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THE 
LAW  OF  CONTRACTS 


BY 

WILLIAM  HERBERT  PAGE 

(pi  the  Columbus,  Ohio,  Bar,    Professor  of  Law  in  the  Ohio  State  University 
Author  of  Page  on  Wills]. 


VOLUME  2 


CINCINNATI 

THE  W.  H.  ANDERSON  CO. 

LAW  BOOK  PUBLISHERS 
1905 


/ 

COPYRIGHT 
1905 

THE  W.  H.  ANDERSON  CXX 

Cincinnati,  O. 


PART  III. 

OTHER  FORMS  OF  CONTRACT. 


54  686495 


FOKMAl,  CONTRACTS. CONTKACTS  OF  RECOKD.     851 


CHAPTER  XXXII. 


FORMAL  CONTRACTS-CONTRACTS  OF  RECORD. 

§544.     Nature  of  formal  contract. 

The  formal  contract  is  an  obligation  which  owes  its  validity 
not  to  consideration,  nor  in  some  cases,  as  in  contracts  of  record, 
to  the  agreement  of  the  parties,  but  solely  to  the  form,  of  the 
transaction.  There  is  an  inclination  to  explain  the  contract 
of  record  on  the  theory  that  the  law  implies  an  agreement  and 
presumes  a  consideration.^  Such  an  explanation  is  of  course 
a  gross  anachronism.  The  formal  contract  at  Common  Law 
antedated  the  executory  simple  contract,  and  was  enforceable 
by  reason  of  its  form  long  before  consideration  was  thought  of 
as  having  any  place  in  the  law  of  contract."  At  Common  Law 
primary  rights  were  classed  Avith  reference  to  the  form  of  actions 
by  which  they  were  enforced.  Accordingly  we  find  that  as 
the  action  of  debt  would  lie  on  a  record  and  the  action  of 
covenant  on  a  sealed  contract,  both  were  classed  as  contracts.* 
Assumpsit  could  not  be  brought  on  a  contract  under  seal,  to 

1 "  In  an  action  upon  a  record  or  whether  expressed  by  the  party  or 

upon  a  contract  under  seal,  a  lawful  implied  by  law."     Hilton  v.  Guyot, 

consideration  was  presumed  to  exist  159     U.    S.     113,     199.     The    state- 

and   could   not   be   denied."     Hilton  ment  that  covenant  and  debt  were 

V.  Guyot,  159  U.  S.  113,  199.  concurrent    remedies   where   a   fixed 

2  See  Ch.  I.  sum  of  money  was  due  and  owing 

3  "  At  Common  Law  an  action  of  under  a  sealed  instrument  was  true 
debt  would  lie  on  a  debt  appearing  of  the  classic  period  of  the  Common 
by  a  record,  or  by  any  other  special-  Law,  Black.  Com.  III.  154,  but  it 
ty,  such  as  a  contract  under  seal;  was  not  true  at  the  early  Common 
and  would  also  lie  for  a  definite  Law  after  covenant  was  differen- 
sum  of  money  due  by  simple  con-  tiated  from  debt.  Pollock  and 
tract.  Assumpsit  would  not  lie  up-  Maitland  History  of  English  Law 
on  a  record  or  other  specialty;   but  (2d   ed.),   Vol.   II.,   219. 

would  lie  upon   any  other  contract, 


852  PAGE    Oisr    CONTRACTS. 

recover  damages  for  breach  thereof/  The  tendency  of  Modem 
Law  to  classify  primary  rights  according  to  their  own  inherent 
nature,  and  to  define  contract  as  an  agreement  enforceable  at 
law,  has  excluded  the  greater  number  of  the  so-called  contracts 
of  record  from  the  class  of  true  contracts.^  They  are  here 
included  for  historical  reasons.  The  formal  contract  consisted 
of  two  great  classes:  the  contract  of  record  and  the  contract 
under  seal.     Each  of  these  will  be  discussed  separately. 

§545.    Meaning  of  specialty. 

Whether  the  term  "  specialty  "  includes  all  formal  contracts, 
or  only  those  under  seal,  excluding  contracts  of  record,  is  a 
question  upon  which  there  is  a  conflict  of  authority.  The  better 
authorities  define  "  specialty "  as  "  a  writing  sealed  and 
delivered,  containing  some  agreement."^  This  was  undoubtedly 
its  original  and  primary  meaning.  But  it  has  been  said  in 
some  courts  that  it  is  used  in  a  "  more  comprehensive  sense  as 
embracing  debts  upon  recogliizances,  judgments  and  decrees,  and 
(in  England  certainly)  debts  upon  statutes."^  In  a  later  case, 
however,  it  was  said  that  the  term  si>ecialty  "  has  no  technical 
meaning  that  necessarily  embraces  judgments,"^  and  subse- 
quently the  Supreme  Court  of  Ohio  declined  to  pass  upon  the 
question  whether  a  foreign  judgment  was  a  "  specialty  "  or  not.* 
"  A  foreign  judgment  was  not  considered,  like  a  judgment  of 
a  domestic  court  of  record,  as  a  record  or  a  specialty."^ 

*  Junction  R.  R.  v.  Bank,  12  Wall.  Seymour  v.  Street,  5  Neb.  85. 
(U.   S.)    226.  3  Tyler's    Executors    v.    Winslow, 

5  See  §§  13,  14.  15  O.  S.  364,  368. 

1  Bouvier  Law.  Diet.  "  Specialty  ";  *  Fries  v.  Mack,  33  O.  S.  52. 
Black.  Com.  II.,  465;  Lane  v.  Mor-  5  Hilton  v.  Guyot,  159  U.  S.  113, 
ris,  10  Ga.  162,  167;  Davis  v.  Smith,  200.  See  also  to  the  same  effect 
5  Ga.  274,  285;  48  Am.  Dec.  274,  Walker  v.  Witter,  1  Dougl.  1 
284;  Kimball  v.  Whitney,  15  Ind.  Phillips  v.  Hunter,  2  H.  Bl.  402 
280;  Helm  V.  Eastland,  2  Bibb  (Ky.)  Smith  v.  Nicolls,  7  Scott  147;  5 
193;  Frazer  v.  Tunis,  1  Binn.  (Pa.)  Bing.  N.  C.  208;  D'Arcy  v.  Ketchum, 
254;  Probate  Court  v.  Child,  51  Vt.  11  How.  (U.  S.)  165;  Mills  v.  Dur- 
82.  yee,  7  Cranch    (U.  S.)    481;   Eissell 

2  Stockwell  V.  Coleman.  10  O.  v.  Briggs,  9  Mass.  462;  6  Am-  Dec. 
S.   33,  40.     To  the  same  effect  see  88, 


FORMAL,  CONTRACTS. CONTRACTS  OF  RECORD.     853 

§546.    Judgments  classed  as  contracts  of  record. 

A  judgment  is  the  determination  and  sentence  of  the  law, 
awarded  and  pronounced  by  the  court.^  The  code  definition 
of  a  judgment  is  "  the  final  determination  of  the  rights  of  the 
parties  in  an  action."^  At  Common  Law  a  judgment  was 
classed  as  a  contract,^  since  the  action  of  debt  could  be  main- 
tained thereon.*  This  view  was  entertained  in  many  of  the 
tjarly  American  cases.^  In  many  of  these  cases  the  proposition 
that  a  judgiTient  is  a  contract  is  wholly  uncalled  for,  the  real 
'^oint  at  issue  being  decided  without  reference  thereto.  Thus 
';»^here  the  point  actually  decided  was  that  a  foreign  judgment 
knust  show  that  the  court  rendering  such  judgment  had  jurisdic- 
tion of  the  cause  of  action  and  of  the  defendant  the  court  added 
the  obiter :  "  A  judgment  for  money  is  a  contract  of  record  to 
pay  the  amount  thereof  to  the  plaintiff.  Such  a  contract,  how- 
ever, is  not  entered  into  by  the  defendant  in  proper  person,  but 
by  the  court  for  him  .  .  .'"^  and  a  judgment  rendered  by 
confession  in  favor  of  a  bank,  without  the  consent  of  such  bank 
was  held  voidable  at  the  bank's  election,  but  on  the  unnecessary 
gj-ound  of  being  "  a  new  and  different  contract."^  So  a  judg- 
ment against  a  feme  covert  was  held  void,  because  it  was  "  in 
the  nature  of  a  contract."^  A  release  of  "  all  notes,  accounts 
abd  demands  of  every  kind  and  nature  "  was  held  to  include 

-«Bouvier's     Law.     Diet.     "Judg-  3  Black.   Com.   III.,   158. 

Bwnt";  Black.  Com.  III.,  396;  Jud-  *  Williams  v.  Jones,  13  M.  &  W. 

son  V.  Gage,  98  Fed.  540;  Gould  v.  628. 

Hayes,   71   Conn.   86;    40   Atl.   930;  5  Stuart  v.  Lander,   16  Cal.   372; 

Blystone    v.    Blystone,    51    Pa.    St.  76  Am.  Dec.  538;  Reed  v.  Eldredge, 

3T^.  27    Cal.    348;    Henry   v.   Henry,    11 

2^ev.   Stat.  Ohio,   §   5310;   King-  Ind,   236;    71    Am.   Dec.   354;    Geb- 

mahv.  Mfg.  Co.,  170U.  S.  675;  7nre  hard   v.    Garnier,    12    Bush.     (Ky.) 

Smith,  122  CaL462;  7L.  R.  A.  240;  321;   23  Am.  Rep.   721;    Sawyer  v. 

65    I-ac.    249;    Voisin   v.    Insurance  Vilas,   19  Vt.  43. 

Co.,  123  N.  Y.   120;   25  N.  E.  325;  e  Gebhard    v.    Garnier,    12    Bush. 

Cameron  v.  Workman,  30  O.  S.  58;  (Ky.)    321;   23  Am.  Rep.  721. 

Moore  v.  Ogden,  35  O.  S.  430;  Cin-  7  Farmers'   Bank   v.   Mather,    301 

cinnati  <.  Steadman,  53  O.  S.  312;  la.  283. 

45     N.     E.     5.     This     definition    of  s  Morse      v.      Tappan,      3      Gray; 

course  applies  to  final  judgments  at  (Mass.)  411. 
Common  Law. 


S5i 


PAGE    ON    CONTEACTS. 


a  judgment,  on  the  ground  that  "  a  judgment  is  a  demand  — 
a  contract  of  record."^  A  judgment  is  often  said  to  be  a  "  con- 
tract of  record"^"  or  "  a  debt  of  record."^^  Thus  it  has  been 
said  of  consent  judgments :  "  They  are  contracts  in  the  most 
solemn  form  sanctioned  by  the  court,  and  cannot  be  collaterally 
attacked.'"- 

§547.     Judgment  not  founded  on  agreement. 

It  is  evident,  however,  that  a  judgment  does  not  necessarily 
have  anything  to  do  with  agreement.  It  may,  it  is  true,  be 
based  on  contract,  or  it  may  be  entered  by  agreement;  but  on 
the  other  hand  it  may  be  based  on  tort  and  may  be  rendered 
only  after  all  means  of  resistance  have  been  exhausted.  Fur- 
thermore, it  possesses  certain  elements  which  are  inconsistent 
with  the  modern  idea  of  a  contract. 

First,  as  between  the  parties  thereto  the  record  is  conclusive 
as  to  matters  litigated,^  and  it  is  equally  conclusive  as  to 
those  claiming  under  such  parties^  though  it  is  not  conclusive 


9  Henry  v.  Henry,  11  Ind.  236;  71 
Am.  Dec.  354. 

10  Barber  v.  International  Co.,  74 
Conn.  652;  92  Am.  St.  Eep.  246;  51 
Atl.  857.  (Even  where  held  not  to 
be  a  contract  for  the  purpose  of  the 
statute  of  limitations.) 

iiLynde  v.  Lynde,  162  N.  Y. 
405,  417;  76  Am.  St.  Rep.  332;  48 
L.  E.  A.  679;  56  N.  E.  979;  Conrad 
V.  Everich,  50  0.  S.  476,  481;  40 
Am.  St.  Rep.  679;  35  N.  E.  58; 
Trowbridge  v.  Spinning,  23  Wash. 
48,  64;  83  Am.  St.  Rep.  806;  62  Pac. 
125. 

12  Union  Bank  v.  Boai'd  of  Com- 
missioners of  Oxford,  90  Fed.  7,  12. 

iKeech  v.  Beatty,  127  Cal.  177; 
59  Pac.  837;  Naftzger  v.  Gregg,  99 
Cal.  83;  37  Am.  St.  Rep.  23;  33 
Pac.  757;  Lancaster  v.  Snow,  184 
111.  534;  56  N,  E.  813;  Bruce  v. 
Osgood,  154  Ind.  375;  56  N.  E.  25; 
Moy  V.  Moy,  111  la.  161;  82  N.  W. 


481 ;  Willard  v.  Ostrander,  51  Kan. 
481;  37  Am.  St.  Rep.  294;  32  Pac. 
1092;  Gregory  v.  Pike,  94  Me.  27; 
46  Atl.  793;  Faber  v.  Hovey,  117 
Mass.  107;  19  Am.  Rep.  398;  Day 
V.  De  Jonge,  66  Mich.  550;  33  N.  W. 
527 ;  De  Camp  v.  Miller,  44  N.  J.  L. 
617;  Mershon  v.  Williams,  63  N.  J. 
L.  398;  44  Atl.  211;  Allen  v.  Text 
Book  Co.,  201  Pa.  St.  579 ;  88  Am.  St. 
Rep.  834;  51  Atl.  323;  same  case, 
sub  nom.,  Allen  v.  Engineers'  Co.,  196 
Pa.  St.  512;  46  Atl.  899;  Thornton 
V.  Baker,  15  R.  I.  553;  2  Am.  St. 
Rep.  925;  10  Atl.  617;  King  v. 
Ross,  21  R.  I.  413;  45  Atl.  146. 

2  0'Connell  v.  Ry.  Co.,  184  111. 
308;  56  N.  E.  355;  Scott  v.  Hall,  60 
X.  J.  Eq.  451;  46  Atl.  611;  revers- 
ing 58  N.  J,  Eq.  42;  43  Atl.  50; 
Wadsworth  v.  Murray,  161  N.  Y. 
274;  76  Am.  St.  Rep,  265;  55  N.  E. 
910. 


rOKMAL  CONTRACTS. 


CONTRACTS  OF  RECORD. 


855 


as  to  strangers;^  as  to  a  party  suing  in  a  different  capacity,* 
or  as  to  nominal  parties  without  real  interest.^  It  is  not  con- 
clusive as  to  issues  not  passed  upon,®  or  as  to  rights  not  litigated.^ 
It  is,  of  course,  not  conclusive  if  the  court  rendering  the  judg- 
ment has  no  jurisdiction  to  render  such  judgment,^  or,  it  has 
been  held,  if  the  petition  shows  affirmatively  that  no  cause  of 
action  against  defendant  exists.^ 

Second,  the  validity  of  a  judgment  cannot  be  attacked  col- 
laterally if  the  court  rendering  it  had  jurisdiction  of  the  subject 
matter  and  the  person  of  the  defendant  against  whom  it  is 
rendered,"  but  if  the  judgment  is  void  it  is  liable  to  collateral 


3  Garland  County  v.  Hot  Springs 
County,  68  Ark.  83;  56  S.  W.  636; 
Cloverdale  v.  Smith,  128  Cal.  230; 
60  Pac.  851;  Going  v.  Society,  117 
Mich.  230;  75  N.  W.  462;  Seymour 
V.  Wallace,  121  Mich.  402;  80  N. 
W.  242;  Selleck  v.  Janesville,  104 
Wis.  570;  76  Am.  St.  Rep.  892;  47 
L.  R.  A.  691;  80  N.  W.  944;  Hart 
V.  ]\Ioulton,  104  Wis.  349;  76  Am. 
St.  Rep.  881;  80  N.  W.  599;  Hood 
V.  Dorer,  107  Wis.  149;  82  N.  W. 
546. 

4  Pollock  V.  Cox,  108  Ga.  430;  34 
S.  E.  213. 

5  Walker  v.  Philadelphia,  195  Pa. 
St.  168;  78  Am.  St.  Rep.  801;  45 
Atl.  657. 

<3  Beronio  v.  Lumber  Co.,  129  Cal. 
232;    61   Pac.   958. 

7  Smith  V.  Rountree,  185  111.  219; 
56  N.  E.  1130;  affirming  85  HI. 
App.  161 ;  Bacon  v.  Schepflin,  185 
ni.  122;  56  N.  E.  1123;  affirming 
85  HI.  App.  553;  Weeks  v.  Ed- 
wards, 176  Mass.  458;  57  N.  E.  701; 
Rossman  v.  Tilleny,  80  Minn.  160; 
83  N.  W.  42;  American,  etc.,  Co. 
V.  Macdonnell,  93  Tex.  398 ;  55  S.  W. 
737;  Dillard  v.  Dillard,  97  Va.434; 
34  S.  E.  60. 

8  Scott  V.  McXeal,  154  U.  S.  34; 
Hall  V.  Melvin,  62  Ark.  439 ;  54  Am, 


St.  Rep.  301;  35  S.  W.  1109;  Mc- 
Carty  v.  Kinsey,  154  Ind.  447;  57 
N.  E.  108;  Morgan  v.  Dodge,  44 
N.  H.  255;  82  Am.  Dec.  213; 
Springer  v.  Sha vender,  118  N.  C. 
33;  54  Am.  St.  Rep.  708;  23  S.  E. 
976;  denying  rehearing  in  116  N.  C. 
12;  47  Am.  St.  Rep.  791;  33  L.  R. 
A,  772;  21  S.  E.  397;  Melia  v.  Sim- 
mons, 45  Wis.  334;  30  Am.  Rep. 
746. 

9  "  Where  a  bill  shows  no  cause  of 
action  against  the  defendants  with 
reference  to  the  subject-matter  of 
the  suit,  tenders  no  issue  with  them 
but  on  the  contrary  shows  that  there 
never  could  be  any  issue  with  them, 
the  complaint  not  even  being  sus- 
ceptible of  amendment  to  show  an 
issue,  a  decree  based  on  such  a  bill 
is  a  nullity,  no  matter  how  at- 
tacked." Hall  V.  Melvin,  62  Ark. 
439,  443;  54  Am.  St.  Rep.  301,  302; 
35  S.  W.  1109.  (Citing  Munday  v. 
Vail,  34  X.  J.  L.  418;  Spoors  v. 
Coen,  44  O.  S.  497;  9  N.  E.  132; 
Seamster  v.  Blackstock,  83  Va.  232 ; 
5  Am.  St.  Rep.  262;  2  S.  E.  36.) 

10  Van  Wagenen  v.  Carpenter,  27 
Colo.  444;  61  Pac.  698;  Figge  v. 
Rowlen,  185  111.  234;  57  N.  E.  195; 
Lancaster  v.  Snow,  184  111.  534;  56 
N.  E.   813;    Watkins  v.  Lewis,   153 


856  PAGE    ON    CONTRACTS. 

attack.^^  Jurisdictional  facts  such  as  the  entering  by  an  at- 
torney of  the  appearance  of  a  defendant  who  is  not  served^"  may 
be  attacked  in  a  direct  proceeding  for  that  purpose. 

Further,  a  judgment  operates  as  a  merger  of  the  cause  of  ac- 
tion on  which  it  is  rendered,  so  that  after  its  rendition  no  liabil- 
ities exist  except  by  reason  of  the  judgment.^^  By  statute 
a  judgment  operates  under  certain  circumstances  as  a  lien  on 
realty;  and  a  judgment  may  be  enforced  by  execution.  A 
subsequent  suit  thereon  is  not  necessary  in  the  jurisdiction  in. 
which  it  was  rendered. 

§548.    Judgments  held  not  to  be  contracts. 

Accordingly,  there  is  a  decided  tendency  at  Modern  Law  to 
exclude  judgments  from  the  class  of  contracts,^  "  The  theory 
that  a  foreign  judgment  imposes  or  creates  a  duty  or  obligation 
is  a  remnant  of  an  ancient  fiction,  assumed  by  Blackstone,  say- 
ing that  ^  upon  showing  the  judgment  once  obtained,  still  iu 
full  force,  and  yet  unsatisfied,  the  law  immediately  implies  that 
by  the  original  contract  of  society  the  defendant  hath  contracted 
a  debt,  and  is  bound  to  pay  it.'  3  Bl.  Com.  159.  That  fiction, 
which  embraced  judgment  upon   default  or  for  torts   cannot 

Ind.  648;  55  N.  E.  83;  J.  B.  Wat-  Neb.   248;    77   N.   W.   680;    Elmen- 

kins,  etc.,  Co.  v.  JMuUen,  62  Kan.  1;  dorf  v.  Elmendorf,  58  N.  J.  Eq.  113; 

61  Pac.  385;  reversing  8  Kan.  App.  44  Atl.  164;  O'Malley  v.  Fricke,  104 

705;  54  Pac.  921;  Benjamin  v.  Ear-  Wis.  280;   80  N.  W.  436. 

ly,   123  Mich.  93;    81  N.  W.  973;  12  Mullins  v.  Eieger,  169  Mo.  521 ; 

Bengtsson  v.  Johnson,  75  Minn.  321;  92  Am.  St.  Rep.  651;  70  S.  W.  4. 

78  N.  W.  3;   State  ex  rel.  Lacy  v.  i3  See  §  1353. 

Brandhorst,  156  Mo.  457;  56  S.  W.  i  Louisiana   v.   Xew   Orleans,    109 

1094 ;  McKeen  V.  Converse,  68  N.  H.  U.    S.    285;    Freeland   v.    Williams, 

173;    39    Atl.    435;    Dauberman    v.  131  U.  S.  405;   Morley  v.  By.,   14ft 

Hain,  196  Pa.  St.  435;  46  Atl.  442.  U,   S.    162;    Smith  v.  Harrison,   33 

11  McAllister  v.  Johnson,   108   la,  Ala.   706;   Larrabee  v.  Baldwin,   35 

42;  78  X.  W.  790;  Kager  v.  Vickery,  Cal.  155;  Rae  v.  Hubert,  17  111.  572; 

61  Kan.  342;  78  Am.  St.  Rep.  318;  O'Brien  v.  Young,  95  N.  Y.  428;  47 

49  L,  R.  A.  153;  59  Pac.  628;  Dux-  Am.    Rep.    64;    Wyoming    National 

bury   V.   Dahle,    78   Minn.   427;    81  Bank  v.  Brown,   9  Wyom.   153;    61 

N.  W.  198 ;  Sackett  v.  Montgomery,  Pac.     465 ;     denying     rehearing,     7 

57  Neb.  424;   73  Am.  St.  Rep.  522;  Wyom.  494;   75  Am.  St.  Rep.  935; 

77  N.  W.  1083;  Lefferts  v.  Bell,  57  53  Pac,  291. 


FORMAL,  CONTRACTS. CONTRACTS  OF  RECORD.     857 

convert  a  transaction  -wanting  the  assent  of  the  parties  into  one 
"which  necessarily  implies  it.""  So  a  judgment  was  held  not 
to  be  a  contract  with  reference  to  the  liability  of  a  trustee  of  a 
corporation  who  has  become  liable  for  the  "  debts  "  of  the  cor- 
poration by  failing  to  file  a  report  of  the  corporation  as  required 
by  law.^ 

§549.     Judgments  as  affected  by  impairment  of  obligation  of  con- 
tract. 

The  cases  in  which  it  now  is  material  whether  a  judgment  is 
a  contract  or  not  are  generally  cases  involving  the  impairment 
of  the  obligation  of  contracts,  the  period  of  limitations,  the  rule 
as  to  necessary  parties  to  actions,  and  other  questions  arising 
where  the  legislature  has  made  different  provisions  for  actions 
on  contract  from  those  for  actions  generally. 

While  there  are  some  decisions  to  the  contrary^  the  weight  of 
authority,  supported  by  decisions  of  the  Supreme  Court  of  the 
United  States,  is  that  a  judgment  is  not  a  contract  within  the 
meaning  of  the  clause  in  the  United  States'  Constitution 
preventing  a  state  from  impairing  the  obligation  of  contracts. 
Hence  the  legislature  may  interfere  with  the  collection  of  a  judg- 
ment based  on  tort  by  forbidding  the  sale  of  property  for  an  act 
done  during  the  Civil  War,^  or  by  reducing  the  tax  rate  in 
the  municipality  so  that  the  judgment  cannot  be  collected,^  or 

2  Hilton  V.  Guyot,  159  U.  S.  113  legal  tender  act  was  not  a  eon- 
(201).  tract  for  the  payment  of  a  debt  in. 

3  Chase  v.  Curtis,  113  U.  S.  452.  gold  or  silver;  hence  the  court  in  a 
Thus  under  a  statute  making  stock-  suit  on  such  judgment  after  the  pas- 
holders  liable  only  on  contracts  en-  sage  of  such  act  could  not  render 
tered  into  by  the  corporation  while  judgment  for  the  payment  of  the 
they  were  stockholders,  a  judgment  debt  in  gold  or  silver. 

rendered  on  a  cause  of  action  was  i  Skinner  v.  Holt,  9  S.  D.  427 ;  62 

held  not  to  be  a  contract  so  as  to  Am.    St.   Eep.    878;    69   N.   W.   595 

bind  a  stockholder  who  bought  stock  (change    in   exemption   laws), 

after   the    cause    of   action    accrued,  2  Freeland  v.  Williams,   131  U.  S. 

but   before   judgment.     Larrabee   v.  405. 

Baldwin,  35  Cal.   155.     Reed  v.  El-  3  Louisiana   v.   New   Orleans,    109 

dredge,  27  Cal.  346,  is  really  not  in  U.    S.   285;    State   v.   New   Orleans, 

point.     It    holds    that    a    judgment  38  La.  Ann.  119;  58  Am.  Rep.  168. 
rendered   before  the  passage   of   the 


858  PAGE    ON    CONTKACTS. 

by  changing  the  rate  of  interest  which  the  judgment  bears, 
accruing  after  the  passage  of  the  act.*  But  in  some  cases  a 
statute  changing  the  rate  of  interest  on  judgments  is  held  in- 
ajDplicable  to  judgments  previously  rendered.^  There  is,  there- 
fore, a  decided  conflict  of  authority  on  this  point.  As  an  ad- 
ditional complication  some  courts  have  tried  to  distinguish 
cases  where  the  contract  provides  what  rate  a  judgiuent  rendered 
thereon  shall  bear®  from  all  other  cases,  holding  that  in  such 
cases  a  change  in  the  rate  of  interest  of  judgments  previously 
rendered  would  impair  the  obligation  of  contracts,  but  not  in 
other  cases.  A  subsequent  statute  as  to  fish-ways  may  affect 
a  judgment  authorizing  a  dam  to  be  built  across  a  creek,  subject 
to  such  conditions  as  the  court  should  impose  concerning  the 
obstruction  of  the  passage  of  fish/ 

§550.     Remedies  given  on  judgments. 

It  has  been  often  said  that  "  judgments  are  invariably  classed 
with  contracts  with  reference  to  remedies  upon  them."^  "  There 
are  authorities  which  hold  that  judgments  for  some  purposes 
are  not  contracts ;  but  there  is  no  authority  that  they  are  never 
to  be  treated  as  contracts,  and  all  of  them  recognize  the  implied 
obligation  of  every  judgment  debtor  to  pay  the  judgment,  and 
that  for  the  purpose  of  actions  and  remedies  upon  them  they 
are  to  be  treated  as  contracts."^     At  Common  Law  it  was  im- 

4Morley  v.  Railroad  Co.,   146  U.  entitled  upon  his  pre-existing  judg- 

S.  162;  O'Brien  v.  Young.  95  N.  Y.  ment."     Butler  v.  Rockwell,  17  Colo, 

428;  47  Am.  Rep.  64;  Wyoming  Nat.  290,    295;     29    Pac.    458. 

Bk.  V,  Brown,  9  Wyom.  153;  61  Pac.  6  Bond  v.  Dolby,  17  Neb.  491;  23 

465;    denying   rehearing,    7    Wyom.  N.  W.  351. 

494;   75  Am.  St.  Rep.  935;   53  Pac.  7  State  v.  Gilmore,   141  Mo.  506; 

291.  42  S.  W.  817. 

5  Texas,  etc..  Railroad  Co.  v.  An-  i  Wattles    v.    Circuit   Judge,    117 

derson,    149   U.    S.   237;    Sharpe  v.  Mich.  662,  665;  72  Am.  St.  Rep.  590; 

Morgan,   44   111.   App.   346;    Cox  v.  76  N.  W.  115;  Meyer  v.  Brooks,  29 

Marlatt,  36  N.  J.  Law.  389;  13  Am.  Or.  203;   54  Am.   St.  Rep.   790;   44 

Rep.   454;    Brauer   v.   Portland,    35  Pac.  281. 

Or.  471;  58  Pac.  861;  59  Pac.  117;  2  Gutta  Percha,  etc.,  Mfg.   Co.  v. 

60      Pac.      378.     "The      legislature  Houston,  108  N.  1^  276,  279;  2  Am. 

could    not    thus    alter    the    rate    of  St.  Rep.  412;   15  N,  E.  402. 
interest    to    which    a    creditor    was 


FORMAL  CONTRACTS. CONTRACTS  OF  RECORD.     859 

portant  to  determine  whether  a  judgment  was  a  contract  or  not 
chiefly  with  reference  to  the  form  of  action  to  be  brought 
thereon.  At  Modern  Law  the  form  of  action  is  usually  imma- 
terial. Still,  where  the  legislature  has  divided  actions  into 
those  in  tort  and  those  on  contract,  a  judgment  is  yet  held  to 
be  a  contract.^  Under  a  statute  authorizing  attachment  on 
all  contracts  express  or  implied,  attachment  may  be  brought  on 
a  judgment  based  on  tort,*  or  on  a  foreign  judgment.^  This  is 
generally,  but  not  invariably,  true.  Thus  a  judgment  is  classed 
as  a  contract  as  concerns  a  statute  forbidding  arrest  on  execu- 
tion in  actions  on  contract  f  as  to  the  jurisdiction  of  a  justice 
of  the  peace,^  as  to  joinder  of  causes  of  action,^  or  as  to  the 
right  of  counterclaim.''  Under  a  statute  authorizing  suit  against 
a  foreign  corporation  by  another  foreign  corporation  on  a  "  cause 
of  action  which  arose  within  the  state."  An  effort  was  made 
to  maintain  an  action  under  such  statute  upon  a  judgment  ren- 
dered in  another  state  upon  the  theory  that  it  was  a  contract 
of  record  and  that  failure  to  pay  it  was  a  continuing  breach, 
so  that  the  cause  of  action  arose  wherever  the  judgment  debtor 
was  doing  business  and  demand  might  be  made.  This  theory 
was  held  to  be  unsound.^'' 


3  Johnson   v.    Butler,    2    la.    535;  «  Childs  v.  Mfg.  Co.,  68  Wis.  231; 

Moore  v.  Nowell,  94  N.  C.  265.  32  N.  W.  43. 

*  Johnson   v.    Butler,    2    la.    535;  »  Taylor  v.  Root,  4  Keyes  (N.  Y.) 

Gutta  Percha,  etc.,  Mfg.  Co.  v.  Hous-  335.     But  in  Rae  v.  Hubert,  17  111. 

ton,  108  N.  Y.  276;  2  Am.  St.  Rep.  572,   a   foreign   judgment   was   held 

412;  15  N.  E.  402;  Nazro  v.  Oil  Co.,  not  included  in  "contract  or  agree- 

36   Hun    (X.  Y.)    296;   Donnelly  v.  nient,  express  or  implied,"  in  a  stat- 

Corbett,    7    N.   Y.    500;    First,    etc.,  ute  giving  the  right  of  set-off. 

Bank  v.  Van  Vooris,   6   S.  D.  548;  lo  Anglo- American    Provision    Co. 

62  N.  W.  378.  V.  Provision  Co.,  169  N.  Y.  506;  88 

5  Wattles  V.  Circuit  Judge,  117  Am.  St.  Rep.  608;  62  N.  E.  587. 
Mich.  662;  72  Am.  St.  Rep.  590;  76  The  court  said:  "  Doubtless  a  judg- 
N.  W.  115;  Gutta  Percha,  etc.,  Mfg.  ment  as  a  debt  of  record  is  a  con- 
Co.  V.  Houston,  108  N.  Y.  276;  2  tract  obligation  of  the  highest 
Am.  St.  Rep.  412;  15  N.  E.  402;  nature.  The  cause  of  action  has  be- 
Meyer  v.  Brooks,  29  Or.  203;  54  come  merged,  and  the  law  implies 
Am.  St.  Rep.  790;  44  Pac.  281.  the   obligation   and   the   promise   of 

6  Sawyer  v.  Vilas,  19  Vt.  43.  the  defendant  to  pay ;  but  it  is  not  a 

7  Stuart  v.  Lander,  16  Cal.  372;  contract  in  the  sense  of  any  engage- 
76   Am.   Dec.    538.  ment  of  the  parties  with  each  other. 


860  PAGE    ON    CONTRACTS. 

A  statute  requiriiig  action  on  contract  to  be  brought  in  the 
name  of  the  real  party  in  interest,  has  been  held  not  to  apply 
to  judgments/^ 

§551.     Judgment  as  affected  by  statute  of  limitations. 

Where  the  limitation  of  actions  is  concerned,  no  question 
arises  as  to  whether  a  judgment  is  a  contract  if  the  legislature 
has  made  specific  provision  for  judgments.^  Where  no  such 
provision  is  made,  a  domestic  judgment  has  been  heM  not  to 
be  a  "written  contract  or  a  specialty"  but  foreign  juG'^ments,^ 
a  judgment  rendered  by  a  justice  of  the  peace*  and  finiUngs  of 
fact  by  a  court,^  such  as  a  finding  of  the  amount  due  on  fore- 
closure, there  being  no  prayer  for  personal  judgment,^  have  been 
held  specialties,  or  at  least  contracts  of  record  governed  by  the 
statute  of  limitations  which  provides  for  specialties. 

§552.    Recognizances. 

A  recognizance,  in  the  correct  use  of  the  term,  is  an  obliga- 
tion of  record  entered  into  either  before  a  court  of  record  or 

The  element  of  mutuality  is  want-  48  N.  E.  1001;  reversing  61  111- 
ing;  for  judicium  redditur  in  in-  App.  78;  Kimball  v.  Whitney,  15 
vitum"  ..."  We  may  concede  Ind.  280 ;  Burnes  v.  Simpson,  9  Kan. 
that  an  action  on  a  foreign  judgment  658 ;  U.  S.  Bank  v.  Dallam,  4  Dana 
is  an  action  ex  contractu;  but  that  (Ky.)  574;  Bullard  v.  Bell,  1  Ma- 
there  is,  within  the  meaning  of  the  son  (U.  S.  C.  C.)  243;  Tyler  v. 
statute  a  cause  of  action  which  Winslow,  15  O.  S.  364. 
arose  within  the  state,  permits  of  3  Stockwell  v.  Coleman,  10  0.  S, 
grave  doubt  and  puts  a  severe  strain  33 ;  Fries  v.  Mack,  33  0.  S.  52. 
on  what  seems  to  be  plain  language."  Contra,  Todd  v.  Crumb,  5  McLean 
167  N.  Y.  509.  (U.  S.  C.  C.)    172;  Barber  v.  Inter- 

11  Wolffe  V.  Eberlein,  74  Ala.  99 ;  national  Co.,  74  Conn.  652 ;  92  Am. 

49  Am.  Eep.  809;  Lovins  v.  Humph-  St.  Rep.  246;    51   Atl.  857;   Jordan 

ries,  67  Ala.  437.  v.   Robinson,   15  Me.   167;   Richards 

1  Shainwald  v.  Lewis,  69  Fed.  487;  v.  Bickley,  13  Serg.  &  R.  (Pa.)  395. 
Schuyler,    etc..    Bank    v.    Bradbury,  *  Pease  v.  Howard,  14  Johns.    (N. 

56  Kan.  3.55;  43  Pac.  254;  Mead  v.  Y.)    479. 

Bowker,    168   Mass.   234 ;    46   N.   E.  s  Doyle  v.  West,  60  O.  S.  438 ;  54 

625;     Whiteside     v.     Catching,     19  N.  E.  469. 
Mont.  394;  48  Pac.  747.  c  Doyle   v.    West,    60   O.    S.   438; 

2Epling  V.  Dickson,  170  HI.  329;  54  N.  E.  469   (semUe). 


FORMAL  CONTKACTS. CONTBACTS  OF  EECORD.     861 

before  a  magistrate  authorized  by  law  to  take  such  recognizance, 
conditioned  to  be  void  ujwn  the  doing  of  some  specified  act, 
otherwise  to  be  in  full  force  and  effect/  "  A  recogTiizance  at 
Common  Law  was  an  obligation  entered  into  before  soma  court 
of  record  or  magistrate  duly  authorized  with  a  condition  to  do 
some  particular  act,  as  to  keep  the  peace  or  api>ear  and  answer 
to  a  criminal  accusation.  It  need  not  be  signed  by  the  party 
entering  into  it.""  A  recognizance  thus  was  in  form  a  judgment 
by  confession,  with  a  clause  of  defeazance.^  The  condition  is 
construed  strictly.*  On  breach  of  the  condition,  the  recogniz- 
ance became  absolute.  The  fact  that  the  party  on  whose  ap- 
pearance in  court  the  recognizance  was  conditioned  remained 
in  the  city,^  or  was  recaptured,^  did  not  prevent  enforcement  of 
the  recognizance.  It  must  be  entered  of  record.  "  It  can 
exist  only  of  record.  It  must  be  proved  of  record."^  "  A 
recognizance  differs  from  a  bail  bond  merely  in  the  nature  of 
the  obligation  created.  The  former  is  an  acknowledgment  of 
record  of  an  existing  debt;  the  latter,  which  is  attested  by  the 
signature  and  seal  of  the  obligor,  creates  a  new  obligation."^ 
A  parol  recognizance  is  invalid.^  It  need  not,  however,  be  en- 
tered on  record  upon  the  day  that  it  was  taken. ^'^ 


1  Black.  Com.  II.,  341;  State  v.  in  which  such  party  did  not  appear. 
Walker,  56  N.  H.  176;  178;  State  but  after  default  judgment  remained 
V.  Kruise,  32  N.  J.  L.  313;  State  v.  in  the  city  until  he  obtained  his 
Crippen,   1   O.   S.   399.  discharge  in  insolvency.) 

2  People  V.  Barrett,  202  111.  287,  6  Reed  v.  Police  Court,  172  Mass. 
297;    95   Am.   St.   Rep.   230    (238);  427;   52  N.  E.  633. 

67    N.    E.    23.     Citing    Shattuck    v.  7  State    Treasurer    v.    Merrill,    14 

People,  4  Scam.   (111.)  477;  2  Black.  Vt.  64,  65.   "Without  record  there  is 

Cora.  341.  no  recognizance."     Mendocino  Coun- 

3  Adair  v.  State,  1  Blackf.  (Ind.)  ty  v.  Lamar,  30  Cal.  627,  629;  Peo- 
200;  Pugh  V.  State,  2  Head  (Tenn.)  pie  v.  Huggins,  10  Wend.  (N.  Y.) 
227.  464. 

4  State  V.  Murdock,  59  Neb.  521;  s  People  v.  Barrett,  202  111.  287, 
81  N.  W.  447.  (A  recognizance  297;  95  Am.  St.  Rep.  230  (238)  ;  67 
conditioned    to    appear    at    a    given  N.   E.   23. 

term  is  not  binding  for  appearance  9  Bloomington  v.  Heiland,   67  111. 

at  a  later  term.)  278. 

5  Parkman  v.  Bartlett,  173  Mass.  loMcNamara  v.  People,  183  111. 
475;  53  N.  E.  906.      (A  civil  action,  164;   55  N.  E.  625. 


862 


PAGE    ON    CONTRACTS. 


At  early  Common  Law  a  recognizance  was  a  very  common 
method  of  securing  a  debt/^  This  is  to-day  closely  paralleled 
by  cases  in  which  a  judgment  has  been  confessed  for  future 
advances.^"  At  Modern  Law  the  use  of  recognizances  is  almost 
wholly  confined  to  criminal  or  bastardy  proceedings."  The 
binding  force  of  the  recognizance  arises  out  of  the  act  of  the 
court;  hence  a  recognizance  need  not  be  signed  by  the  recog- 
nizor, unless  the  statute  specifically  requires  it/*  and  if  signed, 
the  signature  may  be  treated  as  surplusage  ;^^  but  if  the  magis- 
trate or  officer  is  not  authorized  to  take  the  recognizance,^® 
or  if  taken  in  any  other  manner  than  that  prescribed  by  law,^^ 
as  where  it  is  not  conditioned  with  reference  to  any  criminal 
charge,^^  it  is  invalid. 

Where  a  recognizance  is  required  a  bond  cannot  he  given  as 
a  substitute  therefor.^^  A  recognizance  is  sometimes  held  at 
modern  law  to  be  a  true  contract.""     The  difficulties  in  making 


11  Pollock  &  Maitland,  History 
English  Law,  II.,  201,  202  (original 
paging) . 

12  Cook  V.  Whipple,  55  N.  Y.  150; 
14  Am.  Rep.  202;  Shenk's  Appeal, 
33   Pa.   St.   371. 

13  Even  here  the  term  recogniz- 
ance is  often  misused,  where  the 
obligation  is  not  of  record,  but  is 
merely  a  bond  for  appearance  and 
the  like.  People  v.  :Mellor,  2  Colo. 
705 ;  New  Haven  v.  Roger,  32  Conn. 
221;  In  re  Brown,  35  Minn.  307;  29 
N.  W.  131.  "The  bond  in  ques- 
tion is  substantially  a  recognizance." 
Vierling  v.  State,  33  Ind.  218,  219. 
It  is  in  some  cases  distinguished 
from  a  bond,  McMicken  v.  Com- 
monwealth, 58  Pa.  St.  213. 

i-iMcXamara  v.  People,  183  111. 
164;  55  X.  E.  625;  Gay  v.  State,  7 
Kan.  394;  Madison  v.  Common- 
wealth, 2  A.  K.  Mar.  (Ky.)  131; 
Irwin  V.  State,  10  Neb.  325;  6  N. 
W.  370;  King  v.  State,  18  Neb.  375; 
25  N.  W.  519;  Porter  v.  State,  23  0. 
S.  320. 


15  Irwin  v.  State,  10  Neb.  325; 
6  N.  W.  370;  King  v.  Staie,  18  Neb. 
375;  25  N.  W.  519. 

16  Clink  v.  Russell,  58  Mich.  242 ; 
25  N.  W.  175. 

17  Irwin  v.  State,  10  Neb.  325 ;  6 
N.  W.  370.  (Omission  of  designa- 
tion of  official  character  of  officer 
taking  recognizance.)  State  v. 
Pratt,  148  Mo.  402;  50  S.  W.  113. 
(The  statute  in  effect  required  the 
recognizance  to  be  taken  and  signed 
in  the  presence  of  the  officer  who  is 
to  take  it.) 

IS  Cannon  v.  Commonwealth,  96 
Va.  573;   32  S.  E.  33. 

19  Comfort  v.  Kittle,  81  Is*.  179; 
46  N.  W.  988.  This  is  not  true  in 
states  which  treat  recognizance  and 
bond  as  synonymous  terms.  New 
Haven  v.  Rogers,   32  Conn.  221. 

20  State  V.  Weatherwax,  12  Kan. 
463.  (Holding  that  a  minor's  recog- 
nizance for  his  own  release  is  valid 
as  a  contract  for  necessaries,  and 
saying  that  a  recognizance,  while 
"  more  than  a  contract  "  at  Common 


FORMAL  CONTRACTS. CONTRACTS  OF  RECORD.     863 

such  classification  are  that  in  criminal  matters  at  least,  the 
agreement  is  with  the  state  in  its  sovereign  capacity/^  and 
that  the  recognizance  has  the  elements  of  conclusiveness  and 
finality  that  belong  to  a  judgment.^^ 

A  recognizance  was  enforceable  at  Common  Law  by  scire 
facias.'^  Suit  may  be  brought  on  a  recognizance/*  but  where 
the  nominal  amount  of  the  judgment  may  be  reduced  to  equal 
the  actual  damage,  debt  will  not  lie."^ 

§553.     Statute  merchant  and  statute  staple. 

Statute  merchant  was  an  obligation  of  record  analogous  to 
a  recognizance.  The  statute  of  Acton-Burnel,^  the  first  of 
a  series  of  acts,  passed  primarily  to  extend  English  credit  in 
that  mediaeval  struggle  for  trade  in  which  England  laid  the 
foundation  of  her  commercial  greatness,  attempted  to  provide 
a  quick  and  easy  method  for  securing  debts  due  to  merchants. 
"  The  merchant  which  will  be  sure  of  his  debts  shall  cause  his 
debtor  to  come  before  the  mayor  of  London  or  of  York  or 
Bristol,  or  before  the  mayor  and  a  clerk  (which  the  King  shall 
appoint  for  the  same)  for  to  knowledge  the  debt  and  the  day 
of  payment;  and  the  recognizance  shall  be  entered  into  a  roll 
with  the  hand  of  the  said  clerk  which  shall  be  known."  This 
statute  then  provided  that  a  writing  obligatory  was  to  be  made 
by  the  clerk,  sealed  with  the  seal  of  the  debtor  and  the  seal  of 
the  King.     If  the  debtor  did  not  pay  at  the  day  limited  the 

Law,  is  a  contract  in  Kansas. )  State  22McNamara  v.   People,    183   111. 

V.  Crippen,  1  0.  S.  399.  164;  55  N.  E.  625;  State  v.  Kruise, 

21  Anson  regards  this  as  excluding  32  N.  J.  L.  313. 

it  from  true  contract.     Anson  Cont.  23  Banta   v.   People,   53    111.   434; 

51    (original  paging).     In  Smith  v.  State  v.  Dwyer,  70  Vt.  96;   39  Atl. 

Collins,  42  Kan.  259;  21  Pac.  1058,  629. 

the  court  said  that  recognizances  are  24  State  v.  Wheeler,  67  N.  H.  511; 

"not  contracts  within  the  ordinary  41  Atl.  173. 

significance  of  the  word  " ;   and  ac-  25  State  v.  Dwyer,  70  Vt.  96 ;   39 

cordingly  held  that  suits  on  recog-  Atl.  629. 

nizances  were  to  be  classed  as  pen-  ill    or    13    Ed.    I.;    Statutes    at 

alties  rather  than  as  contracts  with  Large,    I.,    141     (edited    by    Danby 

reference  to  the  jurisdiction  of  such  Pickering), 
suit. 


864  PAGE    ON    CONTRACTS. 

creditor  could  come  before  the  said  major  and  clerk  with  his 
bill  obligatory ;  and  if  it  was  found  by  the  roll  and  the  bill  that 
the  debt  had  been  acknowledged  and  that  the  day  of  payment 
had  expired  and  that  the  bill  was  unpaid,  the  mayor  Avas  forth- 
with to  cause  the  movables  of  the  debtor  to  be  sold  after  ap- 
praisal until  the  amount  of  the  debt  was  paid.  Provision  was 
made  for  levying  on  movables  outside  of  the  jurisdiction  of 
the  mayor.  Imprisonment  of  the  debtor  was  provided  for  if 
the  movables  did  not  bring  enough  to  pay  the  debt.  This 
statute  proved  ineffective,  and  its  general  principles  were  re- 
enacted  and  extended  in  the  statute  De  mercatorihus.^  Before 
the  passage  of  this  act,  feudal  principles  had  given  rise  to  the 
doctrine  that  real  property  was  not  liable  for  the  debts  of  the 
owner.  This  rule  had  a  depressing  influence  on  the  credit  of 
English  merchants,  since  their  real  estate  could  not  be  reached 
in  any  way.  The  Statute  of  Acton-Bumel  was  also  shorn  of  its 
force  by  misinterpretation  by  the  sheriffs,  it  is  said  in  the 
preamble  to  the  Statute  De  Mercatotnbus,  and  great  injury  was 
thus  done  to  merchants.  After  specific  provisions  for  recogniz- 
ance, execution  against  movables,  and  imprisonment,  of  the 
same  general  scope  as  the  Statute  of  Acton-Burnel,  but  more 
exact  in  terms,  the  Statute  De  Mercaioribus  provides  for  ex- 
tension of  time  for  a  quarter  of  a  year,  "  And  if  he  do  not 
agree  within  the  quarter  (of  a  year)  next  after  the  quarter 
expired,  all  the  lands  and  goods  of  the  debtor  shall  be  delivered 
to  the  merchant  by  a  reasonable  extent,  to  hold  them  until 
such  time  as  the  debt  is  wholly  levied."  The  liability  thus 
created  was  more  than  a  mere  obligation  of  record ;  since  it  cre- 
ated an  estate  in  lands  defeasible  upon  condition  subsequent,  a 
chattel  interest,  but  one  like  a  freehold,  since  it  might  endure 
forever  if  the  debtor's  estate  were  a  fee  and  the  debt  was  not 
discharged.^  Statute  Staple  was  a  similar  estate  created  under 
a  later  statute.*     The  Statute  of  the  Staple  intended  to  create 


2  13  Ed.  I.;  St.  3,  c.  1;  I.  Stat-  4  27  Ed.  III.,  St.  2,  eh.  9;  II. 
utes  at  Large,  236  (edited  by  Danby  Statutes  at  Large,  85  (edited  by 
Pickering).  Danby  Pickering). 

3  Black.  Com.  II.    160. 


FORMAL  CONTEACTS. CONTEACTS  OF  KECOED.       865 

certain  market-places  in  England  for  v/ools,  leather,  wool-fells 
and  lead.  There  was  also  a  class  of  obligations  of  record  known 
as  recognizances  in  the  nature  of  Statute  Staples.^  No  further 
discussion  of  these  obligations  of  record  is  necessary,  as  they 
have  all  been  long  since  obsolete. 

§554.     Other  contracts  of  record. 

Contracts  of  record  other  those  enumerated  are  naturally  rare. 
They  are  not,  however,  entirely  unknown.  It  has  been  held  that 
a  contract  made  between  the  parties  to  pending  litigation  in 
open  court,  and  entered  on  the  journal  as  a  proceeding  in  the 
cause,  "  has  all  the  force  and  effect  of  a  contract  of  record."^ 
Such  a  contract  has  been  held  not  to  be  within  the  operation 
of  the  statute  of  frauds.^ 

5  Black.  Com.  II.  160.  2See§  737. 

1  Huston  V.  Ry.,  21  0.  S.  235. 


55 


866  PAGE    ON    CONTKACTS. 


CHAPTER  XXXIII. 


CONTRACTS  UNDER  SEAL. 

§555.    History  of  the  seal. 

The  use  of  the  seal  as  a  means  of  authenticating  instruments 
is  often  said  to  be  due  primarily  to  the  ignorance  of  our  ances- 
tors. This  is  not  historically  true.  Before  the  E^orman  con- 
quest we  find  that  seals  were  used  by  the  Duke  of  the  Xormans 
and  possibly  a  few  of  his  great  men.  On  the  other  side  of  the 
channel,  Edward  the  Confessor  carried  his  love  for  things 
Norman  to  the  extent  of  using  a  private  seal/  In  the  years 
immediately  following  the  Norman  Conquest  the  use  of  the 
seal  was  distinctive  of  the  king  and  a  few  of  the  great  men. 
Gradually  the  use  of  the  seal  extended  downward  in  the  social 
scale  until  by  the  time  of  Henry  II.  we  find  that  it  was  assumed 
that  formal  instruments,  executed  by  free  men,  would  be  under 
seal.  We  know  of  this  change  in  the  general  use  of  the  seal 
better  than  many  more  important  facts  about  the  history  of  our 
law.  In  a  famous  case  between  Abbot  Walter  and  Gilbert 
de  Baillol"  we  find  that  the  validity  of  a  charter  of  an  earlier 
reign  was  attacked  on  the  ground  that  the  charter  was  unsealed. 
Richard  de  Lucy,  the  justiciar,  replied  that  it  was  not  the 
ancient  custom  that  every  petty  knight  should  have  a  seal,  which 
was  suitable  only  for  kings  and  pre-eminent  personages.^     It  is 

1  Pollock  &  Maitland's  History  in  this  statement  of  the  case  for 
of  English  Law,  I.  72  (original  pag-  prosecution  which  could  be  success- 
ing)  ;  II.  221    (original  paging).  fully  controverted,  as  the  Curia  Re- 

2  Bigelow  Placita.  175;  Pollock  &  gis  possessed  testimony  on  every 
Maitland's  History  of  English  Law,  point;  at  the  permission  of  the  king, 
11.221  (original  paging) .  Adams  &  the  deeds  of  purchase  and  of  gift 
Stephen's  Select  Documents  of  En-  were  read  in  the  hearing  of  all.  and 
glish  Constitutional  History,  9.  also    the    charters    of    confirmation. 

^ "  ^ow,  since  there  was  nothing      Since  the  other  party  had  little  to 


^  CONTEACTS    UNDEE    SEAL.  8G7 

true  that  the  justiciar  was  sitting  in  a  case  in  which  his  brother 
was  deeply  interested  as  plaintiff,  and  was  doing  everything  in 
his  power  to  bring  about  a  decision  in  his  brother's  favor.  His 
statement  of  the  deterioration  of  human  nature  may  be  chal- 
lenged. At  the  same  time  his  statement  of  the  law  seems  to 
have  been  unquestioned.  We  may  thus  conclude  that  soon  after 
the  Xorman  Conquest  it  was  not  expected  that  knights  holding 
by  military  tenure  would  have  private  seals ;  while  by  the  reign 
of  Henry  II.  it  was  assumed  that  every  knight  at  least  will  have 
a  seal,  and  by  the  end  of  the  thirteenth  century  it  is  assumed 
that  every  free  and  lawful  man  will  have  a  seal  as  a  matter  of 
course.* 

§556.    What  constitutes  a  seal. 

Any  statement  either  of  what  a  seal  was  or  of  its  legal  effect 
is  constantly  complicated  b^^  the  fact  that  the  constant  tendency 
of  the  law^,  during  the  last  century  and  a  half,  has  been  to 
abolish  technical  requirements  as  to  the  nature  of  the  seal  and 
as  to  its  legal  effect.  This  has  been  done  in  part  by  judicial 
decisions,  in  part  by  statute.  It  is,  therefore,  difficult  in  dis- 
cussing different  steps  in  the  development  of  the  law  to  deter- 
mine whether  given  cases  are  merely  extending  a  doctrine  at  a 
given  stage  of  development,  and  adhering  to  it,  though  constru- 

answer  to  these,  Gilbert  de  Baillol,  quenee  to  have  them,  and  in  the  old 
that  he  might  not  seem  to  make  no  times  spite  did  not  make  men  petti- 
objection,  answered  that  he  had  foggers  or  sceptics."  ("Moris  an- 
heard  the  reading  of  the  deeds  given  tiqiiitns  non  erat  quemlibet  militu- 
by  his  predecessors,  but  he  took  oc-  lum  sigillum  habere,  quod  regibus  et 
casion  to  note  that  no  seals  were  praecijmis  tantum  competit  per- 
affixed  to  them  in  attestation.  Turn-  sonis."  Bigelow  Placita,  177.)  Ab- 
ing  to  him,  that  splendid  and  wise  bot  Walter  v.  Gilbert  de  Baillol ; 
man  Richard  de  Lucy,  the  brother  Bigelow's  Placita,  175,  177;  Adams 
of  the  said  abbot,  then  the  Justiciar  &  Stephen's  Select  Documents  of 
of  the  lord  king,  inquired  whether  English  Constitutional  History,  9, 
he  had  a  seal.  Upon  his  reply  that  10;  decided  in  the  reign  of  Henry 
he  had  a  seal,  the  illustrious  man  II. 

smiled  and   said,  "  The  old  fashion  4  Pollock  &  Maitland's  History  of 

was   not   for  every  little  knight  to  English  Law,  II.  221,  222   (original 

have  a  seal,  but  it  was  customary  paging), 
for  only  kings  and  people  of  conse- 


868  PAGE    ON    CONTKACTS. 

ing  it  more  liberally  than  the  earlier  cases;  or  whether  they 
mark  a  transition  to  the  next  stage  of  development.  (1)  The 
Common  Law  seal  consisted  originally  of  a  distinct  and  individ- 
ual engraved  or  inscribed  stamp  with  which  impressions  could  be 
made  upon  wax  or  other  substance  capable  of  adhering  to  paper 
and  of  receiving  impressions.  It  is  in  this  sense  of  the  word 
that  Glanville  and  Britton  speak  of  the  loss  of  a  seal.^  The  term 
was,  as  it  still  is,  an  ambiguous  one,  as  it  also  meant  the  im- 
pression made  by  such  stamp  upon  such  adhesive  substance.^ 
"  Sigillum  est  cera  impressa  quia  cera,  sine  impressione,  non 
est  sigillum."^  While  Coke  speaks  of  a  seal  as  necessarily  an 
impression  in  wax,  it  has  been  held  that  any  substance  may  be 
used,  if  both  capable  of  receiving  an  impression  and  of  adhering 
to  the  paper.*  So  an  impression  on  a  wafer^  or  mucilage® 
was  held  sufficient.  So  an  impression  made  directly  upon  the 
paper,  causing  indentations  and  elevations  in  its  substance, 
might  be  a  seal.^  (2)  The  next  step  in  breaking  down  the 
technical  requirements  as  to  the  form  of  a  seal  was  to  hold  that 
a  piece  of  wax  or  a  wafer,^  a  piece  of  paper"  or  other  extrinsic 
substance  affixed  to  the  instrument  and  intended  as  a  seal,  might 
be  a  valid  seal,  though  no  distinctive  impression  of  any  sort 
appeared  thereon.  (3)  The  next  step  in  breaking  down  tech- 
nical requirements  as  to  the  form  of  a  seal  was  to  hold  that  an 
mark  upon  the  paper  intended  as  a  seal  would  be  a  valid  seal, 
though  no  extrinsic  substance  was  affixed  to  the  paper  and  no 
impression  of  any  sort  was  made  upon  the  paper.  Where  this 
principle  obtains  an  ink  seal,^"  a  scrawl  with  the  word  seal 


1  Glanville,  Book  X.,  ch.  XII.;  s  Gillespie  v.  Brooks,  2  Redf.  (N. 
Britton,  I.  64&.  Y.)    349. 

2  Fish  V.  Brown,  17  Conn.  341;  7  pieice  v.  Indseth,  106  U.  S.  546; 
Warren  v.  Lynch,  5  Johns.  (N.  Y.)  Pillow  v.  Roberts,  13  How.  (U.  S.) 
239.  472;    Hendee  v.   Pinkerton,    14   All. 

3  Co.  Inst.  Lib.  III.  169.  (Mass.)    381;    Manchester   Bank   v. 

4  Pillow  V.  Roberts,  13  How.    (U.  Slason,  13  Vt.  334. 

S.)    472.  8  Hughes  v.  Debnam,  8  Jones  L. 

sTasker     v.     Bartlett,     5     Cush.  (N.  C.)    127. 

(Mass.)    359.  » Turner  v.  Field,  44  Mo.  382. 

10  Hastings  v.  Vaughn,  5  Cal.  315. 


CONTRACTS    UNDER    SEAL.  869 

■written  within  it,"  or  printed/^  a  scroll  seal,"  the  word  "  seal  "^* 
the  word  "  seal  "  printed  within  braekets,^^  the  letters  "  L.  S."^* 
or  an  ink  mark  intended  as  a  seaP^  have  been  each  held  suffi- 
cient as  seals.  Many  states,  however,  have  not  adopted  this 
principle  as  a  Common  Law  rule,  and  have  held  that  if  no 
impression  is  made  on  the  paper,  a  mark  no  matter  how  clearly 
meant  for  a  seal,  such  as  the  word  "  seal "  surrounded  by  brack- 
ets,^^  or  a  scroll  seal,^^  or  the  word  "  seal  "^°  is  not  sufficient  as 
a  seal.  Under  a  statute  specifically  authorizing  an  impression 
upon  the  paper  without  the  use  of  wax  or  wafers,  wherever  a 
seal  was  required,  a  scroll  with  the  word  "  seal  "  written  under 
it  is  not  a  valid  seal  if  affixed  to  a  contract  which  is  not  required 
by  law  to  be  under  seal.^^  (4)  The  last  step  has  been  statutory 
and  consists  in  abolishing  the  private  seal. 

§557.    Adoption  of  seal. 

If  the  impression  or  mark  upon  the  paper  is  of  such  nature 
as  to  be  recognized  as  a  valid  seal  it  need  not  be  physically 
affixed  or  made  by  the  obligor.  He  may,  if  he  pleases,  adopt  as 
his  own  a  seal  already  on  the  instrument,^  as  where  the  seal  is 
printed  on  a  blank  form.^  If  several  obligors  execute  an  instru- 
ment it  is  not  necessary  that  each  should  affix  a  separate  seal. 

11  Bacon  v.   Green,   36   Fla.   325;  is  Osborn  v,  Kistler,  35  O.  S.  99. 

18  So.  870;   Cosner  v.  McCrum,  40  le  Barnard   v.    Gantz,    140   N.   Y. 

W.  Va.  339;   21   S.  E.  739;   Putney  249;   35  N.  E.  430;   Lorah  v.  Niss- 

V.  Cutler,  54  Wis.  66;  11  N.  W.  437,  ley,   156  Pa.  St.  329;   27  Atl.  242; 

i2Carli]e  v.  People,  27  Colo.  116;  Williams  v.  Starr,  5  Wis.  534. 

25  Pac.  48.  it  Such  as  a  dash.     Hacker's  Ap- 
is Jacksonville,     etc.,     R.     R.     V.  peal,   121  Pa.  St.   192;    1  L.  E.  A. 

Hooper,   160  U.   S.  514;   Le  Roy  v.  861;   15  Atl.  500. 

Beard,  8  How.   (U.S.)   451    (Wis.);  is  Manning    v.    Perkins,    86    Me. 

San  Luis  Obispo  County  v.  White,  419;  29  Atl.  1114. 

91   Cal.  432;   24  Pac.   864;   27  Pac.  "  Hendee    v.    Pinkerton,    14    All. 

756;    Brown   v.    Jardhal,    32   Minn.  (Mass.)  381. 

135;    50   Am.   Rep.   560;    19   N.   W.  20  Beardsley  v.  Knight,  4  Vt.  471. 

650;  Carpenter  v.  Frazier,  102  Tenn.  21  Providence,  etc.,  Co.  v.  Engrav- 

462;  52  S.  W.  858.  ing  Co.,  24  R.  I.  175;  52  Atl.  804. 
14  Cochran   v.    Stewart,   57   Minn.  1  Lorah    v,    Nissley,    156    Pa.    St. 

499;  59  N.  W.  543;  Cook  v.  Cooper,  329;   27  Atl.  242. 

59  S.  C.  560;  38  S.  E.  218;  Whitley  2  Osborn  v.  Kistler,  35  O.  S.  99. 

V.  Davis,  1  Swan   (Tenn.)   333. 


870 


PAGE    ON    CONTRACTS. 


Two  or  more  may  adopt  a  common  seal  if  they  wish.^  A  eur- 
poration  may  adopt  such  seal  as  it  pleases  if  it  is  sufficient 
in  law  as  the  seal  of  a  natural  person,*  such  as  a  scroll  seaP  or 
the  seal  of  a  natural  person.**  So  the  District  of  Columbia  may 
adopt  the  seals  of  its  commissioners.'^  In  order,  however,  that 
this  principle  applies,  the  seal  already  on  the  instrument  must 
be  in  fact  adopted  by  the  obligor  whose  seal  it  is  claimed  to  be.^ 
Thus  a  clause  in  a  conveyance  under  seal  whereby  the  grantee 
assumes  a  mortgage  is  not  the  specialty  of  the  grantee.^  So  a 
written  guaranty  of  a  signature,  written  on  the  back  of  a  sealect 
instrument  does  not  thereby  become  a  sealed  guaranty. ^"^  An 
unsealed  addition  to  a  sealed  note  is  not  itself  under  seal.^^  If 
the  seal  is  omitted  by  accident  and  the  contract  is  in  all  other 
respects  duly  executed  and  valid,  equity  can  supply  the  omis- 
sion.^^  The  objection  that  a  sealed  contract  is  not  dated  is  "  too 
frivolous  to  require  consideration."" 


3  Ryan  v.  Cooke,  172  111.  302;  50 
N.  E.  213;  affirming  68  111.  App. 
.592;  Bohannons  v.  Lewis,  3  T.  B. 
Mon.  (Ky.)  376;  Bradford  v.  Ran- 
dall, 5  Pick.  (Mass.)  496;  Citizens' 
Building  Association  v.  Cummings, 
45  0.  S.  664;  16  N.  E.  841;  Lamb- 
den  V.  Sharp,  9  Humph.  (Tenn.) 
224;  Rollins  v.  Humphrey,  98  Wis. 
66;  73  N.  W.  331. 

4  G.  V.  B.  Mining  Co.  v.  Bank,  95 
Fed.  23;  36  C.  C.  A.  633;  Blood  v. 
Water  Co.,  113  CaL  221;  41  Pac. 
1017;  45  Pac.  252;  Royal  Bank  v. 
Depot  Co.,  100  Mass.  444;  97  Am. 
Dec.  115;  Alfalfa  Irrigation  Dis- 
trict V.  Collins,  46  Neb,  411;  64  N. 
W.  1086;  Thayer  v.  Mill  Co.,  31  Or. 
437;    51   Pac.   202. 

5  Jacksonville,  etc.,  R.  R.  v.  Hoop- 
er, 160  U.  S.  514. 

c  Phillips  V.  Coffee,  17  111.  154; 
63  Am.  Dec.  357;  Porter  v.  R.  R., 
37  Me.  349 ;  Mill  Dam  Foundery  Co. 
V.  Hovey,  21  Pick.  (Mass.)  417; 
Stebbins     v.      Merritt,      10     Cash. 


(Mass.)  27;  Tenney  v.  Lumber  Co., 
43  N.  H.  343;  Middlebury  Bank  v. 
R.  R.,  30  Vt.  159. 

7  District  of  Columbia  v.  Iron 
Works,  181  U.  S.  453. 

8  Ridley  v.  Hightower,  112  Ga. 
476;  37  S.  E.  733;  Hess's  Estate, 
150  Pa.  St.  346;  24  Atl.  676;  Tay- 
lor V.  Forbes's  Administrator,  101 
Va.  658;  sub  nomine,  Taylor  v» 
Forbes's  Administratrix,  44  S.  E, 
888. 

9  Taylor  v.  Forbes's  Administra* 
tor,  101  Va.  658;  sub  nomine,  Taylor 
V.  Forbes's  Administratrix,  44  S.  E. 
888.  (As  to  the  period  of  limita- 
tions.) 

10  Ridley  V.  Hightower,  112  Ga, 
476;  37  S.  E.  733. 

11  Sanders  v.  Bagwell,  32  S.  C. 
238;  7  L.  R.  A.  743;  10  S.  E.  946. 

12  Trustees  of  Wadsworthville 
Poor  School  V.  Bryson,  34  S.  C.  401 ; 
13   S.  E.  619. 

13  Seigman  v.  Streeter,  64  N.  J.  L. 
169,  170;  44  Atl.  888. 


CONTRACTS    UNDER    SEAL. 


871 


§558.     Necessity  of  seal  in  contract  of  corporation. 

The  original  rule  was  that  a  corportion  "  acts  and  speaks  only 
by  its  common  seal.  .  .  .  It  is  the  fixing  of  the  seal,  and 
that  only,  which  unites  the  several  assents  of  the  individuals 
who  compose  the  community  and  makes  one  joint  assent  of  the 
whole."^  Exceptions  were  made  to  this  rule  in  cases  of  trivial 
or  routine  business."  When  trading  and  manufacturing  cor- 
porations became  important,  it  was  evident  that  to  require  the 
ease  of  the  corporate  seal  would  destroy  the  practical  effective- 
ness of  such  corporations,  and  the  exceptions  multiplied  until 
it  may  be  said  that  in  the  United  States  they  have  become  the 
rule,  and  now  a  corporation  need  not  affix  its  seal  to  a  contract,^ 
except  in  cases  such  as  deeds,'*  where  a  natural  person  should 


1  Black.  Com.  I.  475 ;  Preston  v. 
R.  R.,  17  Beav.  114  (117)  ;  Gooday 
V.  B.  R.,  17  Beav.  132  (136)  ;  Winne 
V.  Bampton,  3  Atk.  473;  Waller  v. 
Bank,  3  J.  J.  Mar.  (Ky.)  201;  Gar- 
rison V.  Combs,  7  J.  J.  Mar,  (Ky.) 
84;  22  Am.  Dec.  120. 

2  Church  V.  Imperial,  etc.,  Co.,  6 
Ad.  &  El.  846;  33  E.  C.  L.  230; 
niggle  V.  R.  R.,  5  Exch.  442. 

3  Gottfried  v.  Miller,  104  U.  S. 
521 ;  First,  etc..  Bank  v.  Mining  Co., 
89  Fed.  439 ;  Crowley  v.  Mining  Co., 
55  Cal.  273;  Savings  Bank  v.  Da- 
vis, 8  Conn.  191;  B.  S.  Green  Co.  v. 
Blodgett,  159  111.  169;  50  Am.  St. 
Rep.  146;  42  N.  E.  176;  Columbia 
Casino  Co.  v.  Columbian  Exposition, 
85  111.  App.  369;  Globe,  etc.,  Co.  v. 
Reid,  19  Ind.  App.  203;  47  N.  E. 
947;  modified  on  rehearing,  49  N.  E. 
291;  Muscatine,  etc.,  Co.  v.  Lumber 
Co.,  85  la.  112;  39  Am.  St.  Rep. 
284;  52  N.  W.  108;  Commercial 
Bank  v.  Mfg.  Co.,  1  B.  Mon.  (Ky.) 
13;  35  Am.  Dec.  171;  Fitch  v.  Mill 
Co.,  80  Me.  34;  12  Atl.  732;  Speirs 
V.  Drop-Forge  Co.,  174  Mass.  175; 
54  N.  E.  497;   National,  etc.,  Asso- 


ciation V.  Stone  Co.,  49  Minn.  220; 
51  N.  W.  916;  Carey,  etc.,  Co.  v. 
Cain,  70  Miss.  628;  13  So.  239; 
Goodwin  v.  Screw  Co.,  34  N.  H.  378; 
Crawford  v.  Longstreet,  43  N.  J.  L. 
325;  Western,  etc.,  Co.  v.  Bank,  9 
N.  M.  1;  47  Pac.  721;  Leinkauf  v. 
Caiman,  110  N.  Y.  50;  17  N.  E.  389; 
Hand  v.  Coal  Co.,  143  Pa.  St.  408; 
22  Atl.  709;  Gassett  v.  Andover,  21 
Vt.  342;  Winterfield  v.  Brewing 
Co.,  96  Wis.  239;  71  N.  W.  101; 
Ford  v.  Hill,  92  Wis.  188;  53  Am. 
St.  Rep.  902;  66  N.  W.  115.  The 
seal  is  especially  unnecessary  where 
the  corporation  has  no  seal.  Omaha, 
etc.,  Co.  V.  Burns,  49  Neb.  229;  68 
N.  W.  492;  Stevens  v.  Ball  Club, 
142  Pa.  St.  52;  11  L.  R.  A.  860;  21 
Atl.  797;  Turner  v.  Lumber  Co., 
106  Tenn.  1 ;  58  S.  W.  854. 

4  Danville  Seminary  v.  Mott,  136 
111.  289;  28  N.  E.  54;  Caldwell  v. 
Mfg.  Co.,  121  N.  C.  339;  28  S.  E, 
475;  Thayer  v.  Mill  Co.,  31  Or.  437? 
51  Pac.  202.  (Citing  In  re  St.  He- 
len Mill  Co.,  3  Sa^vy.  (U.  S.  C.  C.) 
88.) 


872  PAGE    ON    CONTKACTS. 

affix  his  seal.^  This  rule  applies  to  public  as  well  as  to  private 
corporations  at  Modern  Law,  and  a  public  corporation  maj  make 
a  valid  contract  without  affixing  the  corporate  seal,  if  it  is  such 
a  contract  that  a  natural  person  would  not  be  required  to 
execute  it  under  seal,  and  if  the  charter  or  other  statute  does 
not  require  a  seal.''  The  presence  of  a  corporate  seal  has  still 
some  legal  effect  in  some  jurisdictions.  An  instrument  sealed 
with  a  corjwrate  seal  is  treated  as-  'prima  facie  the  instrument 
of  the  corjDoration,^  while  if  such  seal  is  not  affixed  authority  to 
execute  the  instrument  must  be  shown.^  In  some  jurisdictions 
the  absence  of  a  corporate  seal  prevents  the  instrument  from 
being  a  corporate  obligation.^ 

In  Tennessee  it  is  held  that  the  act  abolishing  private  seals 
does  not  change  the  law  as  to  corporate  seals,"  but  the  omission 
of  a  seal  from  a  corporate  deed  does  not  avoid  it  in  equity,  but 
only  in  law.^^  The  seal  is  said  to  be  unnecessary  except  in  case 
of  contract  of  unusual  or  extraordinary  character.^"  In  Canada 
a  contract  must  be  in  the  form  required  by  the  charter  or  under 
seal.^^  In  England  the  courts  adhere  to  the  old  rule  formally, 
though  they  have  so  honey-combed  it  with  exceptions  that  it  is 
practically  obsolete. 

Where  a  seal  is  proper,  it  is  held  in  most  jurisdictions  that 
any  form  of  mark  intended  as  a  seal  may  be  adopted  and  used 
by  the  corporation.^*     Thus  it  may  adopt  the  private  seal  of 

sBenbow  v.  Cook,  115  N.  C.  324;  Church,  3  Pen.    (Del.)   229;  50  Atl. 

44  Am.  St.  Rep.  454;  20  S.  E.  453.  535. 

6  Gordon  v.  San  Diego,  101  Cal.  lo  Garrett  v.  Land  Co.,  94  Tenn. 
522;   40  Am.  St.  Rep.  73;   36  Pac.  459;  29  S.  W.  726. 

18;   affirming  in  bane  32  Pac.  885;  n  Precious    Blood    Society   v.    El- 
Frankfort  Bridge  Co.  v.  Frankfort,  sythe,  102  Tenn.  40;  50  S.  W.  759. 
18  B.  Mon.   (Ky.)   41;  Matthews  v.  12  Diggle    v.    Ry.,    5    Exeh.    442; 
Westborough,  134  Mass.  555;  Bren-  Paine  v.  Guardians,  8  Q.  B.  326;  55 
nan  v.  Weatherford,  53  Tex.  330 ;  37  E.  C.  L.   325. 
Am.  Rep.  758.  i3  Garland,    etc.,    Co.    v.    Electric 

7  Mills   V.    Mining   Co.,    132    Cal.  Co.,  301  Ont.  40. 

95;   64  Pac.  122.  i*  Blood   v.   La   Serena,   etc.,   Co., 

sDegnan  v,  Thoroughman,  88  Mo.  113  Cal.  221;  45  Pac.  252;  reversing 

App.    62.  in  banc  41   Pac.   1017;   Johnston  v. 

»St.    Joseph's,    etc.,     Society    v.  Crawley,  25  Ga.  316;   71  Am.  Dec 


CONTRACTS    UNDER    SEAL.  873 

one  of  its  officers,"  or  the  word  "  seal,""  or  "  L.  S.,""  or  a 
scroll  seal,^^  or  a  piece  of  paper  attached  by  a  wafer,  without 
any  sort  of  impression/® 

§559.     Delivery  of  sealed  instrument. 

The  question  of  the  delivery  of  a  sealed  instrument  presents 
many  of  the  questions  involved  in  the  delivery  of  a  simple 
written  contract.  A  discussion  of  the  delivery  of  a  sealed 
contract  will  therefore  be  deferred  until  the  discussion  of  the 
delivery  of  a  simple  written  contract.^ 

§560.     Effect  of  seal  at  early  Common  Law. 

When  the  seal  once  had  come  into  general  use  and  had  become 
the  means  of  authenticating  formal  instruments  it  at  once 
acquired  an  effect  and  a  sanctity  which  it  is  hard  to  over- 
estimate or  even  appreciate.  If  a  seal  was  affixed  to  an  instru- 
ment it  bound  the  party  whose  seal  it  was  without  reference  to 
the  person  by  whom  it  was  affixed.  If  his  agent  or  bailiff 
affixed  it,  even  without  authority,  the  principal  was  bound,  for 
he  should  have  provided  a  better  custodian.  The  law  went 
further  than  this,  however.  Glanville  says^  that  if  the  defend- 
ant acknowledges  the  seal  to  be  his  own  but  denies  that  the 
charter  was  made  with  his  assent,  "  he  is  bound  to  warrant 
the  terms  of  the  charter  and,  in  all  respects,  to  observe  the 
compact  expressed  in  the  charter  as  contained  in  it,  without 
question,  and  to  impute  it  to  his  own  indiscretion  if  he  incur 

173;    Porter  v.   R.   R.   Co.,   37   Me.  v.  Mfg.  Co.,  121  N.  C.  339;  28  S.  E. 

349;   Tenney  v.  Lumber  Co.,  43   N.  475. 

H.  343;   Ransom  v.  Bank,   13  N.  J.  it  G.  V.   B.   Mining  Co.  v.   Bank, 

Eq.   212;    Bank   v.   Ry.   Co.,   30  Vt.  95    Fed.    23;     36    C.    C.    A.     633; 

160.  modifying  89  Fed.  439. 

15  Eureka   Co.   v.    Bailey   Co.,    11  is  Thayer  v.  Mill  Co.,  31  Or.  437; 
Wall.     (U.    S.)    488;    Gashwiler    v.  51  Pac.  202. 

Willis,    33    Cal.    11;    91    Am.    Dec.  i9  Mill,  etc..  Co.  v.  Hovey,  21  Pick. 

607;  Leinkauf  v.  Caiman,  110  N.  Y.  (Mass.)    417. 

50;   17  N.  E.  389.  i  See  §  577  et  seq. 

16  Jacksonville,  etc.,  Co.  v.  Hoop-  i  Book  X.,  ch.  XII.  (Beames's  edi- 
er,  160  U.  S.  514.     Contra,  Caldwell  tion). 


874  PAGE    ON    CONTRACTS. 

any  loss  by  negligently  preserving  his  own  seal.""  This  seemst 
to  mean  that  even  if  his  seal  is  stolen  or  lost  he  is  hound  by 
it  in  the  hands  of  any  person  who  may  use  it.  Britton  seems  to 
take  the  same  view,  but  specifies  a  method  whereby  one  who 
has  lost  his  seal  may,  by  public  announcement  of  such  fact, 
avoid  subsequent  liability  thereunder.  In  speaking  of  defenses, 
Britton  says :  "  Or  he  may  plead,  that  this  writing  ought  not 
to  affect  him,  for  at  the  time  of  it  being  made  he  had  lost  his 
seal,  and  caused  it  to  be  cried  and  published  at  the  churches 
and  markets,  so  that  if  anything  was  made  under  that  seal  after 
a  certain  day  on  which  it  was  lost,  it  ought  not  to  affect  him ; 
and  in  such  manner  he  may  deny  the  deed,  and  thereupon  let 
the  truth  be  inquired  by  the  neighborhood  where  the  deed  is 
supposed  to  have  been  made,  and  according  to  the  verdict  of 
the  country,  let  him  who  shall  be  found  to  have  been  guilty 
of  falsehood  be  adjudged  to  prison,  and  punished  by  fine."' 

§561.    Effect  of  seal  on  consideration  at  Common  Law. 

A  sealed  instrument  was  enforceable  at  Common  Law  be- 
cause of  its  solemnity  of  form.  It  needed  no  consideration, 
and  at  law  want  of  consideration  was  no  defense.^  So  a  sealed 
contract  for  the  sale  of  realty  shows  consideration  sufficiently 
to  comply  with  the  statute  of  frauds.^  So  a  seal,  even  if  by 
statute  presumptive  evidence  only  of  consideration,  shows  con- 
sideration  sufficiently   to   comply  with   a    statute  requiring   a 

sGlanville,     Book    X.,    ch.    XII.  v.  Bank,  57  N.  J.  L.  27;  29  Atl.  320; 

(Beames's  edition).  Dorr  v.  Munsell,  13  Johns.   (N.  Y.) 

3  Britton,    I.    Mb    (Nichols's   edi-  430;     Cosgrove    v.    Cummings,    195 

tion).  Pa.  St.  497;   46  Atl.  69;   Anderson 

iRendleman    v.    Eendleman,    156  v.   Best,    176   Pa.   St.  498;    35   Atl. 

111.  568;   41  N.  E.  223;   Gourley  v.  194;    Carter   v.   King,    11    Rich.   L. 

By.,  96  111.  App.  68j  Bullen  v.  Mor-  (S.  C.)    125;  Barrett  v.  Garden,  65 

rison,  98  111.  App.  669;  Leonard  v.  Vt.  431;   36  Am.   St.  Rep.  876;   26 

Bates,   1   Blackf.    (Ind.)    172;   Ruth  Atl.  530;  Wing  v.  Peck,  54  Vt.  245; 

V.   Ford,   9   Kan.    17;    Van   Valken-  Harris  v.   Harris,   23   Gratt.    (Va.) 

burgh  V.  Smith,  60  Me.  97;  Erickson  737. 

V.  Brandt,  53  Minn.   10;   55  X.   \V.  2  .Johnston  v.   Wadsworth,  24  Or. 

62;  Saunders  v.  Blythe,  112  Mo.  1;  494;   34  Pac.   13. 
20  S.  W.  319;  Ne\\ark,  etc.,  Church 


CONTRACTS    UNDER    SEAL. 


875 


contract  to  answer  for  the  debt  of  another  to  be  evidenced  by 
a  written  memorandum  "  expressing  the  consideration."^  It 
is  often  said  that  the  seal  imports  a  consideration,*  or  that  it 
estops  the  covenantor  to  deny  that  there  was  a  consideration,^  but 
this  expression  of  the  rule  shows  a  misapprehension  of  the 
history  of  the  seal.  A  sealed  contract  was  enforceable  as  such 
at  Common  Law  long  before  consideration  was  thought  of  as 
an  element  of  a  contract.  Historically  it  would  be  more  cor- 
rect to  say  that  consideration  was  a  substitute  for  the  seal.*' 
To  this  Common  Law  rule  there  were  at  least  two  exceptions. 
Contracts  in  restraint  of  trade  and  marriage  are,  as  has  been 
pointed  out  elsewhere, '^  merely  void  and  not  illegal.  Yet  a 
contract  under  seal  in  restraint  of  marriage  would  not  be  en- 
forced, though  a  similar  promise  under  seal  to  make  a  gift, 
without  the  consideration  of  a  promise  to  refrain  from  mar- 
riage, would  be  enforceable.®  So  a  contract  in  restraint  of 
trade,  even  if  reasonable  and  so  not  even  void,  but  valid  as  to 


3  Kuener  v.  Smith,  108  Wis.  549 ; 
84  N.  W.  850. 

4Sivell  V.  Hogan,  119  Ga.  167;  46 
S.  E.  67 ;  Forthman  v.  Deters,  —  111. 
— ;  69  N.  E.  97;  Consolidated,  etc., 
Ry.  Co.  V.  O'Neill,  25  111.  App.  313; 
Wing  V.  Chase,  35  Me.  200;  Erick- 
son  V.  Brandt,  53  Minn.  10;  55  N. 
W.  62;  Saunders  v.  Blythe,  112  Mo. 
1;  20  S.  W.  319;  Parker  v.  Parmele, 
20  Johns.  (N.  Y.)  130;  11  Am.  Dec. 
253;  Wester  v.  Bailey,  118  N.  C. 
193;  24  S.  E.  9;  Ducker  v.  Whit- 
son,  112  N.  C.  44;  16  S.  E.  854. 
"  The  law  of  nudum  pactum  is  in- 
applicable to  instruments  under 
seal.  The  very  fact  of  having  a 
seal  attached  imports  a  considera- 
tion." Brown  v.  Brown,  44  S.  C. 
378,  381;  22  S.  E.  412.  So  Carter 
V.  King,  11  Rich.  L.  (S.  C.)  125. 
"  Want  of  consideration  is  not  a 
sufficient  answer  to  an  action  on  a 
sealed  instrument.  The  seal  imports 
a  consideration,  or  renders  proof  of 


consideration  unnecessary ;  because 
the  instrument  binds  the  parties  by 
force  of  the  natural  presumption 
that  an  instrument  executed  with  so 
much  deliberation  and  solemnity  is 
founded  upon  some  sufficient  cause." 
Storm  V.  United  States,  94  U.  S. 
76    (84). 

5  Smith  V.  Smith.  36  Ga.  184;  91 
Am.  Dec.  761;  Black  v.  Maddox,  104 
Ga.  157;  30  S.  E.  723.  "The  in- 
strument relied  on  in  this  case  be- 
ing under  seal,  a  consideration  is  im- 
ported which  the  promisors  would  be 
estopped  to  deny."  Black  v.  Mad- 
dox, 104  Ga.  157,  163;  30  S.  E. 
723. 

6  Walker  v.  Walker,  13  Ired.  L. 
(N.  C.)   335. 

7  See  §§  373-381,  424,  510. 

8  Baker  v.  White,  2  Vern.  215; 
Key  v.  Bradshaw,  2  Vern.  102 ;  Lowe 
V.  Peers,  4  Burr.  2225 ;  Sterling  v. 
Sinnickson,  5  N.  J.  L.  756. 


876  PAGE    ON    CONTRACTS. 

subject-matter,  would  not  be  enforced  without  a  valuable  con- 
sideration, even  if  the  contract  was  under  seal.^ 

§562.     In  equity. 

If  the  question  of  the  validity  of  a  contract  becomes 
material  in  equity  the  existence  of  a  seal  does  not  prevent 
equity  from  inquiring  whether  the  instrument  is  supported 
by  a  valuable  consideration,  and  from  treating  it  as  unenforce- 
able if  it  appears  that  no  consideration  exists.^  Thus  specific 
performance  will  not  be  given  in  equity  upon  a  gratuitous  prom- 
ise under  seal.^  This  rule  is  especially  true  under  a  statute 
authorizing  inquiry  into  the  consideration  of  a  contract  under 
seal,  to  show  want  of  consideration.^ 

§563.     Under  modem  statutes. 

The  Common  Law  efPect  of  the  seal  as  dispensing  with  the 
necessity  of  consideration  has  been  greatly  modified  by  statute 
in  many  states.  In  some  states  the  affixing  of  a  seal  has  no 
practical  effect  unless  the  instrument  is  one  required  by  law 
to  be  imder  seal.^  A  seal  may  be  ignored  as  surplusage  if  the 
instrument  to  which  it  is  affixed  is  not  necessarily  under  seal, 
and  the  addition  of  the  seal  would  vitiate  the  instrument,  as 
where  the  seal  is  affixed  by  an  agent  whose  authority  is  created 
by  parol.^  So  a  contract  under  seal,  made  by  an  unauthorized 
agent,  and  not  being  necessarily  under  seal,  may  be  ratified 

sMitchel  v.  Eeynolds.   1  P.  Wms.  3  Winter  v.  Ry.,  160  Mo.  159;   61 

181;    Palmer    v.    Stebbins,    3    Pick.  S.  W,  606. 

(Mass.)     188;     15    Am.    Dec.    204;  i  Edwards  v.  Dillon,   147   111.   14; 

Keeler  v.  Taylor,  53  Pa.  St.  467;  91  37  Am.  St.  Rep.  199;  35  N.  E.  135; 

Am.  Dee.  221.  Barton  v.   Gray,   57   Mich.   622;    24 

iHervey  V.  Audland,  14  Sim.  531;  X.  W.  638;  Blewitt  v.  Boorum,  142 
Hale  V.  Dressen,  73  Minn.  277;   76  N.  Y.  357;  40  Am.  St.  Rep.  600;  37 
jSr.  W.  31;  Lamprey  v.  Lamprey,  29  N.  E.  119;  McXeal,  etc.,  Co.  v.  Walt- 
Minn.   151;    12  N.  W.   514;   Winter  man,  114  N.  C.  178;  19  S.  E.  109. 
V.  Ry.,  160  Mo.  159;  61  S.  W.  606.  sHartnett  v.   Baker,  —  Del.  — ; 

2Crandall  v.  Willig,  166  111.  233;  56   Atl.    672;    Mcintosh   v.   Hodges, 

46  X.  E.  755;   Buford  v.  McKee,  1  110  Mich.  319,  322;   68  X.  W.  158; 

Dana    (Ky.)    107;   Bosley  v.  Bosley,  70  X.  W.  550. 
85  Mo.  App.  424. 


CONTEACTS    UNDER    SEAL,  877 

"bj  parol,  the  seal  being  ignored.^  These  statutes  may  be 
grouped  under  two  general  classes.  (1)  Some  statutes  provide 
that  even  though  an  instrument  is  under  seal,  want  of  consid- 
eration may  be  inquired  into.*  The  same  result  seems  to 
have  been  reached  in  some  states  without  the  aid  of  statute.^ 

Some  jurisdictions  hold  that  the  purpose  of  these  statutes 
is  merely  to  allow  inquiry  into  failure  of  consideration  where 
a  valuable  consideration  was  contemplated,  but  not  to  make 
invalid  sealed  instruments  which  were  intended  to  be  without 
■  consideration.^  Other  jurisdictions  treat  such  statutes  as  abol- 
ishing voluntary  promises  under  seal,  and  reducing  the  seal  to 
a  mere  prima  facie  evidence  of  consideration  which  may  be 
rebutted.^  While  consideration  may  be  presumed  from  the  use 
of  the  seal,  this  presumption  does  not  arise  where  the  language 
of  the  contract  shows  that  it  had  no  consideration.®  (2)  In 
other  jurisdictions  the  private  seal  has  been  abolished  by  stat- 
ute.^ The  effect  of  such  statutes  is  to  reduce  all  specialties  to 
simple  contracts.  Even  if  a  ^eal  is  affixed  to  a  contract,  it  is, 
under  such  statutes,  mere  surplusage.^" 

§564.    Extrinsic  evidence  in  sealed  contracts. 

The  question  of  what  facts  and  circumstances,  outside  of  the 
words  of  a  contract  under  seal,  can  be  considered  in  connection 

3  Smyth  V.  Lynch,  7  Colo.  App.  6  Rendleman  v.  Rendleman,  156 
383;  43  Pac.  670;  Bless  v.  Jenkins,  111.  568;  41  N.  E.  223;  AUer  v.  Al- 
129  Mo.  647;  31  S.  W.  938.  ler,  40  N.  J.  L.  446.     So  at  equity 

4  Withers  v.  Greene,  9  How.  (U.  independent  of  statute.  Meek  v. 
S.)  213;  McCarty  v.  Beach,  10  Cal.  Frantz,  171  Pa.  St.  632;  33  Atl. 
461;    Williams    v.    Haynes,    27    la.  413. 

251;  1  Am.  Rep.  268;  Coyle  v.  Fow-  7  Render   v.   Been,   78   la.   283;    5 

ler,  3  J.  J.  Mar.    (Ky.)   472;   Baird  L.  R.  A.  596;  43  N.  W.  216;  Judy 

V.   Baird,   145  N.  Y.  659;   28  L.  R.  v.  Louderman,  48  0.  S.  562;  29  N.  E. 

A.  375;  40  N.  E.  222;  Gray  v.  Bar-  181. 

ton,  55  N.  Y.  68;  14  Am.  Rep.  181;  8  Render  v.   Been,    78   la.   283;    5 

Judy  V.  Louderman,  48  O.   S.  562;  L.  R.  A.  596;  43  N.  W.  216. 

29  N.  E.   181;   McLean  v.  Houston,  »  Bradley  v.  Rogers,  33  Kan.  120; 

2   Heisk.    (Tenn.)    37    (41).  5  Pac.  374;  Garrett  v.  Land  Co.,  94 

5  Solomon  v.  Kimmel,  5  Binn  Tenn.  459 ;  29  S.  W.  726 ;  Murray  v. 
(Pa.)     232;    Swift    v.    Hawkins,    1  Beal,  23  Utah  548;  65  Pac.  726. 

Ball.    (Pa.)    17;  Mattock  v.  Gibson,  lo  See  anie,  this  section. 

8  Rich.  L.   (S.  C.)  437. 


878  PAGE    ON    CONTRACTS. 

■with  siicli  words,  as  forming  a  real  part  of  the  contract,  is  in 
many  respects  the  same  question  as  that  presented  in  determin- 
ing what  facts  and  circumstances,  outside  of  the  words  of  a 
simple  written  contract,  can  he  considered  as  a  part  thereof. 
The  two  questions  will,  therefore,  for  the  most  part,  be  con- 
sidered together.^  There  are,  however,  certain  special  topics 
in  which  the  law  of  the  sealed  contract  is  different  from  that  of 
the  simple  written  contract,  on  account  of  the  peculiar  force  of 
the  seal.  These  topics  will,  therefore,  he  discussed  separately 
in  the  following  sections.  The  use  of  these  facts  outside  of  the 
words  of  the  contract  is  referred  to  as  "  extrinsic  evidence." 
As  will  be  seen  later"  this  is  a  very  poor  name  to  express  the 
idea,  as  it  is  rarely  evidence  in  the  proper  sense,  any  more 
than  the  contract  itself  is  evidence,  and  it  is  often  not  extrinsic 
to  the  contract,  though  it  is  not  contained  in  the  writing.  It 
is  used,  however,  because  it  is  one  of  the  terms  commonly 
employed  by  the  courts  in  describing  such  facts  and  circum- 
stances.^ The  effect  of  a  sealed^  contract  as  merger  of  prior 
rights  and  liabilities  is  elsewhere  discussed.* 

§565.     Incomplete  contracts  under  seal. 

If  a  contract  under  seal  is  incomplete  on  its  face,  and  some 
of  its  terms  must  be  supplied  by  extrinsic  evidence  of  the 
oral  agreement  of  the  parties,  it  is  clear  that  such  a  contract 
cannot  be  said  to  be  under  seal.  The  principle  is  carried  so 
far  that  even  if  blanks  are  purposely  left  in  a  sealed  instrument 
and  such  blanks  are,  after  delivery  of  the  instrument,  filled  by 
one  having  parol  authority  to  fill  them,  the  instrument  is  with- 
out effect  as  an  instrument  under  seal.^     This  rule  is  very  gen- 

1  See  §1123.  Am,   Dec.    549;    Mickey    v.    Barton, 

2  See  §  1189.  194  111.  446;  62  N.  E.  802;   People 

3  See  §   1189.  v.   Organ,   27   111.   27;    79  Am.  Dec. 

4  See  §  1354.  391;     Basford    v.    Pearson,    9    All. 
iHibblewhite  v.  M'Morine,  6  M.       (Mass.)     387;    85    Am.    Dec.    764; 

&  W.   200    (disapproving  Texira   v.  Clark  v.  Butts,  73  Minn.  361;  76  N. 

Evans,  which   is  referred  to  in  the  W.    199;    Williams    v.    Crutcher,    5 

opinion  of  the  court  in  1  Anst.  228)  ;  How.   (Miss.)   71;  35  Am.  Dec.  422; 

Ingram   v.   Little,    14    Ga.    173;    58  Blacknall  v.  Parish,  6  Jones.  Eq.  (N. 


CONTRACTS    UNDER    SEAL.  879 

erally  recognized  where  the  instrument  is  so  incomplete  before 
the  blanks  are  filled  as  to  be  without  legal  effect,^  but  it  is 
denied  in  some  states  where  the  instrument  is  merely  incom- 
plete before  the  blanks  are  filled,  but  is  not  wholly  inoperative.^ 
The  cases  thus  far  discussed  are  those  in  which  the  contract 
is  required  by  law  to  be  under  seal,  and  hence  the  real 
question  is  as  to  the  validity  of  the  contract  as  a  sealed  con- 
tract, since  the  oral  contract,  even  if  complete,  does  not  comply 
with  the  requirements  of  the  law.  If,  however,  the  contract 
is  one  which  is  valid  if  not  under  seal,  it  is  not  merged  in  a 
subsequent  contract  under  seal  if  the  latter  is  incomplete  or 
invalid.*  Accordingly  the  validity  of  a  prior  simple  contract 
is  not  affected  by  a  subsequent  defective  contract  under  seal. 

§566.    Adding  party  to  sealed  contract  by  extrinsic  evidence. 

At  Common  Law  it  could  not  be  shown  by  extrinsic  evidence 
that  a  contract  under  seal  was  intended  to  bind  any  party  other 
than  those  whom  it  purported  to  bind  since  all  the  terms  of 
a  contract  under  seal,  including  the  nature  of  the  liability  im- 
posed and  the  identity  of  the  parties  upon  whom  such  liability 
is  imposed  must  be  gathered  from  the  instrument  itself.^  Hence 
it  cannot  be  shown  that  the  apparent  obligor  is  merely  the  agent 
of  an  undisclosed  principal  to  enable  the  obligee  to  sue  such 
undisclosed  principal  upon  such  sealed  contract.^  In  this  re- 
spect the  law  of  contracts  under  seal  is  sharply  contrasted  with 

C.)    70;   78  Am.  Dec.  239;   Shirley  Pac.  1046;  Wiley  v.  Moor,  17  S.  & 

V.  Burch,  16  Or.  83;  8  Am.  St.  Rep.  R.    (Pa.)   438;   17  Am.  Dec.  696. 

273;  18  Pac.  351;  Preston  v.  Hull,  4  Gray  v.  Fowler,   1  H.  Bl.  462; 

23  Gratt.    (Va.)   600;   14  Am.  Rep.  Robinson  v.   Bland,   2   Burr.    1077; 

153.  Thurston     v.      Percival,      1      Pick. 

2  Burns  v.  Lynde,  6  All.    (Mass.)  (Mass.)  415. 

305.  1  Beckham  v.  Drake,  9  M.  &  W. 

3Drury  V.  Foster,  2  Wall.  (U.  S.)  79    (93)  ;.  Morrison  v.  Bowman,   29 

24;   Brown  v.  Colquitt,  73  Ga.  59;  Cal.  337;  Nobleboro  v.  Clark,  68  Me. 

54  Am.  Rep.  867;  Swartz  v.  Ballou,  87;  28  Am.  Rep.  22;   New  England 

47  la.  188;  29  Am.  Rep.  470;  South  Dredging   Co.    v.    Granite    Co.,    149 

Berwick  v.  Huntress,  53  Me.  89;  87  Mass.  381;  21  N.  E.  947;  Deluis  v. 

Am.  Dec.  535;   Cribben  v.  Deal,  21  Cawthorn,  2  Dev.  Law.    (N.  C.)   90. 

Or.  211;   28  Am.  St.  Rep.  746;   27  2  Nobleboro  v.  Clark,  68  Me.  87; 


880  PAGE    ON    CONTRACTS. 

the  law  of  ordinary  simple  contracts  in  writing.^  So  if  an 
agent  without  authority  executes  a  sealed  instrument  in  the 
name  of  his  principal,  extrinsic  evidence  is  inadmissible  to 
show  the  agent's  intention  to  be  bound  personally.*  Accordingly 
the  liability  of  such  agent  is  in  tort.  Still  less  can  the  apparent 
obligor  use  extrinsic  evidence  when  sued  upon  a  sealed  instru- 
ment, for  the  purpose  of  showing  that  by  the  real  understand- 
ing of  the  parties,  he  was  acting  merely  as  agent  and  was  to 
incur  no  personal  liability.^  To  do  this  would  be  to  contra- 
dict the  plain  intention  of  the  parties  as  shown  in  the  contract. 
In  this  respect  the  law  of  the  contract  under  seal  is  the  same 
as  that  of  the  simple  written  contract.^ 

§567.    Modification  of  contract  under  seal  by  subsequent  agree- 
ment. 

The  original  Common  Law  rule  required  a  discharge  by  the 
act  of  the  parties  to  be  of  as  high  a  nature  as  the  instrument 
to  be  discharged.  Applying  this  rule  to  the  subject  of  the 
sealed  contract,  it  made  a  sealed  contract  or  other  sealed  in- 
strument essential  to  the  discharge  of  a  contract  under  seal.  A 
subsequent  oral  agreement  could  not  discharge  or  modify  a 
contract  under  seal  before  breach  thereof.^  Where  the  common 
forms  of  action  and  rules  of  pleading  are  still  in  force,  and  an 
action  is  brought  in  covenant,  the  entire  contract  relied  upon 
must  be  under  seal,  and  a  subsequent  oral  modification  of  the 
sealed  contract  cannot  be  enforced,   even   after  performance.* 

28    Am.    Rep.    22;    Briggs    v.    Par-  ley,   8   Exch.   668;    Smith  v.   Lewis, 

tridge,  64  N.  Y.  357;   21  Am.  Rep.  24    Conn.    624;    63    Am.   Dec.    180; 

617;    Delius    v.    Cawthorn,    2    Dev.  Goldsborough  v.  Gable,  140  111.  269 ; 

Law.    (N.  C.)   90.  15   L.    R.   A.   294;    29    N.    E.    722; 

3  See  §  606.  Jones  v.  Chamberlain,  97  111.  App. 

4  Delius  V.  Cawthorn,  2  Dev.    (N.  328;  Loach  v.  Farnum,  90  111.  368; 
C.)   90.  Kendal    v.    Talbot,    1    A.    K.    Mar. 

sLutz   V.   Linthieum,   8   Pet.    (U.  (Ky.)    321;    Brown   v.    Staples,   28 

S.)    165.  Me.  497;  48  Am.  Dec.  504;   French 

6  See  §  1233.  v.   New,  28  N.  Y.   147 ;    Sherwin  v. 

1  Countess     of     Rutland's     Case,  R.  R.,  24  Vt.  347. 
Coke   (Part  5),  256;  West  v.  Blake-  2  Phillips,  etc..  Co.  v.  Seymour.  91 

way,  2  M.  &  G.  729;  Spence  v.  Hea-  U.    S.    646    (decided   under    Illinois 


CONTRACTS    UNDER    SEAL. 


881 


Even  at  Common  Law  a  different  rule  applied  after  breach  of 
the  sealed  contract,  and  the  right  of  action  arising  therefrom 
could  be  discharged  by  parol.^  The  original  rule  has,  how- 
ever, undergone  several  modifications  in  different  jurisdictions. 
If  the  subsequent  oral  agreement  has  been  performed  it  has 
been  held  that  such  performance  operates  as  a  discharge  of 
the  original  contract  under  seal/  In  cases  of  this  sort  the  oral 
agreement  is  used  as  a  defense  and  is  not  generally  relied  on 
as  the  basis  of  an  action.  The  difficulty  caused  by  the  technical 
requirements  of  the  Common  Law  as  to  the  form  of  action  does 
not,  therefore,  arise  in  such  cases  Courts  have  in  some  juris- 
dictions gone  farther,  and  have  allowed  a  contract  imder  seal 
to  be  discharged  by  a  subsequent  oral  contract  not  under  seal, 
even  if  not  performed^  and  if  still  executory.^  Here  again  the 
oral  contract  is  generally  used  as  a  defense  and  not  as  a  basis 
of  action.  Where  no  technical  rule  as  to  form  of  action  is  in 
force,  the  modern  rule  is  that  a  contract  under  seal  may  be 
modified  by  subsequent  oral  agreement,  and  that  an  action  may 
be  brought  on  such  contract  as  thus  modified/  This  rule  is 
well  settled  in  equity*  and  is  recognized  at  law/     A  written  al- 

law)  ;   J.  C.  Winsliip  Co.  v.  Wine-  7  District    of    Columbia    v.    Iron 

man,  77  111.  App.  161.  Works,  181  U.  S.  453;  Canal  Co.  v. 

3  May  V.  Taylor,  6  M.  &  G.  261  Ray,  101  U.  S.  522 ;  Platte  Land  Co. 
(262,  note  a)  ;  Suyclam  v.  Jones,  10  v.  Hubbard,  12  Colo.  App.  465;  56 
Wend.  (N.  Y.)  180;  25  Am.  Dee.  Pac.  64;  Tuson  v.  Crosby,  172  Mass. 
552.  478;   52  N.  E.  744;  Munroe  v.  Per- 

4  Worrell  v.  Forsyth,  141  111.  22;  kins,  9  Pick.    (Mass.)    298;   20  Am. 

30  N.  E.  673;  Drury  v.  Improve-  Dec.  475;  McCreery  v.  Day,  119  N. 
ment  Co.,  13  All.  (Mass.)  168;  Sie-  Y.  1 ;  16  Am.  St.  Rep.  793;  6  L.  R. 
bert  V.  Leonard,  17  Minn.  433;  Mc-  A.  503;  23  N.  E.  198;  Homer  v. 
Creery  v.  Day,  119  N.  Y.  1 ;  16  Am.  Ins.  Co.,  67  1^J.  Y.  478;  Prouty  v. 
St.  Rep.  793;  6  L.  R.  A.  503;  23  Kreamer,  199  Pa.  St.  273;  49  Atl. 
N.   E.   198;   Davis  v.  Inscoe,   84  N.  66. 

C.  396;  Reed  v.  McGrew,  5  Ohio  375.  «  Canal  Co.  v.  Ray,  101  U.  S.  522. 

5  Ryan  v.  Dunlap,  17  111.  40;  63  » District  of  Columbia  v.  Iron 
Am.  Dec.  334;  Adams  v.  Battle,  125  Works,  181  U.  S.  453;  Fleming  v. 
N.  C.  152;  34  S.  E.  245;  McCauley  Gilbert,  3  Johns.  (N.  Y.)  528;  Le 
V.  Keller,  130  Pa.  St.  53;  17  Am.  St.  Fevre  v.  Le  Fevre,  4  S.  &  R.  (Pa.) 
Hep.   758;    18   Atl.   607.  241;   8  Am.  Dec.  696;   McCombs  v. 

eKromer  v.  Heim,  75  N.  Y.  574;      McKennan,  2  W.  &  S.  (Pa.)  216;  37 

31  Am.  Rep.  491.  Am.  Dec.  505. 

56 


882  PAGE    ON    CONTRACTS. 

teration  in  a  sealed  contract  made  after  delivery  with  the  assent 
of  all  the  parties  thereto  is  valid  and  the  new  provision  becomes 
an  essential  part  of  the  sealed  contract.^'* 

loSpeake    v.     United     States,     9      derson,  43  111.  App.  317;  Collins  v. 
Cranch  (U.  S.)  28  j  Kneedler  v.  An-      Collins,  51  Miss.  311. 


WRITTEN    SIMPLE    CONTEACTS.  883 


CHAPTER  XXXIV. 

WRITTEN  SIMPLE  CONTRACTS  NOT  REQUIRED  TO  BE 
IN  WRITING  NOR  TO  BE  PROVED  BY  WRITING. 

I.     FoBM  OF  Contract. 

§568.     Written  contracts  in  general. 

While  the  growth  of  our  law  has  been  steadily  obliterating  the 
once  important  distinction  between  the  formal  and  the  simple 
contract,  a  new  classification  of  simple  written  contracts  has 
developed.  Simple  written  contracts  are  to  be  divided  into 
three  classes  i  (1)  Contracts  which  are  in  writing,  but  which 
neither  need  to  be  in  wa'iting  nor  to  be  proven  by  writing; 
(2)  contracts  which  do  not  need  to  be  in  writing,  but  must  be 
proven  by  writing;  and  (3)  contracts  which  must  be  in  writing. 
This  classification  is  not  one  of  grade  or  rank  of  the  various 
kinds  of  contract.  They  are  all  of  the  same  rank,  being  all 
simple  contracts,  nor  is  the  dift'erence  between  them  in  the 
manner  of  execution.  These  three  classes  of  contracts  present 
many  resemblances  and  but  few  differences  in  questions  arising 
out  of  the  material  on  which  and  with  which  the  contracts  are 
to  be  written,  the  method  and  form  of  signature,  and  delivery. 
The  great  distinction  between  these  classes  of  contracts  arises  on 
the  question  of  what  in  law  can  constitute  the  contract,  for  the 
purpose  of  determining  the  terms  thereof.  They  differ  from 
one  other  upon  the  question  whether  part  of  the  contract 
may  be  written  and  part  oral,  or  whether  the  oral  agreement  of 
persons  to  a  written  contract  may  make  them  parties  to  such 
contract  without  signing  it.  The  first  of  these  classes  of  con- 
tracts to  be  discussed  will  be  those  contracts  which  the  parties 
have   actually  put  in  writing  but  which   are  not  required  by 


884  PAGE    ON    CONTRACTS. 

law  either  to  be  in  writing  or  to  be  proved  by  writing.  If  tlie 
contract  is  one  which  is  in  whole  or  in  part  in  writing,  but  is 
not  required  to  be  proven  by  a  writing,  or  to  be  in  writing,  three 
classes  of  questions  generally  arise.  (1)  Under  the  facts,  has 
a  contract  been  entered  into,  and  if  so  who  are  the  parties 
thereto;  (2)  to  what  extent  is  extrinsic  evidence  admissible 
to  show  the  intention  of  the  parties;  (3)  under  which  clause 
of  the  statute  of  limitations  does  the  contract  in  question  come. 
Tor  convenience  and  economy  of  space  contracts  which  are  re- 
quired to  be  in  writing,  such  as  negotiable  instruments,  and 
contracts  which,  are  in  writing  but  are  not  required  either  to  be 
in  writing  or  to  be  proved  by  writing,  will  be  discussed  in  this 
chapter  as  far  as  questions  of  execution  and  deliveiy  are  con- 
cerned. Contracts  required  to  be  proved  by  writing  are  dis- 
cussed elsewhere.^ 

§569.     What  materials  may  be  used. 

While  there  is  little  authority  on  the  point,  there  seems  no 
reason  why  a  written  contract  may  not  be  made  upon  any  ma- 
terial which  can  receive  a  legible  impression  of  any  kind ;  and 
there  seems  to  be  no  reason  why  any  material  which  is  capable 
of  making  a  legible  impression  may  not  be  used  as  a  means 
of  writing.  Paper  is  now  the  common  material  upon  which 
to  write,  and  ink  the  common  material  with  which  writing  is 
done,  whether  it  is  applied  by  means  of  a  pen  or  a  typewriter. 
Writing  in  lead  pencil  has,  however,  received  the  sanction  of 
the  court,^  as  where  a  signature  made  with  a  lead  pencil  has 
been  held  valid,  even  in  case  of  negotiable  contracts  which  must 
be  in  writing.^  So  a  signature  to  a  promissory  note  may  be 
printed,^  as  where  a  signature  is  lithographed  in  facsimile  and 
printed  on  the  contract.* 

iSee  Ch.  XXXV.  2  Brown  v.  Bank.  6  Hill    (X.  Y.) 

1  Myers  v.  Vanderbelt,  84  Pa.  St.  443;  41  Am.  Dec.  7.55. 

510;    24    Am.    Rep.    227;    Reed    v.  3  Weston  v.  Myers.  3.3  111.  424. 

Roark,   14   Tex.   329;    65   Am.   Dec.  *  Pennington    v.    Baehr,    48    Cal. 

127.  565. 


WEITTEIf    SIMPLE    CONTRACTS. 


885 


§570.     Necessity  of  signature. 

A  written  contract  not  required  to  l>e  in  writing  or  to  be 
proved  by  writing  is  valid  thongb  not  signed  if  the  parties 
intend  it  to  take  effect  without  signing.^  Thus  if  one  party 
signs  it  and  the  other  acquiesces  therein,^  as  by  acting  under 
it^  such  contract  is  binding,  both  on  the  party  signing,*  since 
the  liability  of  the  adversary  party  is  a  consideration  for  his 
liability,  and  on  the  party  who  does  not  sign.^  Thus  a  bill  of 
lading,*'  or  a  railroad  ticket,^  or  a  pass*  containing  contractual 


iHinote  v.  Brigman,  —  Fla-.  — ; 
33  So.  303;  Sellers  v.  Greer,  172  111. 
549;  40  L.  R.  A.  589;  50  N.  E. 
246;  Farmer  v.  Gregory,  78  Ky. 
475;  David  Bradley  v.  Bower 
(Neb.),  99  N.  W.  490. 

2  Ross  V.  Parks,  93  Ala.  153;  30 
Am.  St.  Rep.  47;  11  L.  R.  A.  148; 
8  So.  368;  Vassault  v.  Edwards,  43 
Cal.  465;  Sellers  v.  Greer,  172  111. 
549;  40  L.  R.  A.  589;  50  N.  E.  246; 
Vogel  V.  Pekoe,  157  111.  339;  30  L. 
R.  A.  491;  42  N.  E.  386;  Memory 
V.  Niepert,  131  111.  623;  23  N.  E. 
431;  Ames  v.  Moir,  130  111.  582; 
22  N.  E.  535;  Plumb  v.  Campbell, 
129  111.  101;  18  N.  E.  790;  Harlan  v. 
Gas  Co.,  133  Ind.  323;  32  N.  E. 
930;  Midland  Ry.  Co.  v.  Fisher,  125 
Ind.  19;  21  Am.  St.  Rep.  189;  8 
L.  R.  A.  604;  24  N.  E.  756;  New 
Iberia  Rice-Milling  Co.  v.  Romero, 
105  La.  439;  29  So.  876;  Western 
Ry.  Corp.  v.  Babcock,  6  Met.  (Mass.) 
356 ;  Bacon  v.  Daniels,  37  O.  S.  279 ; 
Orove  V.  Hodges,  55  Pa.  St.  504; 
Swisshelm  v.  Laundry,  95  Pa,  St. 
367;  Sylvester  v.  Born,  132  Pa.  St. 
467;  19  Atl.  337;  McPherson  v. 
Fargo,  10  S.  D.  611;  66  Am.  St. 
Rep.  723;  74  N.  W.  1057;  Lowber 
V.  Connit,  36  Wis.  176;  Vilas  v. 
Dickinson,  13  Wis.  488.  "Where  a 
party  accepts  and  adopts  a  written 
contract,  even  though  iti  is  not 
signed  by  him,  he  shall  be  deemed 
to  have  assented  to   its   terms   and 


conditions,  and  to  be  bound  by 
them."  Forthman  v.  Deters,  206  111. 
159;  69  N.  E.  97. 

3  Sellers  v.  Greer,  172  111.  549;  40 
L.  R.  A.  589;  50  N.  E.  246;  McKee 
v.  Cowles,  161  111.  201;  43  N.  E. 
785;  Vogel  v.  Pekoe,  157  111.  339;  30 
L.  R.  A.  491;  42  N.  E.  386. 

4Whatley  v.  Reese,  128  Ala.  500; 
29  So.  606;  Lavenson  v.  Wise,  131 
Cal.  369 ;  63  Pac.  622. 

5  Harts  V.  Emery,  184  111.  560;  .56 
N.  E.  865 ;  Edwards  v.  Gildemeister, 
61  Kan.  141;  59  Pac.  259;  Ameri- 
can, etc.,  Co.  v.  Walker,  87  Mo. 
App.  503 ;  Carnegie  Natural  Gas  Co. 
V.  Philadelphia  Co.,  158  Pa.  St.  317; 
27  Atl.  951;  Slayden  v.  Stone,  19 
Tex.  Civ.  App.  618;  47  S.  W.  747. 

6  Field  V.  Ry.,  71  111.  458;  Anchor 
Line  v.  Dater,  68  111.  369;  Adams 
Express  Co.  v.  Carnahan,  29  Ind. 
App.  606;  63  N.  E.  245;  64  N.  E. 
647 ;  Gaines  v.  Union  Transporta- 
tion Co.,  28  O.  S.  418;  Ryan  v.  Ry., 
65  Tex.  13;  57  Am.  Rep.  589. 

7  Walker  v.  Price,  62  Kan.  327; 
84  Am.  St.  Rep.  392;  62  Pac.  1001; 
Dangerfield  v.  Ry.,  62  Kan.  85;  61 
Pac.  405 ;  Rahilly  v.  R.  R.,  66  Minn. 
153;  68  N.  W.  853;  Gregory  v.  R. 
R.,  10  Neb.  250;  14  N.  W.  1025; 
Abram  v.  Ry.,  83  Tex.  61 ;  18  S.  W. 
321;  Drummond  v.  R.  R.,  7  Utah 
118;  25  Pac.  733. 

sQuimby  v.  R.  R.,  150  Mass.  365; 
5  L.  R.  A.  841 ;  23  N.  E.  205. 


886  PAGE    ON    CONTKACTS. 

provisions  is  valid  though  unsigned.  Thus  a  treasurei  who 
assents  to  a  bond  purporting  to  be  given  by  him  for  money 
received,  but  does  not  sign  it,  is  liable  thereon.®  So,  while  a 
guardian's  bond  which  is  assented  to  by  the  guardian,  but  not 
signed  by  him,  is  not  good  as  a  statutory  bond  it  may  be  good 
as  a  Common  Law  bond."  A  gave  an  order  for  a  mowing 
machine  to  B's  agent,  X.  The  order  w.as  signed  by  A.,  and 
provided  for  reserving  to  A  "  the  full  benefit  of  the  warranty 
endorsed  hereon."  On  the  back  of  the  order  was  a  printed 
warranty  with  vendor's  signature  printed  thereunder,  and  the 
blanks  unfilled.  It  was  held  that  such  reference  made  the 
warranty  a  part  of  the  written  contract,  and  accordingly  the 
vendor's  acceptance  of  the  order  made  the  warranty  as  binding 
upon  him  as  if  he  had  signed  it.^^  If  it  is  the  imderstanding 
of  the  parties  that  a  contract  is  not  to  "he  binding  upon  the 
person  named  therein  until  he  signs  it,  his  omission  or  refusal 
to  sign  it  will,  prevent  it  from  being  his  obligation.^^  The  ques- 
tion of  the  necessity  of  signature  by  the  parties  to  a  written 
contract  is  complicated  with  the  doctrine  of  mutuality.  Written 
agreements  are  made  which  impose  obligations  on  one  party, 
provided  the  other  person  will  do  certain  things,  but  do  not, 
expressly  or  by  implication,  require  such  other  person  to  do  such 
things.  Such  written  agreement  is  in  the  nature  of  a  written 
offer.  If  the  party  upon  whom  obligation  is  not  imposed 
performs  the  acts  upon  which  the  obligation  of  the  other  party 
was  conditioned,  this  amounts  to  an  acceptance,  and  the  contract 
is  in  legal  effect  a  written  contract.^^  Thus,  a  contract  signed  by 
a  lumber  company  to  pay  a  certain  amount  for  water  if  a 
water  company  would  extend  its  mains  to  the  lumber  yard, 
is  binding  on  the  lumber  company  as  a  written  contract  if  the 
water  company  extends  the  mains  in  accordance  with  the  con- 


aSenoiir  v.  Masehinat    (Ky.),   31  Am.   St.   Rep.   533;    27    >?.   W.   579. 

S.  W.  481.  12  Meyer   v.   Labau,    51    La.   Ann. 

10  Painter    v.    Maiildin,    119    Ala.  1726;  26  So.  463. 

88 ;  72  Am.  St.  Rep.  902 ;  24  So.  769.  is  Phmib  v.  Campbell,  129  111.  101 ; 

"Grieb  v.  Cole,  60  Mich.  397;   1  18  N,  E.  790. 


WRITTEN    SIMPLE    CONTRACTS.  887 

dition  of  such  written  agreement/*  A  person  upon  whom 
obligations  are  not  imposed  by  such  writing,  may  subsequently 
accept  such  written  offer  orally  and  agi'ee  to  perform  the  con- 
ditions therein  indicated.  This  contract  is  valid  as  between 
the  parties,  but  as  part  of  it  consists  of  oral  terms,  it  is  for 
technical  purposes  treated  as  an  oral  contract/^  The  part  of  it 
which  is  in  writing  falls  within  the  parol  evidence  rule,  how- 
ever, and  can  not  be  contradicted  by  extrinsic  evidence  any 
more  than  if  the  entire  contract  were  in  writing. 

§571.    Place  of  signature. 

In  the  absence  of  statute  specifying  in  what  part  of  the 
contract  the  signature  must  be  written,  a  signature  may  be 
written  anywhere  upon  the  contract/  While  the  name  must 
be  written  with  the  intention  that  it  shall  operate  as  an  execu- 
tion of  the  contract  in  order  to  constitute  a  signature,  this  de- 
pends upon  a  different  principle,  and  has  nothing  to  do  with 
the  place  at  which  the  name  is  to  be  written.  Thus  a  signature 
may  be  written  in  the  body  of  the  contract  itself.^  So,  where  a 
written  contract  contained  the  provision,  "  this  agreement  fur- 
ther continued  below,"  followed  by  the  signatures  of  the  parties, 
below  which  were  additional  terms  of  the  contract,  such  con- 
tract was  held  to  be  properly  signed.^  If  A  signs  near  the 
lower  right-hand  corner  of  the  instrument,  opposite  a  seal, 
and  B  signs  a  little  to  the  left  and  slightly  below  A's  signature, 
it  has  been  held  that  this  is  p'ima  facie  A's  instrument  and  that 
B  is  a  witness  thereto.*  A  statute  which  provides  that  a  con- 
tract must  be  "  subscribed,"  has  been  held  to  require  a  signature 
at  the  end  of  the  instrument,  and  to  make  invalid  a  signature  in 

1*  Muscatine  Water  Co.  V.  Lumber  104;     Noe     v.     Hodge,     3     Humph. 

Co.,   85   la.    112;    39   Am.   St.   Rep.  (Tenn.)    162. 

284;   52  N.  W.  108.  2  Noe  v.  Hodge,  3  Humph.  (Tenn.) 

isHulbut  V.  Atherton,  59  la.  91;  162;    Fulshear   v.   Eandan,    18   Tex. 

12  N.  W.  780.  275;   70  Am.  Dee.  281. 

1  Dickson  v.  Conde,  148  Ind.  279;  3  Dickson  v.  Conde,  148  Ind.  279; 

46   N.   E.   998;    Coddington  v.   God-  46  N.  E.  998. 

dard,   16  Gray    (Mass.)    436;   Saun-  4  steininger   v.   Hoch,   39   Pa.   St, 

ders    V.    Hackney,    10    Lea     (Tenn.)  263;  80  Am.  Dec.  521. 


PAGE    ON    CONTRACTS. 

tlie  body  of  the  instrument.^  A  contract  required  by  law  to 
be  in  writing,  as  a  negotiable  instrument,  may  be  signed  at  any 
part  thereof,  as  in  the  body  of  the  note®  or  on  the  back/ 

§572.     Form  of  signature. —  Name. 

In  the  absence  of  statute  any  visible  mark  upon  the  paper, 
intended  by  a  party  to  be  his  signature  thereto,  is  sufficient  as 
his  signature.  The  common  and  most  approved  form  of  sig- 
nature is  for  the  party  to  write  his  full  name  with  his  own  hand. 
This  is  not,  however,  necessary.  If  a  person  signs  by  a  Chris- 
tian name  alone  it  is  sufficient.^  Thus  a  mortgage  of  realty  in 
which  the  name  of  the  grantor's  wife  appears  in  full  in  the 
premises  and  in  the  acknowledgment,  although  she  signs  by  her 
Christian  name  alone  is  valid.^  So  a  deed  has  been  held  valid 
where  the  true  name  of  the  grantor  appeared  in  the  premises 
and  in  the  certificate  of  acknowledgment,  although  when  he 
signed  he  wrote  his  name  "  Edmund  "  instead  of  "  Edward."^ 
So  a  signature  by  one's  surname  alone  is  sufficient.*  A  signa- 
ture may  be  valid  although  it  is  not  the  true  name  of  the  party 
signing.  Thus  one  who  enters  into  a  contract  not  required 
by  law  to  be  in  writing,  under  an  assumed  name,  he  is  bound 
thereby.^  Thus,  a  party  to  a  contract  was  named  William 
Couture.  "  Couture  "  being  the  French  for  "  seam,"  he  signed 
his  name  to  the  contract  "  William  Seam."     Such  signature  was 

5  Globe  Accident  Co.  v.  Reid,  19  ciety  v.  Edmonds,  95  Tenn.  53;  31 
Ind.  App.  203;  47  N.  E.  947;  modi-       S.  W.   168.     See  §  1231. 

fied,  49  N.  E.  291.  i  Walker    v.    Walker,    175    Mass. 

6  Taylor  V.  Dobbins,  1  Stra.  399.  349;    56   N.   E.   601.      (Citing   San- 

7  Good  V.  Martin,  95  U.  S.  90;  born  v.  Flagler,  9  All.  (Mass.)  474; 
Quin  V.  Sterne,  26  Ga.  223;  71  Am.  Peck  v.  Vandemark,  99  X.  Y.  29; 
Dec.  204;  Allison  v.  Circuit  Judge,  1  N.  E.  41.) 

104    Mich.    141;    62    N.    W.     152;  2  Zann  v.  Haller,  71  Ind.  136;   36 

Schultz  V.  Howard,  63  Minn.  196;  56  Am.  Rep.  193. 

Am.   St.  Rep.  470;    65  N.  W.   363;  3  Middleton  v.  Findla,  25  Cal.  76. 

Salisbury  v.  Bank,  37  Neb.  872;  40  *  Hodges  v.  Nalty,   113  Wis.  567; 

Am.   St.   Rep.   .527;    56  K  W.   727;  89  N.  W.  535. 

Seymour  v.  Mickey.   15   O.   S.   515;  s  Scanlan   v.    Grimmer,    71    Minn. 

Bright  V.  Carpenter,  9  Ohio  139;  34  351;  70  Am.  St.  Rep.  326;  74  N.  W. 

Am.  Dec.   432;    Provident,   etc.,   So-  146. 


WRITTEJSr    SIMPLE  ■  CONTRACTS.  889 

held  to  be  valid.®  So  a  promissory  note  signed  by  the  maker's 
initials  is  valid.'  Misspelling  the  maker's  name  does  not  invali- 
date his  signature  to  a  promissory  note  if  he  can  be  identified. 
Thus  a  maker  signed  a  note  payable  to  himself  and  omitted  one 
letter  from  such  signature.  He  then  indorsed  it,  spelling  his 
name  correctly  in  the  indorsement.  This  was  held  to  be  a  valid 
note.* 

§573.    Mark. 

In  the  absence  of  some  statute  to  the  contrary,  a  signature 
by  mark  affixed  by  the  party  whose  signature  it  is  intended  to 
be,  is  sufficient,^  Thus  where  a  grantor  signed  by  mark  im- 
mediately below  a  clause  which  contained  his  name,  and  opposite 
a  seal,  such  signature  was  held  to  be  sufficient."  It  is  not  neces- 
sary that  an  attesting  witness  sign  in  addition  thereto.^  Thus 
a  signature  to  a  mortgage  by  mark,  without  the  signature  of  any 
attesting  witness  thereto  is  sufficient."*  A  signature  by  mark  is 
sufficient,  even  if  the  name  of  the  person  whose  mark  is  affixed 
is  not  added  by  any  one.^  The  signature  to  an  instrument  re- 
quired by  law  to  be  in  writing,  as  a  promissory  note,®  may  be 
made  by  mark.  Thus  in  a  case  often  cited'  an  indorsement  in 
lead-pencil  of  the  figures  "  1.  2.  8.,"  intended  as  a  signature  in 
a  contract  of  indorsement  of  a  bill  of  exchange,  was  held  valid. 


6  Augur  V.  Couture,  68  Me.  427.  82  Am.   St.  Rep.   186;   26  So.   898; 

7  Weston  V.  Myers,  33  111.  424.  Finlay  v.  Prescott,  104  Wis.  614;  47 

8  Bank   v.    Sherer,    108    Cal.    513;  L.  E.  A.  695;  80  N.  W.  930. 

41  Pac.  415.  4Meazels  v.  Martin,  93  Ky.  50;  IS 

1  Bates   V.   Harte,    124   Ala.   427;  S.  W.  1028. 

82  Am.   St.  Rep.   186;    26   So.   898;  s  Zimmerman  v.   Sale,  3  Rich.  L. 

Foye  V.  Patch,  132  Mass.  105;  San-  (S.  C.)    76. 

born  V.  Cole,  63  Vt.  590;   14  L.  R.  6  Handyside    v.    Cameron,    21    111. 

A.  208;  22  Atl.  716;  Finlay  V.  Pres-  588;    74    Am.    Dec.    119;    Shank   v. 

cott,    104    Wis.    614;    47    L.    R.    A.  Butsch,  28  Ind.  19 ;  Staples  v.  Bank, 

695;   80  N.  W.  930.  98  Ky.  4.51;    33   S.  W.  403;   Lyons 

2  Devereux  V.  McMahon,  108  N.  C.  v.   Holmes,    11    S.   C.   429;    32   Am. 
134;    12    L.    R.    A.    205;    12    S.    E.  Rep.  483. 

902.  7  Brown  v.  Bank,  6  Hill    (N".  Y.) 

3  Bates   V.   Harte,    124   Ala.   427;  443;  41  Am.  Dec.  755. 


890  PAGE    ON    CONTRACTS. 

Siicli  signature  is  valid  tlioiigli  no  attesting  witness  signs.®  If 
a  note  is  signed  by  the  maker's  mark,  his  name  being  written 
thereto  and  an  attesting  witness  signs,  proof  of  such  witness's 
fcigiiature  is  sufficient  where  he  is  dead  at  the  time  of  the 
triak®  Anyone  who  is  a  competent  witness  at  law  may  act 
as  attesting  witness  to  a  note.  Thus,  where  by  statute  the  par- 
ties and  their  wives  are  competent  witnesses  in  an  action  at  law, 
the  wife  of  the  payee^"  may  act  as  attesting  witness  to  a  note. 
The  construction  of  some  statutes  requires  a  signature  by  mark 
to  be  attested  by  the  signature  of  an  attesting  witness  Avho  can 
write ;  as  this  provision  is  made  to  obviate  the  chance  of  fraud, 
the  payee  cannot  be  such  subscribing  witness. ^^  A  promissory 
note  signed  by  the  maker  by  mark  in  the  presence  of  the  payee, 
no  third  person  being  present,  is  therefore  invalid.^" 

§574.     Signature  by  another. 

If  a  stranger  to  the  contract  signs  the  name  of  a  party  to  the 
contract  in  the  presence  of  such  person,  and  with  his  authority, 
this  is  a  sufficient  signature.^  Thus  where  a  grantor  authorized 
the  acknowledging  officer  to  sign  for  him,  and  such  signature 
was  made  in  grantor's  presence,  it  was  held  to  be  valid."  The 
fact  that  the  party  to  the  contract,  at  the  time  of  such  execu- 
tion, added  that  she  would  have  nothing  to  do  with  the  contract, 
does  not  affect  its  validity  where  not  known  to  the  adversary 
party. ^  A  surety,  who  was  not  at  that  time  in  antagonistic 
relations  with  his  principal,  may  sign  the  name  of  such  princi- 
pal, and  the  latter  is  bound  thereby.*     If  a  party  to  an  instru- 

8  Shank  v.  Butsch,  28  Ind.  19;  i  Jansen  v.  McCahill,  22  Cal.  563 ; 
Staples  V.  Bank,  98  K-y.  451;  33  S.  83  Am.  Dec.  84;  Wyatt  v.  Guano 
W.  403.  Co.,  144  Ga.  375;  40  S.  E.  237;  Nye 

9  Sanborn  v.  Cole,  63  Vt.  590;   14  v.  Lowry,  82  Ind.  316. 

L.  R.  A.  208;  22  Atl.  716.  2  Lewis  v.   Watson,   98  Ala.  479; 

10  Shepard  v.  Parker,  97  Me.  86 ;  39  Am.  St.  Eep.  82 ;  22  L.  R.  A. 
53   At!.   879;   Alexander  v..  Hanley,      297;  13  So.  570. 

64  Vt.  361;  24  Atl.  242.  3  Wyatt   v.    Guano    Co.,    114    Ga. 

ii^a?  parte  Miller,  49  Ark.  18;  4  375;  40  S.  E.  237. 

Am.  St.  Rep.  17;  3  S.  W.  883.  4  Wright  v.  Forgy,  126  Ala.  389; 

12  Sivils  V.  Taylor.  12  Okla.  47;  69  28  So.  198. 
Pae.  867. 


WRITTEN    SIMPLE    CONTRACTS.  891 

ment  affixes  his  mark  thereto  after  another  person  has  signed 
his  name,  in  his  presence,  and  by  his  authority,  the  instrument 
is  valid,  if  either  form  of  signature  complies  with  the  law. 
Thus,  A  signed  B's  name  to  an  instrument  in  B's  presence, 
and  by  B's  authority,  and  B  then  added  his  mark.  The  statute 
required  that  a  mark  must  be  attested  by  a  witness,  ^o  attest- 
ing witness  signed.  Such  signature,  however,  was  held  to  be 
valid.^  In  a  written  contract  which  is  not  required  by  law  to 
be  proven  by  writing,  or  to  be  in  writing,  one  party  to  a  contract 
may  affix  the  signature  of  the  other  party  thereto  in  his  pres- 
ence and  at  his  request.®  If  a  stranger  to  a  note  signs  the 
maker's  name  thereto  in  the  presence  of  the  maker  and  at  his 
request,  such  signature  is  valid.'^  At  A's  request  B  wrote  A's 
name  to  a  note  and  A  then  made  his  mark  thereto.  This  was 
held  valid  as  a  signature  by  A  for  B,  even  if  A's  signature  by 
mark  was  invalid  as  not  complying  with  the  statutory  require- 
ment that  A's  signature  by  mark  must  be  attested  by  a  witness 
who  could  write.^  The  fact  that  B  then  signed  the  note  by 
B's  own  name  as  surety  for  A  did  not  invalidate  this  mode  of 
signature.  Signature  by  one  duly  authorized  is  sufficient 
whether  in  the  presence  of  the  maker  or  not.^ 

§575.     Adoption  of  signature. 

In  absence  of  statute  a  party  to  a  contract  may  adopt  a  signa- 
ture thereto  as  his  own,  even  if  made  without  authority.^  Thus 
delivery  of  such  an  instrument  may  be  an  adoption  of  the  sig- 
nature thereon."  So  the  principal  in  a  power  of  attorney  may 
adopt  the  signature  thereto,  by  an  acknowledgment  of  the  sig- 
nature as  his  own.^     A  certificate  purporting  to  be  signed  by 

5  Wright  V.  Forgy,  126  Ala.  389;  9  Blaiikenship  v.  Ely,  98  Va.  359; 
28   So.   198.  36  S.  E.  484. 

6  Crow  V.  Carter,  5  Ind.  App.  169 ;  i  Bowman   v.   Rector    (Tenn.    Ch. 
31  N.  E.  937.  App.),  59  S.  W.  389. 

7  Crumrine   v.   Crumrine,    14   Ind.  -  Davis    v.    Cotton    Co.,    101    Gi. 
App.  641;  43  N.  E.  322.  128;  28  S.  E.  612. 

8  Wright  V.  Forgy,  126  Ala.  389;  3  Munger   v.    Baldridge,    41    Kan. 
28  So.  198.  236;   13  Am.  St.  Rep.  273;  21  Pae. 

159. 


892  PAGE    ON    CONTRACTS. 

highway  commissioners  was  in  fact  signed  by  the  clerk.  The 
commissianers  afterward  made  an  endorsement  on  the  back  of 
such  certificate,  and  sig-ned  such  endorsement.  This  was  held 
to  amount  to  an  adoption  of  the  signatures  on  the  face  of  the 
instrument.*  So  a  grantor  may  adopt  a  signature  to  a  deed 
as  his  own.^  Even  if  by  mistake  he  acknowledges  a  forged 
deed,  thinking  it  to  be  one  that  he  had  previously  signed,  he 
can  not  deny  the  validity  of  such  deed  against  a  bona  fide  pur- 
chaser.*' The  maker  of  a  negotiable  instrument  may  adopt  the 
signature  thereto  as  his  own.'^ 

§576.     Effect  of  omission  of  revenue  stamp. 

The  act  of  Congress,  approved  June  13,  1898,  to  provide  ways 
and  means  to  meet  war  expenditures  and  for  other  purposes, 
provided  that  revenue  stamps  must  be  placed  on  certain  kinds 
of  instruments ;  made  omission  so  to  do  a  misdemeanor,  punish- 
able by  fine  or  imprisonment  or  both ;  made  certain  provisions 
concerning  the  validity  of  instruments  from  which  such  stamps 
v^^ere  omitted,  and  other  provisions  concerning  the  use  of  such 
instruments  as  evidence.  The  earlier  acts  of  1862,  1864  and 
1866  contained  similar  provisions.  The  effect  of  such  omission 
will  therefore  be  considered  without  discussion  of  the  specific 
statute  under  which  the  case  was  decided.  The  revenue  stamp 
is  no  part  of  the  instrument.^  A  petition  not  averring  that  the 
instrument  is  stamped  is  not  demurrable.^  The  stamp  need  not 
therefore  be  described  in  an  indictment  for  forging  such  instru- 
ment.^    An  unstamped  note  may  be  the  subject  of  forgery.* 

4  Just  V.  Wise  Township,  42  Mich,  ris    v.   McMorris,   44   Miss.    441 ;    7 

573;   4  K.  W.  298.  Am.   Rep.   695. 

sBlaisdell  v.  Leach,  101  Cal.405;  2  Ebert  v.   Gitt,   95   Md.    186;    52 

40  Am.  St.  Rep.  65;  35  Pac.  1019.  Atl.  900. 

6Blaisdell  V.  Leach,  101  Cal.  405;  3  Laird    v.     State,    61    Md.    309; 

40  Am.  St.  Rep.  65 ;  35  Pac.  1019.  State  v.  Mott,  16  Minn.  472 ;  10  Am. 

TBartlett    v.    Tucker,    104    Mass.  Rep.  152;  Miller  v.  People,  52  N.  Y. 

336;   6  Am.  Rep.  240.  304;  11  Am.  Rep.  706;  Beer  v.  State, 

iThomasson    v.    Wood,    42    Cal.  42   Tex.   Cr.  P.ep.   505;    96   Am.   St. 

416;    Green   v.    Holway,    101    Mass.  Rep.  810;  60  S.  W.  962. 

243;     3    Am.    Rep.    339;    Trull    v.  ■*  Kin^  v.   State.  42  Tex.  Cr.  Rep. 

Moulton,  12  All.   (Mass.)   396;  Mor-  108;  96  Am.  St.  Rep.  792;  57  S.  W. 


WRITTEN    SIMPLE    CONTRACTS.  893 

While  the  stamp  is  not  technically  a  part  of  the  instrument,  the 
eifeet  of  its  omission  on  the  use  of  the  instrument  as  evidence 
must  be  considered.  The  federal  statute  of  1898  provides  that  an 
instrument  not  duly  stamped  shall  not  be  ''  admitted  or  used  as 
evidence  in  any  court."^  This  clause  would  appear  at  first 
glance  to  make  a  class  of  contracts  somewhat  like  those  under 
the  statute  of  frauds  —  that  is,  a  class  of  contracts  on  which  no 
action  can  be  brought,  since  the  contract  itself  cannot  be  proved. 
In  spite  of  the  broad  language  of  the  statute,  however,  this  has 
been  held  to  apply  only  to  the  United  States  courts  and  to  have 
no  application  whatever  to  state  courts.^  This  holding  is  based 
on  the  theory  that  the  power  of  Congress  to  make  rules  of  evi- 
dence for  state  courts  is  very  doubtful,  and  that,  accordingly, 
the  statute  will  be  construed  as  having  "  a  meaning  which  will 
give  it  full  operation  and  effect  within  the  recognized  scope  of 
the  constitutional  authority  of  Congress."^  Some  courts  go 
farther  and  base  their  holdings  chiefly  on  the  proposition  that 
whatever  the  intention  of  Congress,  it  had  no  power  to  make 
rules  of  evidence  for  the  state  courts,®  while  other  courts  have 

840;   Thomas  v.   State,  40  Tex.   Cr.  reyson,    4    Nev.    124;    Maynard    v. 

Rep.  562;   76  Am.  St.  Rep.  740;  46  Johnson,  2  Nev.  25)  ;  Cassidy  v.  St. 

L.  R.  A.  454;   51  S.  W.  242;   State  Germain,  22   R.   I.   53;   46  Atl.   35; 

V.  Peterson,  129  N.  C,  556 ;  85  Am.  Kennedy  v.  Roundree,  59  S.  C.  324 ; 

St.  Rep.  756;  40  S.  E.  9.  82  Am.  St.  Rep.  841;  37  S.  E.  942; 

5  Section  14  of  Act.  Ins.  Co.  v.  Estes,  106  Tenn.  472 ;  82 

GBumpass    v.    Taggert,    26    Ark.  Am.   St.   Rep.   892;    62   S.   W.   149; 

398;    7   Am.   Rep.   623;    Garland   v.  sub    nomine,    Southern    Ins.    Co.    v. 

Gaines,   73   Conn.   662;    84   Am.   St.  Estes,  52  L.  R.  A.  915;   Sporrer  v. 

Rep.    182;    49    Atl.    19;    Griffin    v.  Eifler,  1  Heisk.   (Tenn.)   633;  Miller 

Ranney,    35    Conn.    239;    Small    v.  v.    Morrow,    5    Heisk.     (Tenn.)     689 

Slocumb,   112   Ga.  279;    81   Am.  St.  (reversing    on    rehearing    Miller    v. 

Rep.  50;   53  L.  R.  A.  130;  37  S.  E.  Morrow,     3     Cold.     (Tenn.)      587); 

481;   United  States  Express  Co.  v.  Walt  v.  Walsh,   10  Heisk.    (Tenn.) 

Haines,     48     111.     248;     Bunker     v.  314. 

Green,   48   111.    243 ;    Green   v.   Hoi-  ^  Carpenter  v.  Snelling,   97  Alass. 

■way,    101    Mass.    243;    3    Am.    Rep.  452,  458;   quoted  in  Knox  v.  Rossi, 

339;  Carpenter  v.  Snelling,  97  Mass.  25   Nev.   96,    100;    83  Am.   St.   Rep. 

452;     Sammons     v.     Halloway.     21  566;  48  L.  R.  A.  305;   57  Pac.  179. 

Mich.   162;   4  Am.  Rep.  465;   Knox  « Duffy   v.   Hobson,   40   Cal.   240; 

V.   Rossi,    25   Nev.   96;    83   Am.    St.  6  Am.  Rep.  617;  Bowen  v.  Byrne,  55 

Rep.  560;  48  L.  R.  A.  305;   57  Pac.  111.   467;   Latham  v.   Smith,   45   111. 

179     (overruling    Wayman    v.    Tor-  29;    Wallace    v.    Cravens,    34    Ind. 


894 


PAGE    ON    CONTRACTS. 


preferred  to  base  their  decision  upon  the  construction  of  the 
statute.^  Some  states  have  held,  contrary  to  the  foregoing 
views,  that  such  statutes  applied  even  to  state  courts.^"  The 
next  point  to  be  considered  is  the  validity  of  a  contract  from 
■which  a  revenue  stamp  is  omitted,  contrary  to  the  statute,  apart 
from  questions  of  its  use  as  evidence.  The  act  of  Congress, 
approved  June  13,  1898,  provided"  that  "  such  instrument, 
document,  or  paper,  not  being  stamped  according  to  law  shall  be 
deemed  invalid  and  of  no  effect."  This  has  been  held  not  to 
apply  to  cases,  otherwise  covered  by  the  act,  where  the  omission 
to  affix  a  stamp  was  not  fraudulent ;  but  occurred  through  mere 
inadvertence.^"  Hence  on  compliance  with  the  provisions  of 
the  statute  for  supplying  stamps  which  had  been  omitted  inad- 
vertently the  instrument  is  as  valid  as  if  originally  stamped.^^ 
If  the  instrument  is  one  from  which  the  stamp  has  been  omitted 
with  fraudulent  intent,  we  are  confronted  with  the  question 
whether  Congress  has  power  to  invalidate  an  instrument  whose 


534;  Hunter  v.  Cobb,  1  Bush.  (Ky.) 
239;  Sporrer  v.  Eifler,  1  Heisk. 
(Tenn.)  633;  Schultz  v.  Herndon, 
32  Tex.  390. 

9  Trowbridge  v.  Addoms,  23  Colo. 
318;  48  Pac.  535;  Clemens  v.  Con- 
t-ad,  19  Mich.  170;  People  v.  Gates, 
43  N.  Y.  40;  Stewart  v.  Hopkins, 
30  O.  S.  502;  Talley  v.  Robinson, 
22  Gratt.  (Va.)  888;  Weltner  v. 
Riggs,  3  W.  Va.  445. 

10  Muscatine  v.  Sterneman,  30  la. 
526;  6  Am.  Rep.  685;  Chartiers, 
etc.,  Co.  V.  McNamara,  72  Pa.  St. 
278;   13  Am.  Rep.  673. 

11  Section  13  of  Act. 

12  Campbell  v.  Wilcox,  10  Wall. 
(U.  S.)  421;  Trowbridge  v.  Ad- 
doms, 23  Colo.  518;  48  Pac.  535; 
Craig  V.  Dimock,  47  111.  308 ;  Mitch- 
ell  V.  Ins.  Co.,  32  la.  421  (overruling 
Muscatine  v.  Sterneman,  30  la.  526; 
6  Am.  Rep.  685;  Berry  v.  Boyd,  28 
la.  410;  Botkins  v.  Spurgeon,  20 
la.  598)  ;   Emery  v.  Hobson,  63  Me. 


33;  Black  v.  Woodrow,  39  Md.  194; 
Moore  v.  Quirk,  105  Mass.  49;  7  Am. 
Rep.  499;  Green  v.  Holway,  101 
Mass.  243;  3  Am.  Rep.  339;  Cab- 
batt  V.  Radford,  17  Minn.  320;  Mor- 
ris V.  McMorris,  44  Miss.  441 ;  7 
Am.  Rep.  695;  Stewart  v.  Hopkins, 
30  O.  S.  502;  Gaylor  v.  Hunt,  23 
0.  S.  255;  Harper  v.  Clark,  17  O.  S. 
190;  Atkins  v.  Plympton,  44  Vt. 
21;  Smith  v.  Scott,  31  Wis.  437; 
Fenelon  v.  Hogaboom,  31  Wis.  172. 
Insurance  policy,  Ins.  Co.  v.  Estes, 
106  Tenn.  472;  82  Am.  St.  Rep.  892; 
62  S.  W.  149;  sub  nomine.  South- 
ern Ins.  Co.  V.  Estes,  52  L.  R.  A. 
915,  Assignment  of  mortgage,  Win- 
gert  V.  Ziegler,  91  Md.  318;  80  Am. 
St.  Rep.  453;  51  L.  R.  A.  316;  46 
Atl.  1074.  Note,  Rowe  v.  Bowman, 
183  Mass.  488;  67  N.  E.  636. 

13  Wingert  v.  Ziegler,  91  Md.  318; 
80  Am.  St.  Rep.  453;  51  L.  R.  A. 
316;  46  Atl.  1074;  Cooke  v.  En- 
gland, 27  Md.  14;  92  Am.  Dec.  618. 


WEITTEN    SIMPLE    CONTRACTS.  895 

validity  depends  in  other  respects  upon  state  law,  for  fraudulent 
and  wilful  omission  of  revenue  stamps.  Upon  this  question  we 
find  that  it  is  generally  either  assumed  or  decided  that  Congress 
has  no  power  to  make  such  instruments  invalid ;  and  hence  they 
are  held  to  be  valid  even  if  the  requisite  revenue  stamp  is  omit- 
ted.^* It  is  true  that  in  some  of  the  cases  cited  this  point  is 
scarcely  touched  upon ;  but  it  is  assumed  necessarily  in  these 
decisions :  since  the  courts  discuss  the  admissibility  of  the  in- 
strument in  evidence,  and  on  holding  it  to  be  admissible,  often 
even  in  cases  where  the  revenue  stamp  is  omitted  wilfully,  de- 
cide the  case  on  the  theoiy  that  if  admissible  in  evidence  the 
instrument  must  necessarily  be  enforceable.  If  the  statute 
does  not  specifically  provide  that  the  instrument  is  to  be  void  if 
the  stamp  is  omitted,  omission  of  the  stamp  will  not  make  it 
void.^^ 

II.     Deliveey. 
§577.     Nature  of  delivery. 

The  question  as  to  the  existence  and  nature  of  delivery  ma;^ 
take  two  distinct  forms:  (1)  has  the  instrument  been  delivered 
in  any  way  by  the  obligor,  so  as  to  take  effect  at  all;  and  (2) 
if  it  has  been  delivered  by  him  is  the  delivery  one  which  takes 
effect  at  once  or  is  it  a  delivery  in  escrow  ?  These  questions 
will  be  considered  in  the  following  sections.  Whether  posses- 
sion of  an  instrument  by  the  obligee  raised  a  presumption  of 
delivery,  raises  a  question  upon  which  there  is  a  conflict  of 
authority.  Possession  of  a  negotit^ble  note  has  been  held  to 
raise  a  presumption  of  delivery.^     It  has  been  held  that  delivery 


i*DuflFy  V.  Hobson,  40  Cal.  240;  64  S.  W.  642;   Sporrer  v.  Eifler,  1 

6  Am.  Rep,  617;   Bowen  v.   Byrne,  Heisk,    (Tenn.)    633. 

55  111.  467 ;  Hanf ord  v.  Obrecht,  49  is  Carothers    v.    Covington     ( Tex. 

111.   146;   Latham  v.  Smith,  45  111.  Civ.  App.),  27  S.  W.  1040. 

29;  Prather  v.  Zulauf,  38  Ind.  155;  i  Garrigus  v.  Missionary  Society, 

Steeley's  Creditors  V.  Steeley  (Ky.),  3   Ind.   App.   91;    50  Am.   St.   Rep. 

262;  28  N.  E.  1009. 


896  PAGE    OiSr    CONTEACTS. 

of  a  non-negotiable  instrument  cannot  be  inferred  from  the 
mere  possession  thereof  by  the  obligee." 

§578.     Necessity  of  delivery. 

A  written  contract  which  is  not  required  by  law  to  be  proved 
by  wi'iting,  or  to  be  in  writing,  is  of  no  effect  unless  it  is 
delivered,  unless  there  is  a  valid  oral  contract  between  the 
parties,  intended  by  the  parties  to  be  effective  before  delivery. 
Thus,  a  written  subscription  to  a  corporation  is  of  no  validity 
unless  it  is  delivered.^  A  made  a  mortgage  to  B  to  secure  a 
loan  made  by  X.  B  took  no  part  in  the  transaction,  and  did 
not  know  of  the  existence  of  the  mortgage.  It  was  held  that 
such  mortgage  was  not  delivered,  and  never  took  effect.^  So 
a  deed  which  has  not  been  delivered  is  of  no  validity,^  and  may 
be  cancelled  in  equity.*  Accordingly,  where  a  corporation  has 
executed  a  written  contract,  the  true  date  of  the  contract  is 
the  date  of  the  execution  and  delivery,  and  not  the  date  of  the 
resolution  of  the  corporation.^  So,  if  a  due  bill  is  signed 
and  retained  by  the  person  signing  it,  no  delivery  exists,  and  it 
never  takes  effect.^  If  delivery  is  necessary  to  give  the  con- 
tract validity,  the  instrument  cannot  be  delivered  after  the 
maker's  death. '^  Thus,  A  executed  a  note  payable  to  B,  and 
told  B  that  he  had  done  so.  B  never  saw  the  note,  and  on  A's 
death  it  was  found  among  his  papers.  It  was  held  that  there 
was  no  delivery.®  So  an  indorsed  note  cannot  be  delivered 
after  the  death  of  the  indorser  so  as  to  put  his  contract  into 
effect." 


2  Wilbur  V.  Stoepel,  82  Mich.  344 ;  39   Am.   St.   Rep.   67;    11    So.    743. 

21  Am.  St.  Rep.  568;  46  N.  W.  724.  5  Keystone,  etc.,  Co.  v.  Bates,  196 

1  Davis  V.  Kneale,  103  Mich.  323;  Pa.  St.  .566;  46  Ail.  887. 

61  N.  W.  508;  s.  c,  97  Mich.  72;  56  «  Cann  v.  Cann,  40  W.  Va.  138;  20 

N.  W.  220;  White  v.  Crosly    (Tex.  S.  E.  910. 

Civ.  App.),  51  S.  W.  350.  7  Michigan    Ins.    Co.    v.    Leaven- 

2  Shirley  v.   Burch,   16  Or.   83;    8  worth,  30  Vt.  11. 

Am.  St.  Rep.  273;  18  Pac.  351.  »  Purviance  v.  .Jones,  120  Ind.  162; 

3  Gore  V.  Dickinson,  98  Ala.  363;  16  Am.  St.  Rep.  319;  21  X.  E.  1099. 
39  Am.  St.  Rep.  67  ;  11  So.  743.  »  Clark    v.    Sigourney,    17    Conn. 

4  Gore  v.  Dickinson,  98  Ala.  363;  511;  Clark  v.  Boyd,  2  Ohio  56. 


WRITTEN    SIMPLE    CONTEACTS.  897 

§579.     Elements  of  delivery. 

Delivery  consists  of  two  distinct  elements:  (1)  A  party 
delivering  tlie  instrument  must  surrender  control  of  the  same, 
and  the  other  party  must  take  either  actual  or  constructive 
possession  thereof.^  (2)  This  surrender  of  control  must  be 
accompanied  by  the  intention  of  both  the  parties  that  the  in- 
strument shall  take  effect  thereby.  Mere  change  of  custody 
without  this  intention  does  not  amount  to  a  delivery.  If  an 
instrument  is  taken  from  the  custody  of  the  person  who  executes 
it,  without  his  knowledge,  as  where  it  is  removed  in  his  absence," 
no  delivery  exists.  If  a  written  instrument  is  taken  from  the 
person  by  whom  it  is  executed  without  his  consent,  as  where 
it  is  snatched  from  his  hand  while  he  is  threatened  with  physical 
violence,^  no  delivery  exists. 

§580.     Actual  delivery. 

Actual  delivery  exists  when  the  written  instrument  comes 
under  the  control  of  the  obligee.  This  usually  involves  a 
change  of  physical  possession.  While  the  obligor  by  person 
or  agent  usually  delivers  physical  possession  to  the  obligee,  this 
is  not  necessary.  A  manager  of  an  insurance  company  put 
upon  his  desk  a  policy  on  the  life  of  a  solicitor  which  had  been 
issued  by  the  company.  He  intended  the  solicitor  to  take  the 
policy,  as  it  was  his  custom  to  deliver  policies  by  leaving  them 
upon  his  desk  for  the  solicitor  to  take  and  deliver  when  the 
premium  was  paid  or  arranged  for.  The  solicitor  took  this 
policy  in  the  absence  of  the  manager.  It  was  held  to  be  a 
valid  delivery.^  Even  change  of  physical  possession  is  not 
necessary.  A  made  out  a  note  to  his  daughter  B,  for  a  val- 
uable consideration,  in  her  presence.  The  note  was  thus  for 
a  time  under  her  control.  With  her  assent  A  deposited  the 
note  in  a  separate  pocket  of  a  note-case  in  A's  safe  in  the  bank. 

iStreissguth   v.    Kroll,    86   Minn.  3  Palmer  v.  Poor,  121  Ind.  135;  6 

325;   90  N.  W.  577.  L.  R  A.  469;  22  N.  E.  984. 

2  Salley  v.  Terrill,  95  Me.  553;  85  i  Massachusetts,    etc.,   Association 

Am.    St.    Rep.    433;     55    L.    R.    A.  v.  Sibley,  158  111.  411 ;  42  N.  E.  137; 

730;   50  Atl.  896.  affirming  57  111.  App.  246, 
57 


898  PAGE    ON    CONTRACTS. 

This  was  held  to  be  a  valid  delivery.^  The  same  principle  ap- 
plies where  a  deed  is  executed  in  the  grantee's  presence  and  is 
for  the  time  being  under  grantee's  control.^  A  deposit  of  a 
contract  in  the  mail,  for  transmitting  to  the  obligee,  with  the 
intent  that  it  shall  thereby  take  effect,  amounts  to  a  delivery.* 
Hence,  if  the  obligee  dies  after  the  contract  is  so  deposited, 
but  before  it  reaches  him,  the  contract  is  in  full  force  and 
effect.^  It  has,  however,  been  held  that  a  bank-check  which  is 
mailed  to  the  payee,  but  is  never  received  by  him,  remains  the 
property  of  the  sender.^ 

§581.    Recording  as  delivery. 

If  a  grantor  causes  a  deed  to  be  recorded  with  the  actual  or 
presumed  assent  of  the  grantee,  such  act  amounts  to  a  delivery.^ 
Thus  if  grantee  sends  a  deed  to  grantor  for  execution,  and  asks 
him  to  have  it  recorded,  delivery  to  the  recorder  is  delivery  to 
the  grantee.^  If  the  actual  assent  of  grantee  to  such  recording 
is  shown  delivery  is  conclusively  presumed.^  Recording  raises 
a  prima  facie  presumption  of  assent  of  grantee,  which  is  suf- 
ficient in  the  absence  of  evidence  to  the  contrary.*     The  pre- 

2  Reeves'  Estates,  111  la.  260;  82  e  Garthwaite    v.    Bank,    134    Cal. 

N.  W.  912.     To  the  same  eflFect,  see  237;    66   Pac.  326. 

Sharmer  v.  Mcintosh,  43  Neb.  509;  i  Gulf,    etc.,    Co.    v.    O'Neal,    131 

sub  nomine,  Sharmer  v.  Johnson,  61  Ala.   117;   90  Am.  St.  Rep.  22;   30 

N.  W.  727.  So.  466;    Brady  v.   Huber,    197   111. 

3Delaplain  v.  Grubb,   44   W.  Va.  291;  90  Am.  St.  Rep.  161;  64  N.  E. 

612;  67  Am.  St.  Rep.  788;  30  S.  E.  264;  McReynolds  v.  Grubb,  150  Mo. 

201.     The  evidence  did   not  contra-  352;  73  Am.  St.  Rep.  448;  51  S.  W. 

diet    the    presumption    of    delivery  822. 

arising  on  these  facts  but  strength-  -  Prignon    v.    Daussat,    4    Wash, 

ened   it.  199;   31  Am.  St.  Rep.  914;   29  Pac 

4  Triple  Link,  etc.,  Association  v.  1046. 

Williams,  121  Ala.  138;  77  Am.  St.  3  Brady   v.   Huber,    197    111.    291; 

Rep.    34;    26    So.    19;    Kirkman   v.  90  Am.  St.  Rep.  161;  64  N.  E.  264. 

Bank,  2  Cold.   (Tenn.)   397.  *  McReynolds  v.   Grubb,    150  Mo. 

5  Triple  Link,  etc.,  Association  v.  352;  73  Am.  St.  Rep.  448;  51  S.  W. 
Williams,  121  Ala.  138;  77  Am.  St.  822;  Sweetland  v.  Buell,  164  N.  Y. 
Rep.  34;  26  So.  19.  541;  79  Am.  St.  Rep.  676;  58  N.  E. 

663. 


WRITTEN    SIMPLE    CONTKACTS.  899 

sumption  of  delivery  is  especially  strong  in  case  of  a  voluntary 
deed,  as  to  a  grantee's  wife^  or  children.®  If,  however,  it  can 
be  shown  that  the  gi-antee,  being  of  full  age  and  of  sound 
mind,  knew  nothing  of  the  existence  or  recording  of  such  deed, 
the  mere  act  of  recording  it  will  not  make  it  take  effect  until 
he  assents  thereto/ 

§582.     Constructive  delivery. 

Delivery  may,  however,  be  constructive,  as  well  as  actual. 
If  a  note  is  made  out,  and  placed  by  the  maker  in  his  safe, 
with  the  consent  of  the  payee,  simply  for  the  purpose  of  safe 
keeping,  it  has  been  held  to  be  constructively  delivered/  In 
an  extreme  case,  a  note  was  held  to  be  constructively  delivered 
where  the  maker  intended  it  to  be  a  complete  and  binding  obli- 
gation without  any  further  act  on  his  part."  So  where  A  drew 
a  check  payable  to  B  or  order  and  the  check  never  came  into 
B's  hands,  but  into  X's,  who  by  false  representations  got  the 
bank  to  pay  him,  this  was  treated  as  such  a  delivery  that  B 
could  maintain  an  action  thereon.^  A  made  a  deed  to  his  son 
B,  conveying  real  estate  for  which  B  was  to  pay  A  three  hundred 
dollars  a  year  until  A's  death.  B  at  once  went  into  possession 
of  such  property,  paid  this  sum  to  A  annually,  paid  the  taxes 
on  the  property,  erected  improvements,  and  treated  it  as  his 
own.  A  always  retained  the  custody  of  the  deed.  A  few  days 
before  A  died  he  directed  another  son  to  deliver  this  deed  to  B. 


5  Shields  v.  Bush,  189  111.  534;  38  Am.  St.  Rep.  606;  22  S.  W.  736. 
82  Am.  St.  Rep.  474;  59  N.  E.  962.  So  of  a  chattel  mortgage,  National 

6  Gulf,  etc.,  Co.  V.  O'Neal,  131  State  Bank  v.  Morse  Wilson  Co.,  73 
Ala.  117;  90  Am.  St.  Rep.  22;  30  la.  174;  5  Am.  St.  Rep.  670;  34 
So,    466;    Parker    v.    Salmons,    101  N.  W.   803. 

Ga.   160;   65  Am.  St.  Rep.  291;   28  i  Victor   v.    Swisky.    87    111.    App. 

S.   E.   681;    Abbott   v.    Abbott,    189  583. 

111.  488;   82  Am.   St.   Rep.  470;    59  2  Rowan  v.  Chenoweth.  49  W.  Va. 

N.  E.  958.  287;   38  S.  E.  544. 

'Weber  v.  Christen,   121   111.  91;  3  pickle   v.   Muse,    88   Tenn.    380; 

2  Am.  St.  Rep.  68;    11   N.  E.  893;  17  Am.  St.  Rep.  900;  7  L.  R.  A.  93; 

Cravens  v.   Rossiter,    116   Mo.    338;  12  S.  W.  919. 


900  PAGE    ON    CONTKACTS. 

This  was  not  done  until  after  A  died.     These  facts  were  held 
to  amount  to  a  constructive  delivery.* 

§583.     Effect  of  re-delivery. 

After  rights  have  become  fixed  by  the  delivery  of  a  written 
contract,  the  subsequent  fate  of  the  written  instrument  is,  apart 
from  questions  of  commercial  paper,  immaterial.  Hence,  the 
fact  that  the  obligee  ultimately  regains  possession  of  such  writ- 
ten instrument,  does  not  destroy  the  effect  of  a  prior  valid 
delivery.^  Thus,  where  an  insured  returned  his  policy  to  the 
insurance  agent  and  requested  that  it  be  cancelled,  but  the 
agent  induced  him  not  to  insist  upon  so  doing,  it  was  held  that 
the  policy  was  in  force.^  Thus,  after  a  deed  has  been  delivered 
unconditionally  to  the  duly  authorized  agent  of  the  grantee,  a 
subsequent  retention  thereof,  either  by  another  agent  of  the 
grantee^  or  by  the  agent  to  whom  the  deed  is  delivered*  at  the 
grantee's  request  to  hold  till  some  designated  future  event,  is  not 
a  delivery  in  escrow.  If  the  re-delivery  is  intended  by  the 
parties  as  a  release  by  each  to  the  other,  of  their  respective 
rights  under  the  contract,  a  different  question  is,  of  course,  pre- 
sented, and  the  original  contract  between  the  parties  will  be 
discharged,  not  by  the  mere  fact  of  re-delivery,  but  by  the 
new  contract.^ 

4Rodmeier  v.  Brown,  169  111.  347;  121  Mich.  690;  80  N.  W.  793.     (In 

61  Am.  St.  Rep.  176;  48  N.  E.  468.  this  case  the  note  given  by  the  in- 

1  Deed,  Tabor  v.  Tabor,  —  Mich,  sured  became  due  after  the  insured 
— ;  99  N.  W.  4;  Schuffert  v.  Grote,  was  suffering  from  his  last  illness 
88  Mich.  650;  26  Am.  St.  Rep.  316;  and  incapable  of  doing  business.  It 
50  N.  W.  657;  mortgage,  Bradtfeldt  was  not  paid  by  him,  but  the  agent 
V.  Cooke,  27  Or.  194;  50  Am.  St.  insisted  on  the  payment.  The  pol- 
Rep.  701 ;  40  Pac.  1 ;  insurance  icy.  on  the  death  of  the  insured, 
policy.  Shields  v.  Assurance  Society,  was  held  to  be  in  full  force  and 
121  Mich.  690;'  80  N.  W.  793;   cer-  effect.) 

tificate   given   by   architect   to   con-  3  Von    Schmidt    v.    Widber,    105 

tractor,    Arnold   v.    Bournique.    144  Cal.  151;  38  Pac.  682. 

111.   132;    36  Am.  St.   Rep.  419;   20  4  Parrish    v.    Steadham.    102   Ala. 

L.  R.  A.  493;  33  N.  E.  530.  615;    15    So.    354. 

2  Shields     v.     Assurance     Society,  5  See  Ch.  LXII. 


WRITTEN    SIMPLE    CONTRACTS.  901 

§584.     Nature  of  delivery  in  escrow. 

A  written  instrument  is  delivered  in  escrow  when  it  is  de- 
livered by  the  obligor  to  a  third  person,  to  be  held  by  such 
third  person  until  some  contingency  occurs,  or  some  condition 
is  complied  with,  upon  the  performance  of  which  condition  it 
is  to  be  delivered  to  the  obligee  and  to  become  of  full  force  and 
effect.^  If  a  written  instrument  is  in  the  possession  of  a  person 
other  than  grantor  or  grantee,  the  question  whether  this  is  a 
delivery  in  escrow  or  not,  turns  on  the  question  of  the  relation 
of  such  holder  to  the  parties  to  the  instrument  and  the  agree- 
ment under  which  he  received  it.  If  the  obligor  has  parted 
with  control  over  the  instrument,  except  in  case  of  the  non- 
happening  of  the  contingency  or  condition  upon  which  it  is  to 
take  effect,  and  the  obligee  has  no  rights  thereunder  until  the 
happening  of  such  contingency  or  condition,  the  instrument  is 
delivered  in  escrow.^  Thus,  A  delivered  a  deed  which  con- 
tained a  clause  providing  that  the  holder  should  deliver  it 
to  the  grantee  upon  the  death  of  the  grantor,  or  should  re-deliver 
it  to  the  grantor  at  her  request.  The  grantee  subsequently  ob- 
tained such  deed  and  erased  the  clause  providing  for  re-delivery 
to  grantor.  The  deed  was  then  put  in  the  custody  of  the 
original  depositary.  This  was  held  to  be  a  valid  delivery  in 
escrow.^  A  deed  has  been  held  to  be  delivered  in  escrow  where 
the  grantor  reserved  the  right  to  recall  it,  but  never  in  fact 
attempted  to  exercise  such  right.*  It  is  not  necessary  that  the 
terms  under  which  a  deed  is  deposited  in  escrow  should  be 
expressed  in  writing.^     If  an  instrument  is  placed  in  the  hands 

1  Davis    V.    Clark,    58    Kan.    100;  2  Shiilts  v.   Shults,   159  111.   654 

48   Pac.   563.     See  to   the   same   ef-  50  Am.  St.  Rep.  188;  43  N.  E.  800 

feet,   Mudd  v.   Green    (Ky.),    12   S.  3  Fulton    v.    Priddy,     123    Mich 

W.    139.     "An    escrow    ex    vi    ter-  298;    81  Am.   St.  Rep.  201;    82  N 

mini   is    a    deed    delivered   to    some  W.    65. 

third  person  to  be  by  him  delivered  4  Lippold  v.  Lippold,  112  la.  134 

to    the    grantee    upon    performance  84    Am.    St.    Rep.    331;    83    N.    W 

of  some  precedent  condition  by  the  809. 

grantee   or  another   or   the   happen-  s  Tharaldson  v.  Everts,   87  Minn 

ing    of    some     event."     Duncan     v.  168;      sub      nom.,      Thoraldsen      v, 

Pope,  47  Ga.  445,  451.  Hatch,  91  N.  W.  467. 


902  PAGE    ON    CONTKACTS. 

of  a  third  person  for  delivery  to  the  vendee,  on  performance 
by  him  of  a  certain  condition  of  sale,  it  has  been  held  that  this 
amounts  to  a  delivery  in  escrow.^  If,  however,  the  person  with 
whom  the  instrument  is'  deposited  is  simply  holding,  subject  to 
the  obligor's  instructions,  but  not  under  any  agreement  made 
with  the  obligee,  or  conferring  rights  upon  him,  such  delivery  is 
not  in  escrow/  If  a  grantor  deposits  a  deed  with  a  third  per- 
son, and  subsequently  recalls  the  deed  and  destroys  it,  and  there 
is  nothing  to  show  the  terms  upon  which  such  deposit  was  made, 
this  can  not  be  assumed  to  be  such  a  delivery  in  escrow  as  to 
confer  any  right  to  the  grantee.*  A  delivery  of  a  deed  together 
with  a  will,  to  the  grantor's  sister-in-law,  with  the  instructions 
to  deliver  them  to  the  one  who  should  settle  grantor's  estate,  is 
not  a  delivery  in  escrow,  especially  where  grantor  subsequently 
takes  such  package  of  papers  back,  and  places  it  in  her  desk, 
though  with  instructions  to  the  sister-in-law  to  take  the  papers 
in  case  the  grantor  should  become  sick.^  A  deed  delivered  to 
a  third  person,  with  instructions  to  deliver  to  the  grantee  in 
case  the  grantor  died  of  the  illness  with  which  she  was  then 
suffering,  but  otherwise  to  be  returned  to  the  grantor,  is  not  a 
delivery  in  escrow. ^°  If  any  future  agreement  must  be  made 
between  the  obligor  and  obligee,  before  the  written  instrument 
in  the  hands  of  a  third  person  can  be  delivered,  no  delivery 
in  escrow  exists."  Thus,  where  deeds  were  deposited  with  a 
third  person  to  be  delivered,  each  in  exchange  for  the  other, 
if,  after  examination  of  title,,  everything  was  found  "  all  right 
and  perfected,"^^  or  drafts  which  had  been  accepted  were  de- 


eHillhouse    v.    Pratt,    74    Conn.  351;  80  Am.  St.  Rep.  240;  58  N.  E. 

113:  49  Atl.  905.  439. 

7  Promissory    note,    Nichols,    etc.,  lo  Williams  v.  Daubner,  103  Wis. 

Co.  V.  Bank.  6  N.  D.  404;  71  N.  W.  521;    74   Am.   St.   Rep.   902;    79   N. 

135;      stock     certificate,     Clark     v.  W.   748. 

Campbell,  23  Utah  569;  90  Am.  St.  "Miller   v.    Sears,   91    Cal.   282; 

Rep.  716;  54  L.  R.  A.  508;  65  Pac.  25  Am.  St.  Rep.  176;  27  Pac.  589. 
496.  12  Miller   v.    Sears,    91    Cal.    282; 

sShiilts   V.   Shults.    159   111.   654;  25  Am.  St.  Rep.   176;   27  Pac.  589. 

50  Am.  St.  Rep.  188;  43  N.  E.  800.  However  a  deed  delivered  to  a  third 

9  Osborne    v.    Eslinger,    155    Ind.  person  to  hold  "till  we  got  proper 


WRITTEN    SIMPLE    CONTEACTS.  903 

posited  to  be  delivered  if  the  acceptor  approved  the  merchandise 
against  v^hich  such  drafts  were  drawn/^  it  is  not  a  delivery  in 
escrow.  A  executed  to  B  a  note  to  take  up  a  note  of  A's  which 
B  had  held,  but  which  had  been  mislaid.  The  note  was  placed 
in  the  hands  of  X,  with  instructions  to  X  to  deliver  the  note 
to  B  when  B  produced  A's  former  note ;  and  if  such  note  could 
not  be  found,  then  X  was  to  deliver  the  note  when  B  had  given 
sufficient  indemnity,  to  be  agreed  upon  thereafter  between  him- 
self and  A.  A  died  before  B  had  found  the  note,  or  before  A 
and  B  had  agreed  upon  the  amount  of  the  indemnity  to  be  given. 
This  was  held  not  to  be  a  delivery  in  escrow,  but  X's  agency 
was  held  to  terminate  on  A's  death.^* 

§585.     Rights  of  parties  when  delivery  is  in  escrow. 

"  The  depositary  of  an  escrow  is  regarded  as  an  agent  of 
both  obligor  and  obligee,  and  he  can  neither  return  the  deed  or 
other  instrument  to  the  former  without  the  latter's  consent, 
nor,  save  upon  the  fulfillment  of  the  agreed  conditions,  deliver 
it  to  the  latter  without  the  former's  consent."^  On  the  one 
hand,  the  obligor,  or  grantor,  who  has  deposited  such  instrument 
with  the  holder  in  escrow,  has  no  right  to  reclaim  the  same  with- 
out the  consent  of  the  obligee  or  grantee."  If  the  instrument 
deposited  in  escrow  passes  title  to  realty  it  is  valid  as  against 
subsequent  devisees  of  the  grantor  or  his  grantees  without  con- 
sideration.^    If  the  grantor  subsequently  obtains  possession  of 


abstracts  of  title,"  was  said  to  be  48  Pac.  563;  to  the  same  effect  are 

held  in  escrow.     Hoyt  v.  McLagan,  Cannon    v.    Ilandley.    72    Cal.    133; 

87  la.  746;   55  N.  W.  18.  13  Pac.  315;  Grove  v.  Jennings,  46 

13  Lehigh  Coal  &  Iron  Co.  v.  Steel  Kan.  366 ;  26  Par.  738 ;  Fred  v. 
Co.,  91  Wis.  221,  225;  64  N.  W.  746.  Fred  (N.  J.  Eq.)  ,  50  Atl.  776;  Shir- 
The  court  gave  as  a  reason  that  the  ley  v.  Ayers,  14  Ohio  307;  45  Am. 
acceptor  "  retained  absolute  con-  Dee.  546 ;  Gammon  v.  Bunnell,  22 
trol  over  them  and  could  by  keeping  Utah  421 ;  64  Pac.  958. 

silent  prevent  their  delivery  for  all  2  Tharaldson  v.  Everts,  87  Minn, 

time."  168;     sub     nomine     Thoraldsen     v. 

14  Farmer    v.    Marvin,    63    Kan.  Hatch.  91  N.  W.  467. 

250;  65  Pac.  221.  3  Bury  v.  Young.  98  Cal.  446;  35 

iDavisv.  Clark,  58  Kan.  100,  105;  Am.   St.   Rep.    186;    33   Pac.   338. 


904:  PAGE    ON    CONTKxiCTS. 

the  deed  deposited  in  escrow/  and  even  destroys  it,^  the  rights 
of  the  grantee  in  escrow  are  not  thereby  destroyed.  On  the 
other  hand,  the  obligee  or  grantee  under  the  instrument  de- 
posited in  escrow,  has  no  right  to  the  custody  of  the  instrument 
until  the  conditions  of  the  deposit  have  been  complied  with, 
nor  can  the  instrument  take  effect  till  then  as  between  the  par- 
ties.® If  the  depositary  of  a  deed  in  escrow  delivers  it  to  the 
grantee  before  the  conditions  of  the  escrow  are  complied  with, 
such  delivery  is  of  no  validity  as  between  the  grantor  and  the 
grantee.^  So  delivery  of  a  lease®  or  mortgage'*  which  has  been 
deposited  in  escrow  is  of  no  effect  if  delivered  before  the  condi- 
tions have  been  complied  with.  So  a  mortgagee  who  has  placed 
a  release  of  a  mortgage  in  escrow  may  enjoin  the  mortgagor 
from  having  it  recorded  before  the  condition  on  which  it  was  de- 
livered has  been  complied  with.^**  If  the  grantee  under  a  deed 
deposited  in  escrow  obtains  it  from  the  depositary  by  fraud, 
such  deed  is  of  no  effect  as  between  grantor  and  grantee.^*  The 
same  rule  applies  where  it  is  taken  without  the  knowledge  of 
the  depositary.^^  l^either  is  it  of  any  validity  as  against  per- 
sons claiming  under  such  grantee  who  are  not  hona  fide  pur- 
chasers for  value.^^  Whether  such  delivery  is  of  any  validity 
against  hona  fide  purchasers  for  value,  is  a  question  upon  which 
there  is  a  conflict  of  authorities.  Some  authorities  hold  that 
such  deed  passes  title  as  to  hona  fide  purchasers  for  value;" 

4  Grove  V.  Jennings,  46  Kan.  366;  Civ.    App.    419;     38     S.    W.    223. 

26   Pae.    738.  ^  Roberson  v.  Reiter,  38  Neb.  198 ; 

sRobbins    v.    Rascoe,    120    N.    C.  56  N.   W.   877. 

79;  58  Am.  St.  Rep.  774;   38  L.  R.  lo  Matteson    v.     Smith,    61    Neb. 

A.  238;  26  S.  E.  807.  761;   86  N.  W.  472. 

6  Wilson   V.    Savings    Association,  n  Hanley    v.    Sweeny,     109    Fed. 

42    Fed.   421.  712;    48   C.   C.   A.   612;    Burnap   v. 

THogueland  v.  Arts,  113  la.  634;  Sharpsteen,   149   111.  225;   36  N.   E. 

85  N.  W.  818;   Jackson  v.  Rowley,  1008;  Everts  v.  Agnes,  6  Wis.  453; 

88  la.  184;  55  N.  W.  339;  Lewis  v.  affirming  same  case  in  4  Wis.  343; 

Prather   (Ky.),  21  S.  W.  538;  Mat-  65   Am.    Dec.    314. 

teson  V.  Smith,  61  Neb.  761;  86  N.  12  Jackson   v.   Lynn,    94   la.    151; 

W.  472;  Tyler  v.  Gate,  29  Or.  515;  58  Am.  St.  Rep.  386;  62  N.  W.  704. 

45  Pac.  800 ;  Landon  v.  Brown,  160  is  Roberson    v.    Reiter,    38    Neb. 

Pa.   St.   538;   28   Atl.   921.  198;  56  N.  W.  877. 

8  Gentry     v.     Gatlin,      14      Tex.  "  Schurtz    v.    Colvin,    55    0.    S. 


WRITTEN    SIMPLE    CONTRACTS.  905 

Others  hold  that  it  does  not.^^  So,  if  a  non-negotiable  contract, 
deposited  in  escrow,  is  delivered  before  the  terms  of  the  deposit 
are  complied  with,  it  is  of  no  validity  against  the  obligor.^* 
Where  a  deed  has  been  improperly  delivered  by  the  depositary, 
the  grantor  may  subsequently  ratify  such  delivery."  By  re- 
maining silent,  and  seeing  third  persons  without  knowledge  of 
the  facts  alter  their  condition,  in  reliance  upon  the  apparent 
delivery,  he  may  estop  himself  to  deny  the  validity  of  such 
delivery.^^  So  a  promissory  note  deposited  in  escrow  and  de- 
livered by  the  depositary  before  the  terms  of  the  delivery  are 
complied  with  is  invalid  except  when  in  the  hands  of  a  bona  fide 
holder  who  acquires  legal  title  for  value  and  before  maturity.^^ 
In  the  hands  of  a  bona  fide  holder,  however,  a  negotiable  instru- 
ment, wrongfully  delivered  by  a  holder  in  escrow,  is  valid.""  A 
depositary  of  a  promissory  note  in  escrow  who  delivers  it  before 
the  conditions  are  complied  with,  in  consequence  of  which  the 
maker  is  obliged  to  pay  the  note  to  an  innocent  holder  for  value, 
is  liable  in  damages  to  such  maker. ^^  A  party  to  a  delivery  in 
escrow,  for  whose  benefit  certain  conditions  were  imposed,  may, 
however,  waive  such  conditions  and  allow  the  deed  to  be  de- 
livered without  the  performance  thereof.^^ 

274;     45     N.     E.     527;     Blight     v.  ic  Daniels  v.   Gower,  54  la.   319; 

Schenck,    10    Pa.    St.   285;    51    Am.  3  N.  W.  424;  6  N.  W.  525. 

Dec.  478;    Everts  v.  Agnes,  4   Wis.  it  Dixon  v.  Bank,  102  Ga.  461;  66 

343;    65   Am.   Dec.    314.  Am.  St.  Rep.  193;  31  S.  E.  96. 

15  Dixon   V.    Bank,    102    Ga.   461;  is  Dixon   v.    Bank,    102    Ga.    461 ; 

66  Am.  St.  Eep.  193;   31  S.  E.  96;  66  Am.  St.  Rep.   193;   31  S.  E.  96; 

Quick  V.  Milligan,  108  Ind.  419;   58  Reese  v.  Medlock,  27  Tex.   120;    84 

Am.  Rep.  49;  9  N.  E.  392;  Jackson  Am.   Dec.   611. 

V.   Lynn,    94   la.    151 ;    58    Am.    St.  i9  Jamison  v.  McFarland.  10  S.  D. 

Eep.  386;   62  N.  W.  704;   Tyler  v.  574;   74  N.  W.   1033. 

Gate,    29    Or.    515;    45    Pac.    800;  20  gclimid  v.  Frankfort,  131  Mich. 

Smith  V.  Bank,  32  Vt.  341;  76  Am.  197;  91  N.  W.  131;  Chase  National 

Dec.  179;   Everts  v.  Agnes,  6  Wis.  Bank  v.  Faurot,  149  N.  Y.  532;  35 

453;   affirming  same  case  in  4  Wis.  L.   R.    A.    605;    44    N.    E.    164. 

343;    65    Am.    Dee.    314.      (In    the  21  Riggs   v.   Trees,   120   Ind.   402; 

ease  in  4  W^is.  supra  it  did  not  ap-  5  L.  R.  A.  696;  22  N.  E.  2.54. 

pear  definitely  that  the  subsequent  22  Smith  v.  Goodrich,  167  111.  46; 

purchaser  acted  lona  fide,  in  6  Wis.  47   N".   E.    316;    Tharaldson   v.   Ev- 

stipra  the  record  showed  him  to  be  erts,    87    Minn.     168;     sub    nomine 

a  bona  fide  grantee.)  Thoraldsen  v.  Hatch,  91  N.  W.  467. 


906  PAGE    ON    CONTRACTS. 

§586.     Necessity  of  second  delivery  of  escrow. 

Whether  the  failure  or  omission  of  the  depositary  in  escro-w 
to  deliver  the  instrument  to  the  party  entitled  to  it  when  the 
conditions  of  the  deposit  in  escrow  have  been  complied  with 
defeats  the  rights  of  the  parties  under  the  instrument,  is  a  ques- 
tion upon  which  there  is  a  conflict  of  authority.  In  some  juris- 
dictions it  is  held  that  at  the  instant  that  the  conditions  of  the 
delivery  in  escrow  are  complied  with,  the  party  so  complying 
has  a  right  to  the  possession  of  the  instrument,  and  the  act  of 
the  depositary  in  withholding  such  delivery  cannot  affect  his 
rights.^  In  other  jurisdictions,  it  is  held  that  the  party  who 
has  a  right  to  such  instrument  cannot  maintain  an  action  thereon 
until  it  is  delivered  to  him.^ 

§587.     Fiction  of  relation  to  original  delivery  in  escrow. 

By  a  legal  fiction  an  instrument  which  has  been  deposited  in 
escrow  may  relate  back  uix)n  the  performance  of  the  conditions 
of  delivery  to  the  time  of  the  delivery  in  escrow,  and  for  some 
purposes,  take  effect  from  such  time.^  This  doctrine  is  gen- 
erally invoked  where  the  obligor  has  died  before  the  conditions 
of  the  escrow  have  been  complied  with.  A  mere  agency  would 
be  revoked  by  such  death,  but  by  the  theory  given,  the  law 
treats  the  instrument  delivered  in  escrow  as  valid,  notwithstand- 


1  So  with  deeds,  White  Star,  etc.,  '  quoted  Davis  v.  Clark,  58  Kan.  100, 

Co.  V.  Moragne,  91  Ala.  610;   8  So.  106;   48  Pac.   563. 

867;   Conneau  v.  Geis,  73  Cal.  176;  2  So  with  bonds,  Jackson,  etc.,  Co. 

2  Am.   St.  Rep.   785;    14  Pac.  580;  v.  Peareon,  60  Fed.  113. 

Davis   V.    Clark,    58    Kan.    100;    48  i  Perryman's    Case,    5    Co.     84a; 

Pac.   563;   notes,   Couch  v.   Meeker,  Bostwick  v.   McEvoy,   62   Cal.  496; 

2  Conn.  302;  7  Am.  Dec.  274;  Tay-  Peck    v.    Goodwin,    Kirby     (Conn.) 

lor   V.   Thomas,    13   Kan.   217.     "A  64;  Price  v.  R.  R.,  34  111.  13;  Wal- 

note   placed   in   escrow   takes   effect  lace  v.  Harris.  32  Mich.  380;   Rug- 

the    instant    the    conditions    of    the  gles  v.  Lawson,   13  Johns.    (N.  Y.) 

escrow  are  performed,   even  though  285;    7    Am.    Dec.    375;    Shirely   v. 

the    depositary    has    not    formally  Ayers,    14   Ohio   307;    45   Am.  Dec. 

delivered  it  to  the  payee."    Syllabus  546 ;   Gammon  v.  Bunnell,  22  Utah 

of  Taylor  v.  Thomas.  13  Kan.  217;  421;    64   Pac.   958. 


WRITTEN    SIMPLE    CONTKACTS.  907 

ing  the  death  of  the  obligor.  Deeds^  and  bank-checks'  held  in 
escrow  may  thus  take  effect  upon  delivery  after  the  obligor's 
death.  Whether  a  deed  can  be  delivered  in  escrow  upon  a  con- 
dition which  by  its  terms  cannot  be  performed  until  after  the 
grantor's  death,  so  that  upon  performance  of  the  condition  the 
deed  will  relate  back  to  the  original  delivery  is  a  question  upon 
which  there  is  a  conflict  of  authority.  If  a  deed  is  placed  in 
the  hands  of  a  third  person,  to  be  delivered  on  grantor's  death, 
provided  that  after  grantor's  death  grantee  performs  some  con- 
dition precedent,  it  has  been  held  that  such  delivery  is  not  a 
valid  delivery  in  escrow.*  On  the  other  hand  a  deed  deposited 
with  a  third  person  and  delivered  in  accordance  with  conditions 
imposed  by  the  grantor's  will  has  been  held  to  relate  back,  no 
third  person's  rights  being  injured  thereby.^  Like  other  legal 
fictions,  however,  the  fiction  of  relation  will  not  be  extended  to 
cases  not  intended  by  the  fiction  originally.  Thus,  where  the 
rights  of  third  persons  will  be  prejudiced  by  such  relation,  the 
relation  will  not  exist  as  to  them.  Thus,  A  made  a  deed  of  gift 
to  his  son  B,  and  delivered  it  in  escrow  to  X,  to  be  delivered 
to  B  on  A's  death.  It  was  held  that  such  delivery  was  ineffect- 
ive as  against  subsequent  creditors  of  A  who  had  extended 
credit  to  him,  relying  upon  his  apparent  ownership  of  such  prop- 
erty.® The  doctrine  of  relation  will  not  be  invoked  where  it  is 
contrary  to  the  apparent  intention  of  the  parties.  Thus,  where 
a  deed  has  been  delivered  in  escrow,  and  before  the  conditions 
of  the  escrow  were  complied  with,  a  building  upon  the  land 
■which  belonged  to  a  third  person,  of  which  fact  the  grantee  had 

aSchuur  v.  Rodenbaek,   133   Cal.  22  S.  W.   1077;   Eosseau  v.  Bleau, 

85;    65   Pac.   298;   Trask  v.  Trask,  131    N.   Y.    177;    27   Am.   St.   Rep. 

90  la.  318;   48  Am.  St.  Rep.  446;  578;   30  N.  E.   52. 

57  N.  W.  841;  Davis  v.  Clark,  58  3  whitehouse    v.    Wliitehouse,    90 

Kan.   100;   48  Pac.  563;   Brown  v.  Me.  468;   60  Am.  St.  Rep.  278;   38 

Stutson,  100  Mich.  574;  43  Am.  St.  Atl.  374. 

Rep.  462;   59  N.  W.  238;   Tharald-  4Taft  v.  Taft,  59  Mich.  185;   60 

son  V.   Everts,   87   Minn.   168;    sub  Am.  Rep.  291;  26  N.  W.  426. 

nomine  Thoraldsen  v.  Hatch,  91  N.  5  Dettmer  v.  Behrens,  106  la.  585; 

W.  467 ;  Lindley  v.  Groff,  37  Minn.  68  Am.  St.  Rep.  326 ;  76  N.  W.  853. 

338 ;  34  N.  W.  26 ;  White  v.  Pollock.  6  Rathmell    v.    Shirey,    60    0.    S. 

117  Mo.  467;  38  Am.  St.  Rep.  671;  187;    53   N.  E.   1098. 


908  PAGE    ON    CONTKACTS. 

notice,  was  purchased  by  the  grantee  to  prevent  the  owner  from 
removing  the  same,  it  was  held  that  upon  performance  of  the 
conditions  of  the  delivery,  the  deed  did  not  relate  back  to  the 
time  of  the  delivery  in  escrow,  in  order  to  hold  the  grantor  for 
the  value  of  such  building  upon  his  covenants  of  warranty.'' 
Thus  where  a  deed  has  been  delivered  in  escrow  under  an 
agreement  that  the  grantee  is  to  desist  from  all  further  defense 
to  a  particular  suit,  and  that  in  case  a  certain  judgment  is 
affirmed,  the  deed  is  to  be  delivered  to  the  grantee,  the  deed 
will  not,  upon  performance  of  such  condition,  relate  back  to 
the  time  of  its  original  delivery  for  the  purpose  of  defeating 
the  judgment  in  question,  w^iich,  besides  the  title  to  the  land 
conveyed  by  such  deed,  operated  as  an  adjudication  as  between 
the  grantor  and  the  grantee,  as  to  their  rights.  For  the  purpose 
of  determining  their  rights  the  deed  will  be  treated  as  taking 
effect  only  from  the  time  of  the  performance  of  the  conditions 
of  the  delivery ;  that  is,  from  the  affirmance  of  the  judgment.* 
If  a  grantor  has  delivered  a  deed  in  escrow  and  at  the  time  of 
his  death  the  conditions  of  the  escrow  have  not  been  performed, 
it  has  been  held  that  the  legal  title  thereto  descends  to  the 
heirs  and  devisees  of  such  grantor  subject  to  be  divested  by 
the  performance  of  the  conditions  of  the  delivery.^ 

§588.     Who  can  be  depositary  in  escrow. —  Obligor. 

The  question  of  delivery  depends  in  part  upon  the  relation 
of  the  person  in  whose  custody  and  possession  the  instrument 
is,  to  the  instrument  itself,  or  to  the  parties  thereto.  A  written 
instrument  may  be,  (1)  retained  by  the  party  executing  it; 
(2)  delivered  to  his  agent;  (3)  delivered  to  a  person  who  is 
not  a  party  to  the  instrument,  and  who  does  not  take  as  the 
agent  of  either  party,  or  who  may  be  said  to  take  as  the  agent 
of  both  parties;  (4)  delivered  to  the  agent  of  the  adversary 
party;  or,  (5)  delivered  to  the  adversary  party  himself.     The 

THovt  v.  McLagan,  87  la.  746;  264;  48  Am.  St.  Rep.  37;  14  So. 
55  X.  W.   18.  C63. 

8  Ashford    v.    Prewitt,     102    Ala.  » Charlwick    v.     Tatem,     9    Mont. 

354;    23    Pac.    729. 


WRITTEN    SIMPLE    CONTRACTS.  •  909 

effect  of  each  of  these  states  of  fact  must,  therefore,  be  con- 
sidered. A  written  contract  which  is  executed  by  one  party 
and  retained  in  his  custody,  and  of  which  tlie  possession  and 
control  has  never  been  surrendered  to  the  adversary  party,  is  of 
no  validity.^  The  same  principle  makes  invalid  a  deed  which 
is  executed  by  the  grantor  and  retained  by  him  in  his  posses- 
sion," or  which  is  placed  in  the  jDOSsession  of  one  of  two  or 
more  joint  grantors,  as  where  a  deed  executed  by  a  husband  and 
wife  is  put  in  the  custody  of  the  husband,^  or  of  the  wife,* 
though  Avith  the  expectation  of  delivering  it  at  a  later  time. 
If  an  instrument  is  executed  by  both  parties  thereto,  and  is  in- 
tended to  take  effect,  a  valid  delivery  exists  if  it  is  left  in 
the  custody  of  either  of  such  parties.^  Under  any  other  rule 
an  instrument  executed  by  both  adversary  parties  could  never 
be  delivered  between  them. 

§589.     Unauthorized  delivery  by  co-obligor. 

If  an  obligor,  such  as  a  surety,  leaves  an  instrument  to  which 
he  has  afHxed  his  name  with  a  co-obligor  to  be  delivered  only 
if  some  other  party  signs  it  as  co-obligor,  and  the  custodian 
of  the  instrument  delivers  it  to  the  obligee,  who  does  not  know 
that  such  signing  is  conditional,  the  party  so  signing  is  liable 
to  the  obligee.^     The  rules  governing  delivery  by  a  holder  in 

1  Harrison  v.  Morton,  83  Md.  456;  i  Dair  v.  United  States,  16  Wall. 

35   Atl.   99.  (U.  S.)    1;  State  v.  Pepper,  31  Ind. 

sParrott    v.     Avery,     159     Mass.  76;   Carter  v.  Moiilton,  51  Kan.  9; 

594 ;  38  Am.  St.  Rep.  465 ;  22  L.  R.  37  Am.   St.  Rep.   259 ;   20  L.  R.  A. 

A.  153;  35  K  E.  94;  Tyler  v.  Hall,  309;  32  Pac.  633;  Flannery  v.  Bank 

106  Mo.  313;  27  Am.  St.  Rep.  337;  (Ky.),    52    S.    W.    847;    Millett    v. 

17   S.  W.  319;   Cazassa  v.  Cazassa,  Parker,    2    Met.    (Ky.)    608;    State 

92  Tenn.  573;  36  Am.  St.  Rep.  112;  v.  Peck,  53  Me.  284;  Board  of  Edu- 

20  L.  R.  A.  178;  22  S.  W.  560.  cation  v.   Robinson,   81   Minn.   305; 

3  Kopp  V.  Reiter,  146  HI.  437 ;  37  84  N.  W.  105 ;  Fowler  v.  Allen.  32 
Am.  St.  Rep.  156;  22  L.  R.  A.  273;  S.  C.  229;  7  L.  R.  A.  745;  10  S.  E. 
34  N.  E.  942.  947;  Dun  v.  Garrett,  93  Tenn.  650; 

4  Morris  v.  Candle,  178  111.  9;  42  Am.  St.  Rep.  937;  27  S.  V^\  1011 ; 
69  Am.  St.  Rep.  282;  44  L.  R.  A.  Turnbull  v.  Mann,  99  Va.  41;  37 
489;  52  N.  E.  1036.  S.  E.  288. 

sTempleton   v.   Twitty,    88    Tenn. 
595;    14  S.  W.  435, 


910  PAGE    ON    COXTRACTS. 

escrow  do  not  applv,  as  a  co-obligor  is  not  a  holder  in  escrow.^ 
The  requirement  that  the  obligee  must  take  without  notice 
implies  that  the  instrument  is  complete  on  its  face  and  does  not 
show  that  it  is  not  to  take  effect  until  others  sign.^  If  this  re- 
quirement appears  on  the  face  of  the  instrument  the  obligee 
is  charged  with  notice  thereof.  So  a  condition  that  a  Avritten 
contract  which  has  been  delivered  to  the  promisee  is  not  to  take 
effect  until  other  parties  sign  cannot  be  interposed  as  against 
third  persons  who  have  a  right  to  rely,  and  who  have  relied, 
upon  such  contract.  Thus  persons  who  sign  and  deliver  a  sub- 
scription for  stock  complete  on  its  face  under  an  oral  agreement, 
that  it  shall  not  take  effect  until  others  subscribe,  cannot  set  up 
such  oral  condition  as  to  subsequent  subscribers  who  subscribe 
in  reliance  on  the  validity  of  such  prior  subscription.*  But 
where  A,  a  surety  on  a  bond  of  indemnity,  signed  it  and  left  it 
with  B,  the  obligor,  on  condition  that  C,  another  specified  surety, 
would  sign,  and  B  forged  the  name  of  C  and  delivered  the  bond 
it  was  held  that  A  was  not  liable,  as  the  obligee  was  bound  to 
know  the  genuineness  of  the  signatures.^  The  fact  that  after  B 
made  default  C  voluntarily  made  a  payment  on  such  bond  does 
not  make  A  liable.  If  the  obligee  of  an  instrument  knows  that 
it  has  been  signed  by  a  party  thereto,  upon  condition  that  his 
liability  should  not  attach  until  some  additional  party  had 
signed,  and  such  instrument  is  left  in  the  custody  of  an  obligor, 
and  is  delivered  by  him  contrary  to  his  agreement,  it  is  held  in 
many  courts  that  such  instrument  does  not  take  effect  as  to  a 
party  signing  upon  such  conditions.^  If  the  payee  has  notice 
of  the  fact  that  the  surety  signed  on  condition  that  others  were 
to  sign  before  the  instrument  was  delivered,  and  that  the  maker 


2  Carter  v.  Moulton,  51  Kan,  9 ;  5  Southern  Cotton-Oil  Co.  v.  Basg, 
37  Am.  St.  Rep.  259;  20  L.  R.  A.  126  Ala.  343;  28  So.  576.  And  see 
309;    32   Pac.   633.  as  to  such  facts  in  signing  a  note, 

3  Dun  V.  Garrett,  93  Tenn.  650;  Sharp  v.  Allgood,  100  Ala.  183; 
42  Am.  St.  Rep.  937;  27  S.  W.  1011.  14  So.   16. 

■i  Minneapolis  Threshing  Machine  estate  Bank  v.  Evans,   15  N.  J. 

Co.  V.  Davis,  40  Minn.  110;  12  Am.  L.  155;  28  Am.  Dec.  400;  Black  v. 

St.  Rep.   701;    3   L.   R.   A.   769;   41  Lamb,  13  N.  J.  Eq.   (2  Beas.)   455; 

N.   W.    1026.  12  N.  J.  Eq.   (1  Beas.)   108. 


WRITTEN    SIMPLE    CONTRACTS.  911 

has  delivered  such  note  in  violation  of  such  agreement,  some 
authorities  hold  that  the  payee  cannot  recover/ 

§590.     Ag-ent  of  obligor. 

If  a  written  instrument  is  delivered  to  one  who  holds  as  the 
agent  of  the  grantor,  this  does  not  amount  to  delivery  which 
will  give  the  instrument  legal  effect.  Thus  a  deed  delivered 
to  one  who  is  agent  of  the  grantor,  is  of  no  validity,  even  if 
the  grantor  has  instructed  him  to  deliver  it  to  the  grantee.^ 
Thus  A  deposited  certain  stock  with  a  bank  and  gave  the  bank 
written  instructions  to  deliver  it  to  B  on  payment  by  B  of 
seventy-five  thousand  dollars  before  ISTovember  24,  1898.  B 
paid  such  amount  upon  such  date.  In  the  meantime,  on  !No- 
vember  22nd,  a  dividend  had  been  declared.  It  was  held  that 
the  bank  took  as  the  agent  of  the  grantor,  who  had  in  the  mean- 
time full  control  over  such  stock,  and  that  title  thereto  did  not 
pass  until  payment  by  B  and  delivery  to  him.  Accordingly 
the  dividends  did  not  pass  to  B.^  The  test  for  determining 
whether  the  holder  of  the  written  instrument  is  the  agent  of  the 
maker  thereof  or  not  turns  on  the  question  of  the  right  of  the 
maker  to  recall  the  instrument.  If  the  maker  has  such  right 
the  holder  is  acting  as  his  agent  and  no  delivery  exists.^ 

§591.     Agent  of  obligor  taking  in  different  capacity. 

On  the  other  hand,  an  instrument  may  be  delivered  to  one 
who  is  the  agent  of  the  maker  and  yet  he  may  not  take  in  his 
capacity  of  agent.     A  executed  a  note,  placed  it  in  an  envelope, 

TStricklin  v.  Cunningham,  58  111.  C.  201;   Large  v.  Parker    (Tex.  Civ. 

293;  Bank  v.  Bormiian,  124  111.  200;  App.),  56  S.  W.  587. 

16   N.   E.   210;    Coffman  v.   Wilson,  i  Furenes   v.    Eide,    109    la.    511; 

2    Mete.     (Ky.)     542;     Jackson    v.  77  Am.  St.  Rep.  545;  80  N.  W.  539. 

Cooper    (Ky.),  19  Ky.  Law  Eep.  9;  2  Clark  v.  Campbell,  23  Utah  569; 

39    S.   W.   39;    Williams   v.   Luther  90  Am.  St.  Rep.  716;   54  L.  R.  A. 

(Ky.),  17  Ky.  Law  Rep.  311;  30  S.  508;    65   Pac.   496. 

W.  199;  Dunn  v.  Smith,  12  Smedes  s  Miller  v.  Sears,  91  Cal.  282;  25 

&  M.    (Miss.)    602;   Read  v.  McLe-  Am.    St.    Rep.    176;    27    Pac.    589; 

more,  34  Miss.  110;  Hill  v.  Sweetser,  Nichols  v.  Opperman,  6  Wash.  618; 

5  N.  H.  168;  Cowan  v.  Baird,  77  N.  34  Pac.  162. 


912  PAGE    ON"    CONTRACTS. 

sealed  the  envelope,  and  marked  it  with  the  initials  of  the  payee, 
and  delivered  it  to  A's  domestic  servant,  with  instructions  to  be 
sure  that  the  payee  got  it  at  A's  death.  It  was  held  that  unless. 
A  had  reserved  the  right  to  recall  such  note  this  was  a  good 
delivery  in  escrow,  and  could  be  delivered  by  such  servant  to 
the  payee  after  A's  death.  A  verdict  finding  that  this  was  a 
delivery  in  escrow  was  sustained.^  A  executed  a  deed  and  de- 
livered it  to  his  housekeeper,  with  instructions  to  deliver  the 
deed  to  his  son  at  A's  death.  This  was  held  to  be  a  valid  de- 
livery in  escrow  if  A  had  no  right  to  recall  the  deed.  The  fact 
that  the  houskeeper  subsequently  put  the  deed  in  A's  trunk  for 
safe-keeping  did  not  invalidate  such  delivery.^  A's  intention, 
to  put  the  deed  beyond  his  recall  by  such  delivery  was  held  to 
be  shown  from  the  fact  that  he  did  not  try  to  recall  it,  and  also 
from  the  fact  that  he  made  such  delivery  after  receiving  an 
opinion  from  his  attorney  that  such  delivery  would  be  valid, 
and  would  be  binding  upon  A.  A  grantor  who  has  sold  land 
through  a  real  estate  agent  may  deposit  the  deed  to  the  property 
sold  in  escrow  with  such  agent.^  So,  if  an  application  is  made 
for  insurance,  under  a  contract  that  if  the  application  for  insur- 
ance is  accepted  the  insurance  will  take  effect  from  the  time  of 
the  application,  and  the  application  is  accepted,  and  the  policy 
is  forwarded  to  the  agent  of  the  insurance  company  with  un- 
conditional instructions  to  deliver  to  the  insured,  such  jwlicy 
takes  effect,  even  though  the  manual  possession  of  the  policy 
is  not  surrendered  by  the  agent  to  the  insured.^     This  principle 


1  Daggett  V.   Simonds,    173   Mass.  33;  Young  v.  Assurance  Society,  30 

340;  46  L.  R.  A.  332;  53  N.  E.  907.  Fed.  902;  Harrigan  v.  Ins.  Co.,  128 

2Munro  v.  Bowles,   187   111.   346;  Cal.    531;    61    Pac.    99;    incorrectly 

54  L.  E.  A.  865;  58  N.  E.  331.  entitled  Harrington  v.   Ins.   Co..  in 

3  McLaughlin  v.  Wheeler,  1  S.  D.  58   Pac.    180;    Fireman's   Fund   Ins. 

497;  47  S.  W.  816;  modified  on  an-  Co.  v.  Pekor,    106   Ga.   1;    31   S.  E. 

other  point  2  S.  D.  379;   50  N.  W.  779;    Xew    York    Life    Ins.    Co.    v. 

834.  Babcock,    104   Ga.   67;    69   Am.   St. 

4Xenos    V.    Wickham,    L.    R.,    2  Rep.  134;  42  L.  R.  A.  988;  30  S.  E, 

H.  L.  296;   Union  Central  Life  Ins.  273;   Medearis  v.   Ins.   Co.,   104  la. 

Co.    V.    Phillips,    102    Fed.    19;    41  88;  65  Am.  St.  Rep.  428;  73  N.  W. 

C.  C.  A.  263 ;   reversing  on  another  495 ;  Mutual  Life  Ins.  Co.  v.  Thom- 

ground  Phillips  v.  Ins.  Co.,  101  Fed.  son,  94  Ky.  253;  22  S.  W.  87;  Lee 


WEITTEN    SIMPLE    CONTEACTS.  913 

applies  even  where,  by  the  terms  of  the  contract,  the  policy  is 
not  to  take  effect  until  its  delivery.^  This  holding  shows  that 
the  court  looks  upon  such  facts  as  amounting  to  a  delivery.  In 
other  cases  the  controlling  theory  may  be  that  the  contract  of 
insurance  was  effective  between  the  parties,  even  if  no  delivery 
had  ever  been  made.  So,  if  the  insured  is  notified  by  the  agent 
that  the  policy  is  in  the  hands  of  the  agent  subject  to  his  orders, 
delivery  exists  even  though  he  does  not  in  fact  call  for  it.''  Thus 
a  policy  delivered  by  the  insurance  company  to  its  agent  under 
unconditional  instructions  to  deliver  to  the  insured,  but  retained 
by  the  agent  until  the  insured  has  reimbursed  the  agent  for  the 
premium  advanced  by  such  agent,  is  delivered  to  the  insured  so 
as  to  take  effect.^  If,  on  the  other  hand,  there  is  some  other 
and  further  act  to  be  done  before  the  policy  takes  effect,  delivery 
to  the  agent  does  not  amount  to  delivery  to  the  insured.^  Thus, 
if  the  policy  is  not  to  take  effect  until  the  premium  is  paid, 
and  such  premium  has  not  been  paid  and  payment  thereof  has 
not  been  waived,  possession  by  the  agent  of  the  insurance  com- 
pany does  not  amount  to  the  delivery  to  the  insured.^  So  if 
the  insured  is  not  bound  to  take  the  policy,  but  has  the  right  to 
accept  or  reject  it,  delivery  to  the  agent  of  the  insurance  com- 
pany is  not  delivery  to  the  insured.^"  So  if  the  agent  does  not 
take  under  unconditional  instructions  for  delivery,  as  where  he 
is  directed  to  hold  the  policy,  pending  an  investigation  by  the 

V.   Ins.   Co.    (Ky.),   41   S.  W.   319;  134;  42  L.  R.  A.  88;  30  S.  E.  2Y3. 

Dibble  v.  Assurance  Co.,  70  Mich.  1 ;  6  Phoenix  Assurance  Co.  v.  McAu- 

14    Am.    St.    Rep.    470;    37    N.    W.  thor,  116  Ala.  659;  67  Am.  St.  Rep. 

704;    Newark   Machine    Co.    v.    Ins.  154:  22  So.  903. 

Co.,  50  O.  S.  549 ;  22  L.  R.  A.  768 ;  7  Fireman's  Fund   Ins.  Co.  v.  Pe- 

35  N.  E.   1060;  Porter  v.   Ins.   Co.,  kor,   106  Ga.  1;   31  S.  E.  779. 

70    Vt.    504;    41    All.    970.     "The  s  piuegrass  Ins.  Co.  v.  Cobb,  109 

agent  and  the  mails  were  only  the  Ky.  339;   58  S.  W.  981. 

vehicles  to  carry  it  to  him  and  it  aJurgens    v.    Ins.    Co.,    114    Cal. 

was    the    same    thing   as    if    mailed  161;    45   Pac.    1054;    46    Pac.    386; 

or    sent    directly   to    the    plaintiff."  Griffith   v.   Ins.   Co.,    101    Cal.   627; 

Hallock  V.  Ins.  Co.,  26  N.  J.  L.  268.  40  Am.   St.  Rep.  96;    36  Pac.   113. 

279;   affirmed  27   N.   J.  L.  645;    72  lo  Dickerson's     Administrator     v. 

Am.  Dec.  379.  Assurance  Society  (Ky.)  ,  52  S.  W. 

5  New  York  Life  Ins.  Co.  v.  Bab-  825. 
cock,   104  Ga.  67;   69  Am.  St.  Rep. 
58 


914  PAGE    ON    CONTKACTS. 

insurance  company  of  the  truth  of  the  statements  in  the  appli- 
cation/^ or  where  it  is  held  by  the  insurance  company's  agent, 
pending  the  approval  of  the  company  of  the  risk/'  even  if  it  has 
been  exhibited  to  the  agent  of  the  insured,  no  deliver}^  exists. 

§592.     Depositary  representing  both  obligor  and  obligee. 

A  delivery  of  an  instrument  to  a  third  person  to  hold  free 
from  control  of  the  obligor,  and  free  from  the  control  of  the 
obligee,  until  the  happening  of  a  certain  event,  and  then  to 
deliver  such  instrument,  on  the  happening  of  such  event,  to  the 
obligee,  is  a  delivery  in  escrow.^  Thus  a  delivery  of  a  deed  to 
one  who  agreed  to  deliver  to  the  grantee  on  the  grantor's  death, 
and  who  placed  the  deed  in  his  own  box  in  a  safety  vault, 
amounts  to  a  delivery  in  escrow.^  So,  where  grantor  executed 
a  deed  and  grantee  executed  a  lease  back  to  grantor  for  life, 
and  the  two  parties  deposited  both  instruments  in  a  bank,  with 
an  indorsement  that  they  should  be  delivered  to  the  grantor  or, 
upon  the  grantor's  death,  to  the  grantee,  is  a  valid  delivery.^  If 
grantor  delivers  a  deed  to  the  officer  who  takes  the  acknowledg- 
ment, with  instructions  to  deliver  to  the  grantee  under  certain 
contingencies,  this  is  a  valid  delivery  in  escrow.*  So,  where 
grantor  delivered  deeds  to  a  third  person  with  instructions, 
''  Take  these  papers  and  keep  them  until  I  am  gone,  and  give 
them  to  the  ones  that  they  belong  to,"  a  delivery  in  escrow  exists.^ 
It  is  not  necessary  to  the  validity  of  the  delivery  of  a  deed  in 
escrow  that  the  grantee  should  know  of  its  existence  when  it  is 
so  delivered.  If  he  learns  of  it,  and  accepts  the  deed  subse- 
quently, the  original  delivery  is  a  valid  delivery  in  escrow.^ 

"Oliver  v.  Ins.  Co.,  97  Va.  134;  L.     R.     A.     242;      32     Pac.     287. 

33  S.  E.  536.  *  Appleman     v.     Appleman,      140 

12  Nutting   V.    Ins.    Co.,    98    Wis.  Mo.  309;   62  Am.  St.  Rep.  732;   41 

26;   73  N.  W.  432.  S.  W.  794;   Brown  v.  Westfield,  47 

iBeloit,   etc.,   Ry.   v.   Palmer,    19  Neb.  399;  53  Am.  St.  Rep.  532;  66 

Wis.  594.  N.  W.  439. 

2Haeg  V.  Haeg,  53  Minn.  33;  55  s  Shea   v.   Murphy,    164   111.   614; 

N.  W.  1114.  56  Am.  St.  Rep.  215;  45  N.  E.  1021. 

3  Martin    v.    Flaharty,    13    Mont.  e  Clark  v.  Clark,  183  111.  448;   75 

fl6;     40    Am.     St.     Rep.     415;     19  Am.   St.   Rep.   115;   56  N.   E.   82. 


WRITTEN    SIMPLE    CONTEACTS.  915 

A  depositary  in  escrow  is  relieved  from  liability  on  delivering 
the  instrument  deposited  with  him  in  escrow,  in  accordance  with 
the  agreement  made  between  the  parties  to  the  depositary/  On 
the  one  hand,  he  is  not  bound  by  agreements  between  the  parties 
to  the  instrument  not  disclosed  to  him.^  On  the  other  hand,  other 
instructions  given  him  by  one  of  the  parties  can  not  alter  his 
duty  to  deliver  in  accordance  with  the  terms  of  the  deposit/ 
A  delivery  of  a  mortgage  in  escrow,  to  be  delivered  on  the  joint 
request  of  the  two  parties,  does  not  give  the  mortgagee  a  right  to 
its  delivery  until  such  joint  request  is  made.^"  But  where  the 
parties  agree  to  make  a  joint  request  for  delivery  upon  the  per- 
formance of  certain  conditions,  apd  delivery  is  then  to  be  made, 
an  arbitrary  refusal  to  one  party  to  consent  to  the  delivery  does 
not  defeat  the  rights  of  the  other  party/^  Under  an  agreement 
with  B,  A  placed  notes  in  the  hands  of  X  to  be  delivered  to  B 
when  called  for.     This  was  held  to  be  a  sufficient  delivery/^ 

§593.    Agent  of  obligee. 

A  delivery  by  the  obligor  to  the  agent  of  the  obligee,  without 
imposing  any  conditions  or  restrictions,  is  in  legal  effect  a  de- 
livery to  the  obligee  himself.  Thus  a  non-negotiable  note,*  or 
a  negotiable  note,'  or  an  insurance  policy,^  delivered  uncondi- 
tionally to  the  agent  of  the  obligee  take  effect  at  once. 

§594.    Agent  of  obligee  in  different  capacity. 

Whether  the  obligor  can  deliver  to  one  who  is  the  agent  of  the 
obligee  and  in  making  such  delivery  can  impose  such  conditions 

7  Bean  v.  Trust  Co.,  122  N.  Y.  L.  R.  A.  406;  40  S.  W.  656. 
622;26N.  E.  11.  i  Stockton,    etc.,    Society    v.    Gid- 

8  Walker  v.  Bamberger,  17  Utah  dings,  96  Cal.  84;  31  Am.  St.  Rep. 
239;    54   Pac.   208.  181;  21  L.  R.  A.  406;  30  Pae.  1016. 

0  Porter  v.  Metcalf,  84  Tex.  468;  2  Shaw  v.  Camp,  160  111.  425;  43 

19  S.  W,  696.  N.    E.    608;    affirming   61    111.   App. 

10  Belding       Savings      Bank       v.  62 ;    Enneking   v.    Woebkenberg.    88 

Moore,    118    Mich.    150;    76    N.    W.  Minn.  259;   92  N.  W.  932;   Merrill 

368.  V.  Hurley,  6  S.  D.  592;  55  Am.  St. 

"Fred   v.   Fred    (N.  J.   Eq.),   50  Rep.  859;  62  N.  W,  958. 

Atl.  776.  3  Connecticut    Indemnity  Associa- 

12  School  District  v.  Sheidley,  138  tion      v.      Grogan's      Administrator 

Mo.  672;   60  Am.  St.  Rep.  576;   37  (Ky.),  52  S.  W.  959. 


916  PAGE    ON    CONTi^ACTS. 

as  to  make  a  delivery  in  escrow,  is  a  question  upon  which  there 
is  a  conflict  of  autliority.  In  some  jurisdictions  an  agent  of  the 
obligee  may  hold  in  escrow  wherever  the  acceptance  by  him  of 
the  agency  of  escrow  involves  no  violation  of  duty  to  his  princi- 
pal/ Thus  a  deed  delivered  to  an  attorney  of  the  grantee  with 
a  written  memorandum  signed  by  the  grantor,  setting  forth  the 
t^rms  on  which  such  deed  was  to  be  delivered  to  the  grantee,  is 
an  escrow.^  So  a  delivery  of  a  bond  to  the  agent  of  the  obligee 
under  an  agreement  on  his  part  not  to  surrender  it  to  the  obligee 
until  twelve  more  names  have  been  added,  is  delivered  in  es- 
crow.^ In  other  jurisdictions  it  is  said  that  a  delivery  to  the 
agent  of  the  oblige  is  in  legal -effect  an  absolute  delivery  to  the 
obligee  himself,  and  can  not  be  a  delivery  in  escrow.*  So  it  has 
been  held  that  a  promissory  note  cannot  be  delivered  in  escrow 
to  the  agent  of  the  payee.^  This  last  principle  applies  on 
where  delivery  is  to  the  grantee's  agent  in  his  capacity  of  agent. 
The  fact  that  a  grantee  under  a  deed  delivered  in  escrow  has 
paid  the  depositary  to  represent  him  under  certain  conditions, 
does  not  make  the  depositary  his  agent  or  attorney,  so  that  a 
delivery  to  him  is  a  delivery  to  the  grantee.*'  The  divergence  of 
authority  as  to  the  power  of  an  agent  of  the  obligee  to  hold  in 
escrow  is  in  part  a  special  application  of  conflicting  views  enter- 
tained by  different  jurisdictions  upon  the  question  whether  the 
obligee  himself  can  hold  in  escrow  or  not.^  In  some  jurisdic- 
tions, however,  which  deny  that  an  obligee  may  hold  in  escrow, 
it  is  held  that  an  agent  of  the  obligee  may  so  hold  if  the  duties 

1  Deed,  Watkins  v.  Nash,  L.  R.  s  Fertig  v.  Bucher,  3  Pa.  St.  308. 
20  Eq.  262;  Ashford  v.  Prewitt,  *  Deed,  Duncan  v.  Pope,  47  Ga. 
102  Ala.  264;  48  Am.  St.  Rep.  37;  445;  Hubbard  v.  Greeley,  84  Me, 
14  So.  663;  Southern,  etc.,  Co.  v.  340;  17  L.  R.  A.  511;  24  Atl.  799; 
Cole,  4  Fla.  359;  Cincinnati,  etc.,  Bond  v.  Wilson,  129  N.  C.  325;  40 
R.  R.  V.   Iliff,   13   O.   S.  254;   Mer-  S.  E.  179. 

chants'    Ins.    Co.   v.    Nowlin      (Tex.  s  Stewart    v.    Anderson,    59    Ind. 

Civ.    App.),    56    S.    W.    198;    con-  375. 

tract,    Humphreys    v.    Ry.,    88    Va.  6  Dixon  v.  Bank,  102  Ga.  461;  66 

431;    13  S.  E.  985.  Am.  St.  Rep.  193;   31  S.  E.  96. 

2  Ashford    v.    Prewitt,     102    Ala.  7  See  §§  595-596. 
264;    48   Am.    St.   Rep.   37;    14   So. 

663. 


WRITTEN    SIMPLE    CONTKACTS.  917 

of  a  depositary  in  escrow  are  not  inconsistent  with  those  of 
agent.  ^ 

§595.     Obligee. —  Theory  that  he   can  hold   simple   contract  in 
escrow. 

Whether  an  instrument  can  be  delivered  to  the  obligee,  to 
hold  until  some  event  or  contingency  occurs,  not  appearing  on 
its  face,  and  then  to  take  effect,  is  a  question,  upon  which  there 
is  a  great  divergence  of  authority.  The  weight  of  authority  in 
cases  of  simple  contracts  is  that  they  may  be  delivered  to  the 
adversary  party  to  take  effect  only  upon  some  other  and  further 
condition.^  Thus  a  promissory  note"  or  an  insurance  policy^ 
may  be  so  delivered.  A  contract  executed  by  some  of  the  parties 
of  one  part  and  delivered  to  the  party  of  the  other  part,  to  take 
effect  only  if  the  rest  of  the  parties  of  the  one  part  sign  it,  is, 
according  to  this  view,  of  no  effect  until  such  parties  sign  it." 
A  promissory  note  delivered  to  payee  but  not  to  take  effect  until 
another  party  signs  it  is  ineffective  till  then.^  Thus  if  a  contract 
signed  by  a  surety  is  delivered  upon  condition  that  such  contract 
shall  take  effect  only  if  some  additional  surety  signs  it,  the 
weight  of  authority  treats  this  as  a  delivery  which  is  conditional 
only,  and  not  absolute ;  and  the  surety  thus  signing  is  not  bound 
unless  the  additional  surety  signs.  Thus  a  promissory  note,  de- 
livered to  payee  upon  condition  that  it  shall  take  effect  only 
when  signed  by  an  additional  security,  is  held  not  to  take  effect 

8  See  ante  this  section.  N.  Y.  654;  18  N.  E.  127;  Jordan  v. 

1  Wilson  V.  Powers,  131  Mass.  Jordan,  10  Lea.  (Tenn.)  124;  43 
539;   Blewit  v.  Boorum,   142  N.  Y.      Am.  Rep.  294. 

357;  40  Am.  St.  Rep.  600;  37  N.  E.  3  Westerfleld  v.  Ins.  Co.,  129  Cal. 

119;    Benton   v.    Martin,    52   N.    Y.  68;  61  Pac.  667;  58  Pae.  92. 

570.  4Flinn  v.  Mowry,   131   Cal.  481; 

2  Burke  v.  Dailaney.  153  U.  S.  63  Pac.  724;  modified  63  Pac.  1006; 
228;  MacFarland  v.  Sikes,  54  Conn.  Packer  v.  Benton,  35  Conn.  343;  95 
250;    1    Am.    St.    Rep.    Ill;    7    Atl.  Am.  Dec.  246. 

408;  Watkins  v.  Bowers,  119  Mass  5  Belleville      Savings      Bank      v. 

383;  Brown  V.  St.  Charles,  66  Mich.  Bornman,    124    111.    200;    16    N.    E. 

71;    32    N.    W.    926;    Westman    v.  210;      German-American      National 

Krumweide,    30   Minn.    313;    15   N.  Bank  v.  Peoples  Gas  Co.,  63  Minn. 

W.  255;   Reynolds  v.  Robinson,   110  12;  65  N.  W.  90;  McCormick  Har- 


918  PAGE    ON    CONTRACTS. 

until  such  additional  surety  signs.®  This  principle  has  been 
applied  to  delivery  of  a  bond  which  was  required  by  law,  to 
public  officers,  to  take  effect  only  if  some  additional  party  signs 
such  bond/  So  where  a  surety  signed  a  bond  in  replevin  and 
delivered  it  to  a  deputy  sheriff  to  be  by  him  delivered  to  the 
clerk  of  court  only  in  case  an  additional  surety  signed,  de- 
livery by  the  deputy  sheriff  without  the  signature  of  such  addi- 
tional surety  does  not  make  the  instrument  effective.*  The 
obligee  must,  however,  have  notice  of  the  conditions  upon  which 
the  instrument  was  delivered.  An  officer  of  the  school  district 
asked  A  to  sign  the  bond  of  X,  the  district  treasurer.  A  signed, 
upon  an  understanding  that  such  bond  should  only  take  effect  if 
B  also  signed  it.  The  bond  was  delivered.  It  was  held  that 
the  bond  took  effect,  even  if  B  did  not  sign  it,  since  the  officer 
was  not  acting  in  his  official  capacity  in  asking  A  to  sign  such 
bond,  and  notice  to  him  was  not  notice  to  the  public  corporation.^ 

§596.     Obligee. —  Theory  that  he  cannot  hold  simple  contract  in 
escrow. 

Some  authorities,  however,  hold  that  a  written  simple  contract 
cannot  be  delivered  to  the  obligee  in  escrow.  In  some  jurisdic- 
tions, negotiable  instruments  are  specially  singled  out  as  instru- 
ments which  cannot  be  delivered  in  escrow  to  the  payee.^  A 
negotiable  "  note  may  be  delivered  as  an  escrow  to  a  third  person, 
but  it  cannot  be  so  delivered  to  the  payee."^     Thus,  if  a  nego- 

vesting  Machine  Co.  v.  Faulkner,  7  ^  Board    of    Education    v.    Robin- 

S.  D.  363;  58  Am.  St.  Rep.  839;  64  son,  81  Minn.  305;  84  N.  W.  105. 
N.  W.  163.  1  Garner  v.   Fite,  93  Ala.  405;   9 

6  Knight  V.  Hurlbut,  74  111.  133;  So.  367;   Scott  v.  Bank,  9  Ark.  36; 

McCormick  Harvesting  Machine  Co.  Walker  v.  Crawford,  56  111.  444;  8 

V.   Faulkner,   7   S.   D.   363;    58  Am.  Am.    Rep.    701;    Murray  v.   W.   W. 

St.  Rep.   839;    64  N.  W.   163;   Ma-  Kimball  Co.,   10  Ind.  App.  184;   37 

jors  V.  McNeilly,  7  Heisk.    (Tenn.)  K   E.   734;    Dils  v.   Bank,   109  Ky. 

294.  757;   60  S.  W.   715;   Hurt  v.   Ford, 

TGatling  v.  San  Augustine  Coun-  142  Mo.  283;   41  L.  R.  A.  823;   44 

ty,  25  Tex.  Civ.  App.  283;  61  S.  W.  S.  W.  228;   Henshaw  v.  Button,  59 

432.  Mo.   139. 

8  Smith  V.  Spragins,  109  Ky.  535;  2  Clanin  v.  Machine  Co.,  118  Ind. 

59   S.   W.   855.  372,  374;   3  L.  R.  A.  863;  21  N.  E. 


WRITTEN    SIMPLE    CONTRACTS.  919 

liable  instrument  is  delivered  to  the  payee  to  take  effect  only  if 
some  other  person  signs  such  instrument,  such  condition  is 
invalid  and  the  instrument  takes  effect  at  once,  even  if  such  ad- 
ditional party  does  not  sign  it.^  A  surety  who  signed  an  instru- 
ment which  was  delivered  to  an  obligee  to  take  effect  only  if 
additional  sureties  signed  it,  may,  in  jurisdictions  where  such 
instrument  is  held  to  take  effect  at  once,  maintain  an  action 
against  such  obligee  for  damages  which  he  has  suffered  by  reason 
of  the  breach  of  such  agreement.* 

§597.     Contracts  under  seal  delivered  to  obligee  in  escrow. 

In  case  of  sealed  contracts  and  other  instruments  under  seal 
the  weight  of  authority  is  that  they  can  not  be  delivered 
in  escrow  to  the  obligee  unless  the  condition  of  such  delivery 
appears  upon  the  face  of  the  instrument.^  Thus,  by  the  weight 
of  authority,  a  deed  can  not  be  delivered  in  escrow  to  the 
grantee,  but  such  delivery  takes  effect  at  once."  So  a  contract 
under  seal  takes  effect  at  once  upon  delivery  to  the  obligee, 
and  can  not  be  delivered  to  him  in  escrow.^     If  a  sealed  instru- 

35;   citing  Stewart  v.  Anderson,   59  for  in  traditionibus  chartarum  non 

Ind.   375.  quod  dictum    sed   quod  factum,   est 

3  Scott  V.  Bank,  9  Ark.  36;  Dils  inspieitur."  Shep.  Touch.,  59  quot- 
V.  Bank,  109  Ky.  757;  60  S.  W.  ed  in  Ordinary  v.  Thatcher,  41  N.  J. 
715;  Hubble  v.  Murphy,  1  Duv.  L.  403,  407;  32  Am.  Rep.  225. 
(Ky.)  278;  Hurt  v.  Ford,  142  Mo.  2  Blewett  v.  Ry.,  51  Fed.  625; 
283;  41  L.  R.  A.  823;  44  S.  W.  228;  affirming  49  Fed.  126;  Darling  v. 
Henshaw  v.  Button,  59  Mo.   139.  Butler,   45   Fed.   332;    10   L.   R.   A. 

4  Bond,  Hudspeth's  Administrator  469 ;  Haworth  v.  Norris,  28  Fla. 
V.  Tyler,  108  Ky.  520;  56  S.  W.  973;  763;  10  So.  18;  McCann  v.  Ather- 
Note,  Dils  V.  Bank,  109  Ky.  757;  60  ton,  106  111.  31;  McGee  v.  Allison, 
S.  W.  715.  94    la.    527;    63   N.    W.    322;    Dyer 

1  Newman  v.   Baker,    10   App.   D.  v.   Shadan,   128  Mich.  348;   92  Am. 

C.    187.     "If   I    seal   my   deed    and  St.  Rep.  461;   87  N.  W.  277;   Wor- 

deliver   it   to   the   party   himself   to  rail  v.  Munn,  5  N.  Y.  229,  238;  55 

whom  it  is  made  as  an  escrow  upon  Am.  Dec.  330;  Miller  v.  Fletcher,  27 

certain  conditions,  etc.,  in  this  case  Gratt.   (Va.)   403;  21  Am.  Rep.  356. 
let   the   form   of   words   be   what   it  s  Reed    v.    Latham,    1    Ark.    66 ; 

will,    the    delivery    is    absolute    and  Ryan  v.  Cooke,  172  111.  302;   50  N. 

the    deed    shall    take    effect    as    his  E.  213;   Pickett  v.  Green,   120  Ind. 

deed  presently  and  the  party  is  not  584;    22    N.    E.    737;    Ordinary    v. 

bound    to    perform    the    conditions;  Thatcher,  41   N.  J.  L.  403;   32  Am. 


920  PAGE    ON    COTSTRaCItS. 

meiit  shows  upon  its  face  thai  the  parties  ?^,gniiig  w  at**  to  he 
bound  only  in  ease  additional  parties  signed,  delivery  to  the 
obligee  does  not  make  the  instrument  operative  iznti]  such  addi- 
tional parties  sign.*  Thus  a  deed  shov^'ing  on  its  face  that  it 
is  to  be  signed  by  husband  and  wife,  but  which  is  signed  by 
the  husband  alone  and  is  then  delivered  to  the  attorney  of  the 
grantee  to  take  effect  when  the  wife  signs,  is  ineffective  till 
then.^  The  courts  are  not  unanimous  as  to  what  shows  on  its 
face  that  a  sealed  instrument  is  incomplete.  The  fact  that 
the  body  of  the  instrument  contains  the  names  of  persons  who 
have  not  signed  the  instrument,  when  it  is  delivered,  has  been 
held  not  of  itself  to  show  that  the  signatures  of  those  who 
execute  the  instrument  are  not  to  take  effect  until  such  addi- 
tional parties  signed  it.®  Even  in  Case  of  sealed  instruments, 
however,  it  may  always  be  shown  that  a  surrender  of  the  actual 
custody  of  the  instrument  is  not  done  with  the  intent  of  putting 
it  into  effect,  but  for  some  other  purpose.  Thus,  handing  a 
deed  before  proper  acknowledgment  by  the  grantor  to  grantee 
so  that  his  lawyer  can  examine  it,^  or  handing  a  deed  to  grantee 
to  put  in  the  grantor's  box  at  the  bank,^  or  to  hold  as  grantor's 
agent,  subject  to  his  orders,''  does  not  amount  to  a  delivery. 
So  the  obligor  under  a  sealed  instrument  may  show  that  the 
instrument  was  taken  from  his  possession  surreptitiously.^" 

III.    Effect  of  Reducing  Contract  to  Writing. 

§598.     What  constitutes  the  terms  of  a  written  contract. 

In  discussion  of  the  question   of  what  may  constitute  the 
terms  of  a  written  contract  of  this  class  we  find  even  greater 

Rep.  225;  Easton  v.  Driscoll,  18  R.  67    Am.    St.    Rep.    860;    74    N.    W. 

I.  318;  27  Atl.  445.  778. 

4  Sullivan    County    v.    Ruth,    106  » Hayes   v.   Boylan,    141   111.   400; 
Tenn.  85;   59  S.  W.  138.  33    Am.    St.    Rep.    326;    30    N.    E. 

5  Shelby   v.   Tardy,    84   Ala.   327;  1041. 

4  So.  276.  9  Wilson  v.  Wilson.   158  111.  567; 

6  Ordinary  v.  Thatcher,   41   N.  J.  49  Am.  St.  Rep.  176;  41  N.  E.  1007. 
L.  403;  32  Am.  Rep.  225.  lo  Southern,    etc..    Co.   v.    Cole,    4 

7  Curry  v.  Colburn,  99  Wis.    319;  Fla.  350;  Black  v.  Shreve,  13  N.  J. 

Eq.  455. 


WRITTEN    SIMPLE    CONTRACTS.  921 

difficulty  than  usual  in  separating  one  topic  from  its  context 
of  allied  topics.  Any  such  division  is  in  its  nature  more  or 
less  arbitrary,  yet  for  p<ractical  purposes  it  is  an  inevitable 
necessity.  In  this  case  the  question  of  what  constitutes  the 
terms  of  a  written  contract  is  intimately  connected  with  the  so- 
called  parol  evidence  rule/  and  the  parol  evidence  rule  is  in 
turn  a  branch  of  construction.  The  truth  is  that  construction 
is  essentially  a  part  of  the  contract/  and  yet  for  purposes  of 
convenience  it  must  be  discussed  apart  from  the  question  of 
what  makes  up  the  contract. 

§599.    Validity  of  oral  contracts  of  this  class. 

A  contract  which  is  not  within  the  statute  of  frauds  or  any 
similar  statute,  and  which  is  not  within  the  classes  of  contracts 
required  by  the  law-merchant  to  be  in  writing,  is  valid  though 
entirely  oral.^  Thus  a  contract  of  insurance  may  be  made  by 
oral  agreement  and  proved  by  oral  evidence,  if  by  its  terms 
performance  is  not  to  last  beyond  a  year  from  the  time  that 
it  is  made."  So  an  account  stated  may  be  made  by  oral  agree- 
ment.^    So  a  debt  growing  out  of  a  contract  may  be  assigned 

iSee  Ch.  LVI.  hue  v.  Ins.  Co..   175  Mass.  187;   55 

2Sattler    v.    Hallock,    160    N.    Y.  N.  E.  1039  ^  Sanford  v.  Ins.  Co.,  174 

291;  73  Am,  St.  Rep.  686;  46  L.  R.  Mass.   416;    75   Am.    St.   Rep.    358; 

A.  679;   54  N.  E.  667.  54  N.  E.  883;  Emery  v.  Ins.  Co.,  138 

iReed    v.    Orleans,    1    Ind.    App.  Mass.    398;    Angell   v.    Ins.   Co.,   59 

25;    27   N.  E.   109.  N.  Y.  171;   17  Am.  Rep.  322;  Trus- 

2  Eames    v.    Ins.    Co.,    94    U.    S.  tees  of  First  Baptist  Church  v.  Ins. 

621;   Relief  Fire   Ins.   Co.  v.   Shaw,  Co.,   19  N.  Y.   305;    s.  c,  28  N.  Y. 

94  U.  S.  574;   Franklin  Ins.  Co.  v.  153;    Croft   v.   Ins.   Co.,   40   W.  Va. 

Colt,   20   Wall.    (U.   S.)    560;    King  508;  52  Am.  St.  Rep.  902;  21  S.  E. 

V.  Cox,  63  Ark.  204;  37  S.  W.  877;  854;   Campbell  v.  Ins.  Co.,  73  Wis. 

Fireman's  Ins.  Co.  v.  Kuessner,  164  100;    40   N.   W.   661;    King  v.   Ins. 

111.    275;    45    N.    E.    540;    Western  Co.,    58   Wis.   508;    17   N.   W.   297; 

Assurance  Co.   v.  McAlpin,   23   Ind.  contra.  Bell  v.  Ins.  Co.,  5  Rob.  (La.) 

App.  220;   77  Am.  St.  Rep.  423;  55  423;  39  Am.  Dec.  542. 

N.   E.    119;    Davenport  v.   Ins.   Co.,  3  Knowles  v.  Michel,  13  East.  249 

17   la.   276;    Western,  etc.,   Ins.  Co.  Pinchon  v.  Chilcott,  3  C.  &  P.  236 

V.  Duffey,  2  Kan.  347;  Phoenix  Ins.  Lallande   v.    Brown,    121    Ala.    513 

Co.  V.  Ireland.  9  Kan.  App.  644;  58  25    So.    997;    Watkins   v.    Ford,    69 

Pac.  1024;  Howard  Ins.  Co.  v.  Owen,  Mich.  357;  37  N.  W.  300. 
94  Ky.   197;   21  S.  W.  1037;   Good- 


922  PAGE    ON    CONTRACTS. 

orally.*  Even  if  the  contract  is  one  which  by  reason  of  the 
statute  of  frauds  must  be  proved  by  writing,  an  oral  assign- 
ment of  it  is  valid.^  So  an  oral  contract  for  the  adoption*'  or 
emancipation^  of  a  child  is  valid.  As  we  have  seen  elsewhere* 
parties  who  make  an  oral  contract  which  they  intend  to  reduce 
to  writing  may  either  intend  the  contract  to  be  in  force  at  once*^ 
or  they  may  not  intend  that  it  shall  take  effect  until  the  formal 
contract  is  executed.^"  Whichever  intention  they  may  have 
will  be  given  full  force  and  eifect,  and  the  contract  will  be  in 
force  before  it  is  reduced  to  writing  or  not,  as  they  may  have 
agreed. 

§600.    Words  employed  are  terms  of  contract. 

The  words  used  by  the  parties  in  their  written  contract  are 
of  course  a  part  thereof.  Each  and  every  one  of  them  must  be 
considered  in  arriving  at  the  intention  of  the  parties.  It  does 
not  necessarily  follow  that  every  word  written  on  the  paper 
when  the  contract  is  executed  is  a  part  thereof.  Thus  w^here 
a  letter  contained  a  proposition  to  pay  for  the  manufacture 
and  delivery  of  goods,  and  it  was  accepted  by  the  party  to  whom 
it  was  sent  by  a  letter,  the  words  "  All  sales  subject  to  strikes 
and  accidents,"  printed  as  part  of  the  letter-head  of  the  reply, 

4  Heath  v.  Hall,  4  Taunt.  326;  Am.  St.- Rep.  495;  45  L.  R.  A.  645; 
Tibbits  V.  George,  5  Ad.  &  El.  107;       57  Pac.  908. 

Chamberlin  v.  Gilman,  10  Colo.  94;  8  See  §  54, 

Barthol  v.  Blakin,  34  la.  452;  Rob-  9  Drummond  v.  Crane,   159  Mass. 

bins  V.  Klein,  60  O.  S.  199:  54  N,  E.  577;  38  Am,  St,  Rep.  460;  23  L.  R, 

94;  Clark  v.  Gillespie,  70  Tex.  513;  A.    707;    35    N,    E,    90;    Lowrey   v. 

8   S,   W.    121;   Noyes  v.   Brown,   33  Danfortli,   95  Mo.  App.  441;    69   S. 

Vt.  431;   Chapman  v.  Plummer,  36  W.   39;    Sanders   v.   Fruit   Co,,   144 

Wis.   262.  N.   Y,   209;    43   Am,   St,   Rep,   757; 

5  7u  re  Huggin's  Estate,  204  Pa,  29  L.  R.  A.  431;   39  N,  E.  75, 

St,  167;   53  Atl.  746,  lo  Ridgway   v,   Wharton.   6  H,  L. 

eQuinn  v,  Quinn,  5  S,  D.  328;  Cas,  238,  268;  Lake  Erie,  etc,  Co. 
49  Am.  St.  Rep.  875;  58  N.  W,  808;  v,  Ry.,  86  Fed.  840:  Lyman  v.  Rob- 
Taylor  V,  Deseve,  81  Tex,  246;  16  inson,  14  All,  (Mass.)  242;  Mis- 
S.  W.  1008,  sissippi.     etc..     Steamship     Co.     v. 

7  Flynn  v.  Baisley,  35  Or,  268 ;  76  Swift,  86  Me.  248 :  41  Am,  St,  Rep. 

545;   29  Atl.   1063, 


WRITTEN    SIMPLE    CONTBACTS. 


923 


do  not  form  any  part  of  the  contract/  This  principle  is  still 
clearer  where  the  words  in  question  are  on  some  paper  other 
than  that  on  which  the  contract  is  written.  So  if  a  contract  of 
sale  is  in  writing,  the  printed  bill-head  of  the  invoice  of  goods 
is  no  part  thereof."  The  same  principle  applies  where  the  con- 
tract is  not  in  writing.  Thus  A,  a  manufacturer,  had  placed  a 
printed  warranty  on  wheels  manufactured  and  sold  by  him. 
B  bought  a  wheel  and  resold  it  without  removing  the  placard. 
It  was  held  that  B  did  not  thereby  adopt  A's  warranty.^  These 
are  really  special  examples  of  the  application  of  the  general 
doctrines  of  offer  and  acceptance. 

§601.    Law  as  term  of  contract. 

It  is  impracticable  and  impossible  to  set  forth  in  writing  all 
the  different  stipulations  and  provisions  which,  by  the  opera- 
tion of  law,  are  terms  of  the  contract.  The  difficulty  exists,  not 
because  the  contract  is  in  writing,  but  because  it  is  impossible 
to  make  an  exhaustive  enumeration  in  express  words  of  every- 
thing which  may  in  law  be  a  part  of  the  contract.  Some  things 
are  a  part  of  the  contract  which  are  in  the  minds  of  both  parties, 
though  not  stated  in  express  languages.  Other  things  are  pre- 
sumed to  be  in  the  minds  of  the  parties ;  but  in  many  cases  this 
presumption  is  purely  artificial  —  a  mere  fiction.  What  is 
really  meant  is  that  certain  things  affect  the  contract,  even  if 
the  parties  do  not  agree  upon  them  or  even  think  of  them. 
Valid  laws  which  are  in  force  when  the  contract  is  made  are 
a  part  thereof,  even  though  not  expressly  referred  to.^  Thus  an 
ordinance  requiring  the  walls  of  opera-houses  to  be  of  a  specified 
thickness  is  a  part  of  a  contract  of  subscription  for  the  erection 
of  an  opera-house  within  the  city,  although  it  is  not  referred 
to  therein.^     So  municipal  ordinances  creating  and  establishing 

1  Summers  v.  Hibbard,  153  111.  i  Nielsen  v.  Assurance  Society, 
102;  46  Am.  St.  Rep.  872;  38  N.  E.  139  Cal.  332;  96  Am.  St.  Rep.  146; 
899.                                                               73  Pac.  168. 

2  Sturm  V.  Boker,  150  U.  S.  312.  2  Gerner  v.  Churcli,  43  Neb.  690; 
3Pemberton    v.    Dean.    88    Minn.      62  N.  W.  51. 

60;  97  Am.  St.  Rep.  503;  60  L.  R. 
A.  311;  92  N.  W.  478. 


934  PAGE    ON    CONTRACTS. 

fire  limits  are  part  of  a  contract  of  insurance  of  property  in 
such  limits,  and  bind  the  insurer.^  An  unconstitutional  statute 
is  not,  however,  a  term  of  a  contract  made  between  the  time 
that  it  is  passed  and  the  time  that  it  is  declared  unconstitu- 
tional ;*  even,  it  has  been  held,  if  expressly  made  a  part  of  the 
contract.^ 

§602.     Extrinsic  facts  as  terms  of  contract. 

When  we  pass  from  consideration  of  the  words  of  the  contract 
to  the  question  of  what  else  may  be  regarded  as  a  term  of  such 
contract  we  are  met  with  a  practical  difficulty  which  admits  of 
only  a  rather  arbitrary  solution.  The  parties  who  enter  into 
a  contract  do  so  with  full  knowledge  and  in  contemplation  of  a 
great  many  rules  of  law,  customs,  and  facts  which  they  do  not 
carry  into  their  written  contract  in  express  terms.  They  have 
probably  reached  their  written  contract  as  the  result  of  long 
negotiations.  All  these  things  have  undoubtedly  made  some 
impression  on  their  minds,  and  probably  have  influenced  the 
wording  of  the  contract.  To  what  extent  will  the  law  recog- 
nize them  as  terms  of  the  written  contract  ?  The  principles  of 
the  law  which  aiford  a  solution  of  this  question  are  grouped 
under  the  rather  unfortunate  name  of  the  Parol  Evidence  rule. 
It  may  be  said  to  be  a  general  rule  that  the  surrounding  facts 
and  circumstances  other  than  the  prior  and  contemporaneous 
oral  negotiations  of  the  parties  constitute  a  part  of  the  contract 
as  long  as  such  contract  is  not  inconsistent  therewith.^ 

§603.     Rules  and  hy-laws. 

Rules  of  a  voluntary  association  are  a  part  of  a  contract  for 
membership  in  such  association  entered  into  between  the  asso- 

sLarkin    v.    Ins.    Co.,    80    Minn.  52  L.  R.  A.  814;  59  N.  E.  716;  (City 

527;  81  Am.  St.  Rep.  286;  83  N.  W.  of)    Cleveland   v.   Construction   Co., 

409.  67  0.  S.  197;  9.3  Am.  St.  Rep.  670; 

4  Palmer  v.  Tingle,  55  O.  S.  423;  59  L.  R.  A.  775;  65  N.  E.  885. 
45   N.   E.    313.  (Contracts  of  public  corporations.) 

5  People  V.   Coler.    166   N.   Y.    1;  i  See  §  1123. 


WRITTEN    SIMPLE    CONTRACTS.  925 

ciation  and  a  member  thereof/  Tlie  constitution  and  by-laws 
of  a  beneficial  association  form  a  part  of  a  contract  of  insurance 
entered  into  between  such  association  and  a  member  thereof,^ 
whether  such  by-laws  are  referred  to  in  the  contract  of  insurance 
or  not.^  The  construction  placed  upon  such  by-laws  by  its 
highest  tribunal  becomes  as  much  a  part  of  the  contract  as  the 
by-laws  themselves.*  If  power  to  change  the  by-laws  is  re- 
served, subsequent  amendments  become  terms  of  the  contract 
and  are  binding  on  the  members.^  However,  general  power  to 
change  by-laws  has  been  held  not  to  confer  power  to  change  the 
contractual  rights  of  a  member.^ 

§604.     Usages  and  customs. 

In  many  kinds  of  business  a  great  number  of  usages  and 
customs  have  gradually  been  built  up.  These  customs  are 
rarely  carried  in  express  terms  into  contracts  made  with  refer- 
ence to  such  kinds  of  business,  yet  they  are  ordinarily  intended 
by  the  parties  as  terms  of  such  contracts.  Accordingly  even 
though  the  contract  is  in  writing,  extrinsic  evidence  may  be 
resorted  to  to  show  usages  and  customs  of  such  business  con- 
sistent with  the  contract,  and  either  known  to  the  parties  to 

iLawson  V.  Hewell,  118  Cal.  613;  ^.eserve    Association,    89    Md.    99; 

49  L.  R.  A.  400;  50  Pac.  763;  Green  73  Am.   St.  Rep.   169;   44  L.  R.  A. 

V.  Board  of  Trade,  174  111.  585;   49  149;  42  Atl.  944. 
L.  R.  A.  365 ;   51   N.  E.  599.  4  Supreme  Lodge  Knights  of  Py- 

2  Protection  Life  Ins.  Co.  v.  thias  v.  Kalinski,  163  U.  S.  289. 
Foote,  79  111.  361;  Illinois,  etc.,  As-  5  Lawson  v.  Hewell,  118  CaL 
sociation  v.  Walil,  68  111.  App.  411;  613;  49  L.  R.  A.  400;  50  Pac.  763; 
Supreme  Lodge  Knights  of  Pythias  Hass  v.  Relief  Association,  118  Cal. 
V.  Knight,  117  Ind.  489;  3  L.  R.  A.  6;  49  Pac.  1056;  Robinson  v.  Tem- 
409;  20  N.  E.  479;  Daughtry  v.  plar  Lodge,  117  Cal.  370;  59  Am.  St. 
Knights  of  Pythias,  48  La.  Ann.  Rep.  193;  49  Pac.  170;  Daughtry 
1203;  55  Am.  St.  Rep.  310;  20  So.  v.  Knights  of  Pythias,  48  La.  Ann. 
712;  Home  Forum  Benefit  Order  1203;  55  Am.  St.  Rep.  310;  20  So. 
V.  Jones,  5  Okla.  598;  50  Pac.  165;  712. 

McLendon     v.     Woodmen     of     the  g  Sieverts   v.   Benevolent   Associa- 

World,  106  Tenn.  695;   52  L.  R.  A.  tion,  95  la.  710;  64  N.  W.  671;  Co- 

444;  64  S.  W.  36.  hen  v.   Supreme   Sitting.   105  Mich. 

3  Hass  V.   Relief  Association.    118  283;  63  N.  W.  304;  Strause  v.  Life 
Cal.    6;    49    Pac.    1056;    Condon,   v.  Association,  126  N.  C.  971;  54  L.  R. 


926  PAGE    ox    CONTBACTS. 

tlie  contract/  or  so  notorious  that  one  dealing  in  such  business 
must  be  presumed  to  know  it."  Thus  a  principal  who  employs 
a  broker  is  bound  by  the  customs  of  the  market  at  which  such 
broker  acts.^  Thus  in  an  oral  contract  of  insurance  not  speci- 
fying when  it  is  to  take  effect  extrinsic  evidence  of  a  custom 
as  to  when  the  risk  attaches  is  admissible.*  So  under  a  con- 
tract to  pay  twelve  dollars  an  acre  for  clearing  a  right  of  way 
at  points  to  be  designated,  it  has  been  held  proper  to  show  a 
custom  to  pay  for  clearing  in  open  fields  only  such  proportion 
of  the  contract  price  as  such  work  bears  to  the  work  of  clearing 
in  the  forest.^  So  under  a  binding  slip  issued  by  an  insurance 
company  which  recites  that  it  is  issued  to  the  insured  to  protect 
him  against  loss  for  a  certain  time  and  amount,  but  which 
is  incomplete  as  not  showing  the  consideration,  it  may  be  shown 
that  the  custom  of  the  insurance  business  is  to  issue  such  slips 
pending  the  acceptance  or  rejection  of  the  policy  and  that  in 
case  of  rejection,  liability  under  the  binding  slip  ceases  at  once." 
To  be  regarded  as  part  of  a  contract,  however,  the  usage  or 
custom  must  have  both  of  the  foregoing  elements.  (1)  It  must 
be  actually  or  constructively  known;  and  (2)  it  must  be  con- 
sistent with  the  contract.  If  either  of  these  elements  is  lacking 
the  usage  or  custom  cannot  be  regarded  as  part  of  the  contract. 
If  the  usage  is  neither  actually  or  constructively  known  to  one 
of  the  parties  to  the  contract,  it  is  not  binding  upon  him.' 
Thus  the  usage  of  banks  to  hold  checks  deposited  as  a  deposit 
until  the  end  of  banking  hours  to  see  if  the  account  is  good  is 
not  binding  on  a  depositor  if  not  known  to  him.*     It  is  per- 

A.  60;   36  S.  E.  352;   rehearing  de-  4  Cleveland   Oil   Co.   v.   Ins.   Soci- 

nied,   128   N.   C.   465;    54  L.   E.   A.  ety,  34  Or.  228;   55  Pac.  435. 

605 ;   39  S.  E.  55 ;  Hale  v.  Aid  Un-  5  JMcCarthy  v.  MeArthur,  69  Ark, 

ion,  168  Pa.  St.  377;  31  Atl.  1066.  313;    63  S.  W.  56. 

1  Kauffman  v.  Raeder,  108  Fed.  6  Underwood  v.  Ins.  Co.,  161  N. 
171;   54  L.  R.  A.  247;   47  C.  C.  A.  Y.   413;    55   N.   E.   936. 

278.  7Daun  v.   Brewery  Co.,  L.    R.    8 

2  Van  Dusen-Harrington  Co.  v.  Eq.  155;  McDonough  v.  Marble  Co., 
.Jiingeblut,  75  Minn.  298;  74  Am,  112  Fed.  634;  Nonotuck  Silk  Co.  v. 
St.   Rep.   463;    77   N.  W.   970.  Fair,    112   Mass.   354. 

3  Van  Dusen-Harrington  Co.  v.  s  National  Bank  v.  Burkhardt, 
Jungeblut,  75  Minn.  298:  74  Am.  St.  100  U.   S.   686. 

Rep.  463;   77  N.  W.  970. 


WBITTEN    SIMPLE    CONTHACTS.  927 

fectly  possible  for  parties  to  make  contracts  which  are  not  con- 
trolled by  given  usages.  This  may  be  done  by  expressly 
providing  against  them;  but  it  is  done  more  frequently  by 
making  express  provisions,  covering  the  same  ground  as  the 
usage,  but  inconsistent  therewith.  Accordingly  the  usage  in- 
voked must  furthermore  be  consistent  with  the  contract  in 
question  in  order  to  be  regarded  as  part  of  it.  If  consistent, 
with  the  express  provisions  of  the  contract,  it  cannot  be  used 
to  contradict  them  and  to  show  an  intent  different  from  that 
expressed.^  Thus  the  specific  provisions  of  a  contract  to  ship 
goods  cannot  be  contradicted  by  a  local  custom.^"  So  a  contract 
to  saw  logs  as  fast  as  the  operator  could  cannot  be  contradicted 
by  a  custom  to  saw  logs  of  different  owners  in  the  order  in 
which  they  were  delivered."  So  a  contract  which  provides 
who  shall  pay  the  duty  cannot  be  contradicted  by  a  custom  as 
to  who  receives  the  benefit  of  subsequent  reductions.^^  So  a 
written  oil  lease  cannot  be  contradicted  by  evidence  of  a  custom 
that  the  prospector  should  burn  oil  produced  on  a  claim.^^  So 
a  contract  requiring  a  specific  number  of  wells  to  be  bored  can- 
not be  contradicted  by  a  custom  to  bore  a  certain  number  in  a 
given  time.^*  So  if  a  contract  requires  "  walls  to  be  washed 
or  sized  with  good  strong  glue  "  preliminary  to  papering,  evi- 
dence of  a  custom  as  to  the  method  of  papering  is  no  part  of 
the  contract.^^  So  under  a  contract  to  print  a  catalogue  cover 
in  accordance  with  approved  proof,  it  cannot  be  shown  to  be  the 
custom  for  the  printers  to  add  their  name  to  the  bottom  of  the 
last  page  of  the  catalogue,  proof  having  been  approved  without 


9  Menage  v.  Rosenthal,  175  Mass.  12  Withers  v.  Moore.  140  Cal. 
358;  56  N.  E.  579;  Watkins  v.  591 ;  74  Pac,  159 ;  reversing  in  banc, 
Greene,  22  R.  I.  34;   46  Atl.  38.  71  Pac.  697. 

10  Boon  V.  The  Belfast,  40  Ala.  i3  Swift  v.  Petroleum  Co.,  141 
184;  88  Am.  Dec.  761;  Louisville,  Cal.  161;  74  Pac.  700;  reversing 
etc.,    Co.   V.    Rogers,    20    Ind.    App.  in  banc,  70  Pac.  470. 

594;  49  N.  E.  970;  Benson  v.  Gray,  i*  Stoddard  v.  Emery,  128  Pa.  St. 

154  Mass.  391;  13  L.  R.  A.  262;  28  436;   18  Atl.  339. 

N.    E.    275;    Meloche    v.    Ry.,    116  is  Independent    School   District  v. 

Mich.    69;    74   N.    W.    301.  Swearingen,   119  la    702;   94  N.  W. 

iiMowatt  V.  Wilkinson,  110  Wis.  206. 
176;    85   N.   W.   661. 


928  PAGE    ON    CONTRACTS. 

such  addition. ^°  The  legal  effect  of  a  transaction  cannot  he 
contradicted  by  a  usage.  So  a  custom  of  banks  that  crediting 
a  deposit  by  indorsing  checks  is  merely  a  receipt,  not  an  assign- 
ment of  the  check  for  value,  and  that  the  bank  is  not  a  bona  fide 
holder  for  value  has  no  validity.^^ 

§605.     Incomplete  written  contracts. 

Contracts  of  this  sort,  being  perfectly  valid  if  oral,  may  be 
in  part  reduced  to  writing  by  the  parties  and  left  oral  in  part.^ 
Whatever  the  rule  may  be  as  to  a  contract  within  the  provisions 
of  the  statute  of  frauds"  a  contract  reduced  to  writing  merely 
because  the  parties  thereto  choose  to  do  so  need  not  set  forth  the 
consideration.^ 

§606.     Adding   party   to    simple   written    contract   by   extrinsic 
evidence. 

If  A  signs  a  written  contract  made  with  B  on  behalf  of  A's 
principal  X,  and  affixes  his  own  name  thereto  without  apt  words 
to  show  that  he  is  acting  only  as  agent  B  may  undoubtedly  hold 
A  on  such  contract.  If,  however,  B  wishes  to  hold  the  real  prin- 
cipal X,  his  right  to  do  so  is  not  inconsistent  with  his  right  to 

16  Harris  v.  Sharpies,  202  Pa.  St.  1084;  .Jamestown,  etc.,  Association 
243;  58  L.  R.  A.  214;  51  Atl.  v.  Allen,  172  N.  Y.  291;  92  Am. 
965.  St.  Rep.  740;   64  N.  E.  952;   State 

17  Shaw  V.  Jacobs,  89  la.  713;  48  v.  Cunningham,  154  Mo.  161;  55  S. 
Am.  St.  Rep.  411;  21  L.  R.  A.  440;  W.  282;  Selig  v.  Rehfuss,  195  Pa. 
55  N.  W.  333;   56  N.  W.  684.  St.  200;  45  Atl.  919;  Lewis  v.  Turn- 

iGuidery  v.  Green,  95  Cal.  630;  ley,   97   Tenn.   197;    36   S.   W.   872; 

30    Pac.    786;    Kinney    v.    Whiton,  Steed  v.  Harvey,  18  Utah  367;   72 

44    Conn.    262;    26    Am.    Rep.   462;  Am.    St.   Rep.    789;    54   Pac.    1011; 

Chamberlain  v.  Lesley,  39  Fla.  452;  Puget  Sound,   etc..  Works  v.  Clem- 

22    So.    736;    Forsyth    Mfg.    Co.    v.  mons,   32   Wash.   36;    72   Pac.   465; 

Castlen,    112   Ga.    199;    81   Am.   St.  Knowles  v.   Rogers,  27   Wash.  211; 

Rep.  28;  37  S.  E.  485;  Gould  v.  Ex-  67   Pac.   572. 

celsior  Co.,  91  Me.  214;   64  Am.  St.  2  See  §   696. 

Rep.    221;    39    Atl.    554;    Courtney  3  Gillighan  v.   Boardman,  29  Me. 

V.   Mfg.   Co.,   97   Md.   499;    55   Atl.  79;   Horn  v.  Hansen,  56  Minn.  43; 

614;    Drew   v.   Wiswall,    183   Mass.  22   L.   R.   A.   617;    57   N.   W.   315; 

554;  67  N.  E.  666;  Germania  Bank  Patchin  v.   Swift,  21  Vt.  292. 
V.  Osborne,  81  Minn.  272 ;  83  X.  W. 


WRITTEN    SIMPLE    CONTRACTS.  939 

hold  Aj^sinee  both  rights  may  exist  together  until  B  has  made  his 
election  between  them/  Accordingly  it  does  not  contradict  the 
legal  effect  of  such  instrument  to  show  that  X  is  the  real  party 
in  interest.  If  B  wishes  to  sue  X,  the  real  principal,  the  parol 
evidence  rule  does  not,  therefore,  prevent  B  from  showing  tlnit  A 
signed  on  behalf  of  X.  Such  evidence  is  admissible  therefore 
where  the  contract  is  in  writing,  but  is  not  required  by  law  to  be 
in  writing  or  to  be  proved  by  writing."  Thus  one  who  deposits 
money  in  a  bank  and  takes  receipts  given  by  the  cashier  in  his 
own  name,  without  any  official  designation,  may  show  that  the 
bank  was  the  real  party  to  the  contract,^  The  fact  that  i.  ware- 
house receipt  is  declared  negotiable  by  statute  does  not  n;ake  it 
negotiable  within  the  meaning  of  this  rule.  The  holder  of  the 
receipt  may  show  who  the  real  principal  is  and  hold  him  on  the 
receipt.*  In  an  action  on  a  non-negotiable  note  the  mak*  r  may 
show  that  the  nominal  payee  was  the  agent  of  the  real  payee, 
and  thus  show  the  dealings  between  the  maker  and  the  reaV  payee 
to  show  failure  of  consideration.^ 

§607.     Effect  of  knowledge  of  identity  of  principal. 

In  many  of  the  cases  some  emphasis  is  laid  on  the  fact  that  the 
principal  Avas  not  disclosed  when  the  agent  entered  into  the  con- 
tract with  the  adversary  party.     The  importance  of  this  fact  is 

iSee  §§  695,   976.  839;     Barbre    v.     Goodale,     28    Or. 

2  Nash  V.  Towne,  5  Wall.   (U.S.)  465;     38    Pac.    67;     43    Pac.    378; 

689;    Merrill   v.   Kenyon,   48   Conn.  Hubbard   v.   Tenbrook,    124    Pa.    St. 

314;   40  Am.  Rep.   174;   Daugherty  291;   10  Am.  St.  Rep.  585;  2  L.  R. 

V.  Heckard,   189  111.  239;   59  N.  E.  A.    823;    16    Atl.    817;    Landers    v. 

569;  affirming  89  111.  App.  544;  By-  Foster,  —  Wash.  — ;  76  Pac.  274. 

ington  V.   Simpson,   134  Mass.   169;  3  Hanson  v.  Heard,  69  N.  H.  190; 

45  Am.  Rep.  314;  Jones  v.  Williams,  38  Atl.  788;    (citing  Van  Leuven  v. 

139  Mo.  1;  61  Am.  St.  Rep.  436;  37  First  Nat.  Bank,  54  N.  Y.  671 ;  Pier- 

L.   R.   A.    682;    39    S.   W.   486;    40  son  v.  Atlantic  Nat.  Bank,  77  N.  Y. 

S.  W.  353;   Kayton  v.  Barnett,   116  304). 

N.  Y.  625;  23  N.  E.  24;  Patrick  v.  4  Anderson  v.  Flouring  Mills  Co., 

Mercantile    Co.,    —    N.    D.    — ;    99  37  Or.  483;   82  Am.   St.  Rep.   771; 

N.  W.  55;  Aetna  Ins.  Co.  v.  Church,  50  L.  R.  A.  235:  60  Pac.  839. 

21  O.  S.  492;  Anderson  v.  Flouring  s  Stockton,    etc.,    Society    v.    Gid- 

Mills,  37  Or.  483;   82  Am.  St.  Rep.  dings,  96  Cal.  84;   31  Am.  St.  Rep. 

771;    50    L.    R.    A.    235;    60    Pac.  181;  21  L.  R.  A.  406;  30  Pac. -1016. 
59 


930  PAGE    ON    CONTRACTS. 

the  same  in  written  and  unwritten  contracts  and  may  he  hriefly 
stated  as  follows.  If  the  parties  agree  orally  that  the  agent  is 
acting  on  behalf  of  his  principal,  there  is  no  question  then  in  oral 
contracts  as  to  the  right  of  the  adversary  party  to  enforce  the 
contract  against  the  principal.^  In  written  contracts  not  re- 
quired to  be  in  writing  or  to  be  proved  in  writing  the  only  ques- 
tion raised  by  attempting  to  enforce  the  contract  against  the  real 
principal  is  that  of  the  effect  of  the  parol  evidence  rule.  But  if 
identity  and  existence  of  the  principal  are  alike  undisclosed,  the 
additional  question  has  been  raised,  whether  the  adversary  party 
can  properly  be  said  to  have  contractual  relations  with  this  un- 
known principal.  As  this  is  the  most  extreme  case,  most  stress 
has  been  laid  upon  it.  The  courts  have  held  that  whether  the 
contract  is  oral  or  written,  as  long  as  it  is  not  of  the  class  of  con- 
tracts which  must  be  in  writing  the  real  principal  may  be  shown 
and  held  liable  on  the  contract.^  Some  courts,  however,  have 
misunderstood  the  reason  for  emphasizing  the  fact  that  the  prin- 
cipal is  unknown,  and  have  said  that  the  rule  allowing  the  real 
principal  to  be  held  on  a  written  contract  by  which  he  is  not  in 
terms  made  liable,  is  limited  to  cases  where  the  real  principal  is 
unknown  to  the  adversary  party  at  the  time  of  making  the  con- 
tract ;  and  that  if  the  real  principal  is  know^i,  and  the  adversary 
party  accepts  a  written  contract  which  by  terms  and  legal  effect 
binds  the  agent,  this  is  an  election  to  hold  the  agent  and  not  the 
principal.^  An  examination  of  the  authorities  cited  in  Chandler 
V.  Coe,*  will  show  that  those  sustaining  the  proposition  are  cases 
of  negotiable  instruments,  that  is,  of  contracts  which  must  be  in 
writing.  They  come  therefore  under  the  operation  of  a  different 
principle  from  that  here  discussed.  In  cases  involving  contracts 
not  required  to  be  in  writing,  many  fail  to  indicate  whether  the 
principal  was  known  or  unknown  to  the  adversary  party  when 

1  See  §964.  Baxter,   2   Wash.   Ter.   135;    3   Pac. 

2  Merchants'  Bank  v.  Bank,  1  Ga.      844. 

418;  44  Am.  Dec.  G65;  Williams  v.  3  Chandler  v.  Coe,  54  N.  H.  561; 

Robbins,  16  Gray  (Mass.)  77;  77  Obiter  to  the  same  effect  in  Heffron 
Am.  Dee.  396;  Borcherling  v.  Katz,  v.  Pollard,  73  Tex.  96;  15  Am.  St. 
37    N.    J.    Eq.    150;    Brewster    v.      Rep.  764;  11  S.  W.  165. 

4  54  N.  H.  561. 


WKITTEK"    SIMPLE    COXTKACTS. 


931 


the  contract  was  entered  into,  and,  by  fair  inference,  treat  sncli 
fact  as  immaterial.  Where  the  courts  have  discussed  the  effect 
of  the  adversary  party's  knowing  who  the  real  principal  is  when 
he  accepts  a  contract  signed  by  the  agent  alone,  the  weight  of 
authority  is  that  he  can  hold  the  real  principal.^ 

§608.     Subsequent  oral  modification. 

The  parol  evidence  rule  by  its  terms  applies  only  to  prior  and 
contemporaneous  negotiations.  Contracts  which  are  in  writing 
merely  because  the  parties  thereto  chose  to  reduce  them  to  writ- 
ing offer  no  technical  difficulties  to  subsequent  oral  modifications. 
Accordingly  the  parol  evidence  rule  does  not  prevent  the  parties 
to  a  written  contract,  not  under  seal,  and  not  required  by  law  to 
be  in  writing  or  to  be  proved  by  writing,  from  making  subse- 
quent oral  modifications  of  its  terms.^  Thus  a  subsequent  oral 
settlement  making  an  account  stated,^  a  subsequent  extension  of 
time,^  a  subsequent  agreement  that  a  policy,  the  premium  for 
which  by  its  terms  was  payable  in  advance,  should  take  effect  at 
once,   the   insurer  holding  the   policy  until  the  premium  was 


scolder  v.  Dobell,  L.  R.  6  C.  P. 
486;  Bateman  v.  Phillips,  15  East. 
272;  Obiter  in  Higgiiis  v.  Senior,  8 
M.  &  W.  834 ;  York  County  Bank  v. 
Stein,  24  Md.  447. 

iWood  Y.  Ft.  Wayne,  119  U.  S. 
312;  The  Sappho,  94  Fed.  545;  36 
C.  C.  A.  395;  reversing  89  Fed.  366; 
Pecos  Valley  Bank  v.  Evans-Snider- 
Buel  Co.,  107  Fed.  654;  46  C.  C.  A. 
534;  Andrews  v.  Tucker.  127  Ala. 
602;  29  So.  34;  Hartford,  etc.,  Co. 
V.  Attalla,  119  Ala.  59;  54  So. 
845;  Katz  v.  Bedford,  77  Cal.  319; 
1  L.  R.  A.  826;  19  Pae.  523;  Hurl- 
burt  V.  Dusenbery,  26  Colo.  240;  57 
Pac.  860;  Gunby  v.  Drew,  —  Fla. 
— ;  34  So.  305;  Chicago,  etc.,  Co. 
V.  Moran,  187  111.  316;  58  N.  E.  335; 
affirming  85  Ill„  App.  543 ;  Palmer 
V.  Bennett,  96  111.  App.  281;  To- 
ledo, etc.,  Ry.  V.  Levy,  127  Ind.  168; 


26  X.  E.  773;  Bartlett  v.  Stanch- 
field.  148  Mass.  394;  2  L.  R.  A. 
625 ;  19  N.  E.  549 ;  Mouat  v.  Bam- 
let,  123  Mich.  345;  82  N.  W.  74; 
]\Ioore  V.  Locomotive  Works,  14 
Mich.  266;  Conrad  v.  Fisher,  37  Mo. 
App.  352 ;  8  L.  R.  A.  147 ;  Harris  v. 
Murphy,  119  N.  C.  34;  56  Am.  St. 
Rep.  656;  25  S.  E.  708;  Wadge  v. 
Kittleson,  —  X.  D.  — ;  97  X.  W. 
856;  Cline  v.  Shell,  43  Or.  372;  73 
Pac.  12;  Cunningham  v.  Church, 
159  Pa.  St.  620;  28  Atl.  490;  Chi- 
cago, etc.,  Co.  V.  Barry  (Tenn.  Ch. 
App.),  52  S.  W.  451;  Carstens  v. 
Earles,  26  Wash.  676;  67  Pac.  404. 
See  Ch.  LXII. 

2  Krueger  v.  Dodge,  15  S.  D.  159; 
87  X.  W'.  965. 

3  Bannon  v.  Aultman.  80  Wis. 
307:  27  Am.  St.  Rep.  37;  49  X.  W. 
967. 


932  PAGE    ON    CONTRACTS. 

I^aid  ;*  to  deliver  a  note  to  an  agent  of  the  adversary  party,^  or 
providing  that  a  note  already  endorsed  should  be  received  as  se- 
curity and  not  as  payment''  may  all  be  used  as  modifications  of 
prior  written  contracts.  A  provision  in  a  written  contract  that 
no  one  can  change  its  provisions/  or  that  they  can  be  changed 
only  by  writing,^  are  each  ineffectual  to  prevent  subsequent  oral 
modifications.  So  a  subsequent  agreement  by  a  vendor,  on  valu- 
able consideration,  to  give  different  warranties  from  those  in  the 
original  written  contract  of  sale  can  be  enforced.^  The  subse- 
quent modification  can  be  most  readily  shown  after  it  has  been 
performed  in  full.^°  By  statute  in  some  jurisdictions,  subse- 
quent oral  modifications  of  written  contracts  can  be  enforced  only 
when  partly  performed.  If  purely  executory  they  are  unen- 
forceable.^^ The  oral  modification  is  not  partly  performed  un- 
less something  has  been  done  which  the  party  performing  was 
not  bound  to  do  under  the  original  contract.^"  Subsequent  con- 
versations as  to  the  meaning  of  a  prior  contract,  not  amounting 
to  a  new  contract  and  not  giving  rise  to  an  estoppel,  are  not  in- 
tended to  change  the  legal  effect  of  such  contract  and  hence  do 
not  operate  as  such  change.^^ 

4  Prudential  Ins.  Co.  v.  Sullivan,  9  McCormick  Harvesting  Mach. 
27  Tnd.  App.  30;  59  N.  E.  873.                Co.  v.  Hiatt,  —  Neb.  Rep.  Unofficial 

5  Stokes  V.  Polley,  164  N.  Y.  266;       — ;    95  N.  W.  627. 

58  N.  E.  133.  10  Town  v.   Jepson,  —  Mich.  — ; 

6  VVillow    River    Lumber    Co.    v.      95  N.  W.  742. 

Furniture    Co.,    102    Wis.    636;    78  n  Armington  v.   Stelle,   27   Mont. 

N.  W.   762.  13;  69  Pac.  115. 

7  Peterson  v.  Reaping  ^Machine  12  Mackenzie  v.  Hodgkin,  126  Cal. 
Co.,  97  la.  148;  59  Am.  St.  Rep.  591;  77  Am.  St.  Rep.  209;  59  Pac. 
399;  66  N.  W.  96.  36. 

8  Chicago,  etc.,  R.  R.  v.  Moran,  is  Dixon  v.  Williamson,  173  Mass. 
187  Ili.  316;  58  N.  E.  335;  Illinois  50;   52  N.  E.  1067. 

Central  Ry.  v.  Manion,  —  Ky.  — ; 
67   S.  W.  40. 


COliTTBACTS    WHICH    MUST    BE    PKOVED    BY    WRITING.       933 


CHAPTER  XXXV. 

CONTRACTS  WHICH  MUST  BE   PROVED   BY  WRITING. 

I.     History  of  the  Statute. 

§609,    The  fourth  section  of  the  statute  of  frauds. 

In  the  twenty-ninth  year  of  the  reign  of  Charles  II.,  Parlia- 
ment passed  a  statute  for  the  prevention  of  frauds  and  perjuries. 
This  statute  covers  a  variety  of  subjects,  as  its  title  imports. 
The  most  familiar  sections  are  those  which  deal  with  contracts, 
the  fourth  and  the  seventeenth  sections.  The  fourth  section  of 
this  statute  in  the  spelling  of  the  English  Statutes,  Revised  Edi- 
tion, is  as  follows :  "  And  bee  it  further  enacted  by  the  author- 
itie  aforesaid  that  from  and  after  the  said  fower  and  twentyeth 
day  of  June^  noe  action  shall  be  brought  whereby  to  charge  any 
executor  or  administrator  upon  any  speciall  promise  to  answere 
damages  out  of  his  owne  estate  or  whereby  to  charge  the  de- 
fendant upon  any  speciall  promise  to  answere  for  the  debt,  de- 
fault or  miscarriages  of  another  person,  or  to  charge  any  person 
upon  any  agreement  made  upon  consideration  of  marriage,  or 
upon  any  contract  or  sale  of  lands,  tenements,  or  hereditaments, 
or  any  interest  in  or  concerning  them,  or  upon  any  agreement 
that  is  not  to  be  performed  within  the  space  of  one  yeare  from 
the  makeing  thereof  unlesse  the  agreement  upon  which  such 
action  shall  be  brought  or  some  memorandum  or  note  thereof 
shall  be  in  writeing  and  signed  by  the  partie  to  be  charged  there- 
with, or  some  other  person  thereunto  by  him  lawfully  author- 
ized."^    The  date  of  this  statute  is  variously  given.     The  Stat- 

1  1677   A.   D.  authority;  Eot.  Par.  29  C.  II,,  p.  2, 

2  29  Car.  II.,  Ch.  III.,  §  4.     Eng-      Nu.    2. 
lish    Statutes,    Revised    Edition,    by 


934  PAGE    ox    CONTEACTS. 

utes  at  Large^  give  the  date  as  1676.  The  English  Statutes, 
Revised  Edition,  give  the  date  as  1677.  The  fact  is  that  the 
statute  was  introduced  at  a  session  of  Parliament  which  began 
February  15,  1676 ;  but  the  statute  did  not  receive  the  royal 
assent  until  April  16,  1677.  This  section  of  the  statute  with 
sonje  change  in  phraseology  and  much  in  spelling  has  been  adopt- 
ed by  most  of  the  states  of  the  Union.  It  has  been  prolific  of 
litigation ;  and  has  been  so  worked  into  the  general  system  of 
law  as  to  be  known  as  the  adopted  child  of  the  Common  Law,  A 
discussion  of  its  nature  and  effect  is  therefore  necessary. 

II.     Special  Promise  of  Executor  or  Administrator. 

§610.     Special  promise   of  executor  or  administrator  to  answer 
damages  out  of  his  own  estate. 

This  clause  of  the  statute  does  not  include  promises  on  which 
the  executor  or  administrator  is  personally  liable,  even  though 
made  in  consideration  of  property  or  services  for  the  benefit  of 
the  estate,  and  though  he  assumes  to  contract  "as  executor."^ 
Thus  a  promise  by  an  administrator  to  be  personally  responsible 
for  legal  services  rendered  the  estate,^  or  to  pay  a  debt  created 
after  testator's  death,'''  is  not  affected  by  this  clause  of  the  statute. 
So  A,  who  has  located  a  land  certificate  which  belonged  to  B, 
deceased,  under  an  oral  contract  with  C,  B's  administrator,  that 
A  should  have  one-third  of  such  realty  for  his  services,  may  have 
specific  performance  of  such  contract  if  such  remedy  prove  ap- 
propriate even  where  it  is  provided  by  statute  that  contracts  of 
decedent's  can  be  enforced  specifically  only  when  in  writing.* 
Such  a  contract  may  be  affected  by  other  clauses  of  the  local  stat- 
ute.    Thus  an  oral  contract  by  executors  to  pay  brokers  a  com- 

3  Edited   by   Danby  Pickering.  debt  incurred  after  testator's  death 

1  See  §  995.  may  be  a  promise  to  pay  the  debt 

2  Meade  v.  Bowles,  123  Mich.  696 ;  of   another.     Dillaby  v.   Wilcox,   60 
82  N.  W.  658.  Conn.  71;  25  Am.  St.  Rep.  299;   13 

sFehlinger  v.  Wood,   134  Pa.   St.  L.  R.  A.  643;   22  Atl.  491. 
517;    19  Atl.  746.     But  if  the  debt  *  Jack  v.  Cassin.  9  Tex.  Civ.  App. 

is  one  on  which  executor  is  not  per-  228;   28  S.  W.  832. 
sonally  liable,  his  promise  to  pay  a 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WEITING.       935 

mission  for  selling  decedent's  realty  is  affected  by  a  clause  of  the 
statute  concerning  contracts  for  commissions  to  brokers  for  the 
sale  of  real  estate.^  Nor  does  this  clause  include  a  promise  by 
one  who  is  executor,  legatee  and  the  husband  of  the  principal 
legatee  to  pay  a  certain  amount  to  one  in  consideration  of  his 
refraining  from  contesting  the  will.*'  To  create  a  case  for  the 
application  of  this  clause  there  must  be  in  the  first  instance  a 
liability  against  decedent's  estate  primarily,  which  the  executor 
or  administrator  promises  to  pay  out  of  his  own  estate/  It  is 
"  very  nearly  allied  "^  to  the  clause  which  applies  to  contracts  to 
answer  for  the  debt,  default  or  miscarriage  of  another,*^  though 
it  is  doubtful  whether  the  rules  applicable  to  novation  as  distin- 
guished from  gTiaranty^"  would  apply  to  a  promise  by  an  execu- 
tor where  the  claim  against  decedent's  estate  is  thereby  can- 
celled." 

III.     Special  Promise  to  Answer  foe  the  Debt,  Default 
OR  Miscaeeiage  of  Anothee. 

§611.     Scope  of  clause. 

This  clause  of  the  statute  refers  to  transactions  in  which  two 
distinct  liabilities,  involving  three  persons,  must  co-exist.  It 
assumes  that  C  has  incurred  or  is  incurring  a  liability  to  B,  and 

5  Perkins    v.    Cooper     (Cal.),    24  estate."     Bellows  v.   Sowles,   57   Vt. 
Pac.   377;    under   Cal.   Civ.   Code,   §  1G4,   169;    52  Am.  Rep.   118,   119. 
1624 ;  reversed  on  another  point,  87  s  Harrington  v.  Rich,  6  Vt.  666 ; 
Cal.  241;  25  Pac.  411.  quoted  in  Bellows  v.  Sowles,  57  Vt. 

6  Bellows  V.   Sowles,   57   Vt.   164;  164,   170;   52  Am.  Rep.   118. 
52  Am.  Rep.  118.  9  See  §  611,  et  seq. 

7  Taylor  v.  Mygatt,  26  Conn.  184;  "See   §   629. 

Holderbaugh  v.  Turpin,  75  Ind.  84;  n  McKeany    v.    Black,     117    Cal. 

39  Am.  Rep.   124;   Cochrane  v.  Mc-  587;    49   Pac.    710;    holds   that   the 

Entee    (N.   J.    Eq. )  ,    51    Atl.    279;  executor's    oral    promise    to    pay    a 

Wales  V.  Stout,  115  N.  Y.  638;  Bel-  debt  of  decedent  out  of  his  own  es- 

lows  V.  Sowles,  57  Vt.  164;   52  Am.  tate  is  within  the  statute  even  if  the 

Rep.  118.     "  This  phraseology  clear-  debt  of  the  estate  is  to  be  discharged 

ly  implies  an  obligation,  duty  or  lia-  thereby.     The  contract  in  this  case 

bility  on  the  part  of  the  testator's  was  also  within  the  statute  as  one 

estate  for  which  the  executor  prom-  not  to  be  performed  within  a  year 

ises  to  pay  damages  out  of  his  own  from  the  date  of  the  making  there- 


936  PAGE    ON    CONTRACTS. 

that  A  has  assumed  a  liability  to  B  for  the  ultimate  payment  of 
the  debt  for  which  C  is  in  the  first  instance  liable.  At  the  out- 
set it  may  be  said  that  no  general  test  for  determining  whether 
A's  promise  to  B  to  discharge  C's  debt  is  so  related  to  C's  liabil- 
ity as  to  fall  within  the  statute  of  frauds  can  be  laid  down,  which 
will  reconcile  all  the  decisions  of  the  courts,  or  which  can  even 
claim  the  support  of  a  clear  weight  of  authority.^  The  confu- 
sion on  this  subject  has  in  part  grown  out  of  the  fact  that  when 
A  releases  himself  from  liability  to  B  by  paying  C's  debt  it  is 
hard  to  say  whether  it  is  A's  debt  or  C's  that  he  is  paying.  Fur- 
thermore, the  natural  difficulties  of  this  subject  have  been  in- 
creased by  a  loose  use  of  terms ;  especially  of  "  original "  and 
"  collateral."  If  A  promises  to  pay  B  for  goods  furnished  by  B 
to  C,  C  incurring  no  liability,  A's  liability  may  well  be  termed 
original.^  From  this  use  of  "  original  "  it  has  been  an  easy  step 
for  some  courts  to  assume  that  questions  as  to  this  clause  of  the 
statute  of  frauds  could  be  solved  by  the  use  of  the  terms  "  orig- 
inal "  and  "  collateral,"  overlooking  the  fact  that  only  the  statute 
can  be  relied  on  as  the  ultimate  expression  of  its  meaning,  and 
that  if  we  wish  to  substitute  "  original  "  and  "  collateral  "  lia- 
bility for  the  terms  used  in  the  statute,  we  must  first  define  those 

of.  Crawford  v.  King,  54  Ind.  6,  56  Pac.  934.  So  in  speaking  of  this 
seems  to  hold  that  an  oral  promise  clause  the  court  said:  "An  im- 
by  an  executor  to  pay  a  claim  mense  amount  of  litigation  has  aris- 
against  the  estate  personally  in  con-  en  over  its  construction.  It  is  im- 
sideration  of  the  release  of  the  es-  possible  to  reconcile  the  decisions 
tate  is  valid.  which  have  been  made  under  it. 
1 "  Perhaps  few  questions  have  oc-  Almost  any  theory  of  its  scope  and 
casioned  more  controversy,  or  given  meaning  can  find  some  case  to  sup- 
rise  to  more  nice  and  shadowy  dis-  port  it.  The  most  careful  text-writ- 
tinctions  than  those  arising  out  of  ers  have  acknowledged  their  inabil- 
this  branch  of  the  statute  of  frauds.  ity  to  find  anything  like  uniform 
The  cases  on  the  subject  are  in  rules  of  construction  in  the  conflict- 
hopeless  conflict  and  every  attempt  ing  decisions  which  have  been  ren- 
heretofore  made  to  classify  them  dered."  Dillaby  v.  Wilcox,  60 
or  to  draw  from  them  a  rule  that  Conn.  71.  76;  25  Am.  St.  Rep.  299, 
might  be  a  guide  to  future  decisions  301;  13  L.  R.  A.  643;  22  Atl.  491. 
seems  rather  to  have  furnished  new  To  the  same  effect  see  Fullam  v. 
grounds  for  controversy  than  to  put  Adams,  37  Vt.  391. 
the  question  at  rest."  Gilmore  v.  2  gee  §  618. 
Box   Factory,    20    Wash.    703,    704; 


COIS'TRACTS    WHICH    MUST    BE    PROVED    BY    WEITIXG.       937 

terms  so  as  to  conform  to  the  meaning  of  the  statute,  or  thej  "will 
tnislead  us  rather  than  aid  us.^  As  is  often  the  case,  the  adjudi- 
cations, while  far  from  harmonious,  are  by  no  means  as  dis- 
cordant as  the  theories,  expressed  and  reasons  assigned  by  the 
courts  in  deciding  them  would  indicate. 

§612.     Theory  that  continued  existence  of  original  debt  is  test. 

The  theories  actually  established  by  the  adjudicated  cases 
may  be  grouped  under  four  heads.  (1)  Some  courts  hold  that 
the  test  of  the  applicability  of  the  statute  is  the  continued  exist- 
ence of  the  old  debt.  If  A's  promise  to  B  discharges  C's  debt, 
A's  promise  is  not  within  the  statute ;  but  if  C  remains  liable, 
A's  promise  is  within  the  statute.^  This  rule  is  undoubtedly 
true  where  A's  promise  is  sought  to  be  upheld  as  a  novation.^ 
By  the  great  weight  of  authority  it  has  no  application  where  A's 


3  See,  as  using,  "  original "  or 
"  collateral  "  as  a  test,  Underbill  v. 
Gibson,  2  N.  H.  352;  9  Am.  Dec.  82; 
IMeriden  Britannia  Co.  v.  Zingsen, 
48  X.  Y.  247 ;  8  Am.  Rep.  549 ;  War- 
ren V.  Smitb,  24  Tex.  484;  76  Am. 
Dee.  1 15.  "  An  agreement,  if  it  be 
not  collateral,  but  in  the  natvire  of 
an  original  agreement  to  pay  the 
debt  of  another,  founded  on  a  suffi- 
cient consideration,  received  by  the 
promisor  himself,  is  not  within  the 
provisions  of  the  statute."  Thatcher 
V.  Rockwell,  4  Colo.  375,  409;  quoted 
in  Fisk  v.  Reser,  19  Colo.  88;  34 
Pae.  572.  For  a  criticism  of  the 
use  of  the  terms  "  original "  and 
"  collateral "  as  a  test,  see  Dil- 
laby  V.  Wilcox,  60  Conn.  71;  25 
Am.  St.  Rep.  299;  13  L.  R.  A.  643; 
22  Atl.  491. 

1  Mallet  V.  Bateman,  L.  R.  1  C.  P. 
163;  Packer  v.  Benton,  35  Conn. 
343;  95  Am.  Dec.  246;  Mitchell  v. 
Griffin,  58  Ind.  559;  Span  v.  Baltz- 
ell,    1   Fla.   301;   46   Am.  Dec.   346; 


Andre  v.  Bodman.  13  Md.  241;  71 
Am.  Dee.  628;  Dow  v.  Swett,  134 
Mass.  140;  45  Am.  Rep.  310;  Per- 
kins V.  Hershey.  77  Mich.  504;  43 
N.  W.  1021;  Ackley  v.  Parmenter. 
98  X.  Y.  425;  50  Am.  Rep.  693; 
Dougherty  v.  Bash,  167  Pa.  St. 
429;  31  Atl.  729;  Corbett  v.  Coch- 
ran, 3  Hill.  L.  (S.  C.)  41;  30  Am. 
Dec.  348;  Warren  v.  Smith,  24  Tex. 
484;  76  Am.  Dec.  115;  Anderson  v. 
Davis,  9  Vt.  136;  31  Am.  Dec.  612; 
Hooker  v.  Russell,  67  Wis.  257;  30 
X.  W.  358.  This  clause  of  the  stat- 
ute applies  only  to  "  an  undertak- 
ing by  a  person  not  before  liable, 
for  the  purpose  of  securing  or  per- 
forming the  satne  duty  for  which 
the  party  for  whom  the  undertak- 
ing was  made  continues  liable." 
Packer  v.  Benton,  35  Conn.  343,  350; 
95  Am.  Dec.  246,  249 ;  quoted  in  Dil- 
laby  V.  Wilcox,  60  Conn.  71,  77;  25 
Am.  St.  Rep.  299;  13  L.  R.  A.  643; 
22  Atl.  491. 
2  See   §   629. 


938 


PAGE    ON    CONTEACTS. 


promise  is  to  assume  C's  debt  to  B  for  a  valuable  consideration.® 
It  cannot  be  regarded  therefore  as  a  rule  sustained  bj  the  weight 
of  authority. 

§613.     Theory  that  independent  liability  of  promisor  is  test. 

(2)  Other  courts  hold  that  if  the  new  promise  is  not  depend- 
ent on  the  payment  of  the  pre-existing  indebtedness  it  is  not 
within  the  statute  of  frauds,  but  that  if  it  is  so  dependent  it  is 
Avithin  the  statute  even  if  it  is  made  on  a  new  consideration  and 
primarily  for  the  benefit  of  the  promisor.^  Where  this  theory 
obtains  A's  promise  to  pay  C's  indebtedness  to  B  on  consideration 
that  B  will  forbear  to  enforce  a  lien  on  C's  property  is  within 
the  statute,^  even  if  A  expects  to  gain  some  indirect  advantage 
for  himself  thereby  f  and  so  is  A's  promise  to  pay  C's  debt  to  B 


3  See  §  623. 

iMerrell  v.  Witlierby,  120  Ala. 
418;  74  Am.  St.  Rep.  39;  23  So. 
994;  26  So.  974;  Board  of  Commis- 
sioners V.  Cincinnati  Co.,  128  Ind. 
240;  12  L.  R.  A.  502;  27  N.  E. 
612;  King  v.  Lumber  Co.,  80  Minn. 
274;  83  N.  W.  170;  Giles  v.  Ma- 
honey,  79  Minn.  309;  82  N.  W.  583; 
Maurin  v.  Fogelberg,  37  Minn.  23; 
5  Am.  St.  Rep.  814;  32  N.  W.  858; 
Grant  v.  Wolf,  34  Minn.  32;  24  N. 
W.  289;  Lamkin  v.  Palmer,  164  N. 
Y.  201;  58  N.  E.  123;  White  v. 
Rintoul,  108  N.  Y.  222;  15  N.  E. 
318;  Garfield  v.  Ins.  Co.,  69  Vt. 
549;  38  Atl.  235;  McKenzie  v.  Bank, 
9  Wash.  442;  43  Am.  St.  Rep.  844; 
37  Pac.  668.  "  Original  promises  as 
distinguished  from  collateral  prom- 
ises under  the  statute  of  frauds  re- 
quired to  be  made  in  writing  are 
such  as  are  founded  on  a  new  con- 
sideration, the  debt  antecedently 
contracted  for  still  subsisting,  mov- 
ing to  the  promisor  and  beneficial 
to  him  and  such  that  the  promisor 


thereby  comes  under  an  independ- 
ent duty  of  payment,  irrespective  of 
the  liability  of  the  principal  debtor." 
White  V.  Rintoul,  108  N.  Y.  222;  15 
N.  E.  318  (from  syllabus  in  15  N.  E. 
318;  quoted  in  Greene  v.  Latcham,  2 
Colo.  App.  416;  31  Pac.  233).  "A 
consideration  to  support  a  promise 
not  in  writing  to  pay  the  debt  of 
another  must  be  of  a  peculiar  char- 
acter, and  must  operate  to  the  ad- 
vantage of  the  promisor  and  place 
him  under  a  pecuniary  obligation  to 
the  promisee  independent  of  the  orig- 
inal debt,  which  obligation  is  to  be 
discharged  by  the  payment  of  that 
debt."  McKenzie  v.  Bank,  9  Wash. 
442,  445;  43  Am.  St.  Rep.  844;  37 
Pac.  668;  citing  Ackley  v.  Parmen- 
ter,  98  N.  Y.  425;  50  Am.  Rep.  693; 
Cross  V.  Richardson,  30  Vt.  641. 

2  \Miite  V.  Rintoul,  108  N".  Y.  222; 
15  X.  E.  318;  Durham  v.  Arledge, 
1  Strobh.  Law  (S.  C.)  5;  47  Am. 
Dee.  544. 

"3  McKenzie  v.  Bank,  9  Wash.  442; 
43  Am.  St.  Rep.  844;  37  Pac.  668. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.        939 

if  C  fails  to  pay  it  after  B  extends  the  time  of  payment.*  Under 
this  rule,  A's  promise  to  fall  without  the  statute  must  be  a  prom- 
ise to  discharge  a  liability  which  is  fixed  upon  him  and  which 
he  must  discharge  in  any  event  in  some  way,  even  if  the  liability 
of  the  principal  debtor  were  to  cease  to  exist ;  and  the  sole  effect 
of  A's  promise  must  be  to  designate  the  manner  in  which  he  is  to 
discharge  his  liability  with  the  consent  of  the  party  to  whom 
he  owes  it.  The  modern  tendency  of  courts  is  unquestionably 
toward  the  adoption  of  this  rule,  although  it  may  still  be  unsafe 
to  say  that  it  has  the  indorsement  of  the  weight  of  authority. 

§614.     Theory  that  new  consideration  for  benefit  of  promisor  is 
test. 

(3)  Other  courts  hold  that  if  the  new  promise  is  based  on  a 
new  consideration  which  is  a  pecuniary  benefit  to  the  promisor, 
the  new  promise  is  not  within  the  statute  of  frauds,  but  that 
otherwise  it  is.^  If  no  consideration  moves  to  the  promisor,  that 
is,  if  he  receives  no  benefit,  the  sole  consideration  being  a  detri- 
ment to  the  promisee,  his  promise  where  this  theory  obtains  is 
within  the  statute  of  frauds."  If  he  receives  a  personal  benefit 
his  promise  is  not  within  the  statute.^     Under  this  theory  a 

4Hilton  V.  Dinsmore,  21  Me.  410;  N.   W.    1022;    Ames   v.   Foster,    106 

overruling    Russell    v.    Babcock,    14  Mass.  400;  8  Am.  Eep.  343;  Bates  v. 

Me.  138;   Lang  v.  Henry,  54  N.  H.  Johnrowe  (also  styled  Bates  x.  Don- 

67;  Harrington  v.  Rich,  6  Vt.  666.  nelly),  57  Mich.  521;  24  N.  W.788; 


1  Chapline  v.  Atkinson,  45  Ark 
67;  55  Am.  Rep.  531;  Smith  v.  De 
laney,  64  Conn.  264;  42  Am.  St 
Rep.  181;  29  All.  496;  Schaafs  v 
Wentz,  100  la.  708;  69  N.  W.  1022; 


(Citing  Packer  v.  Benton,  35  Conn. 
343;  95  Am.  Dec.  246;  Conradt  v. 
Sullivan,  45  Ind.  180;  15  Am.  Rep. 
201;  Townsend  v.  Long,  77  Pa.  St. 
143;    18   Am.   Rep.   438;    Muller  v. 


Durgin  v.  Smith,  115  Mich.  239;  73  Riviere,  59  Tex.  640;   46  Am.  Rep. 

N.  W.  361 ;  Swayne  V.  Hill,  59  Neb.  291;    Clopper    v.    Poland,    12    Neb. 

652;  81  N.  W.  855;  Lookout  Moun-  69;    10    N.    W.    538;    Fitzgerald   v. 

tain  R.  R.  Co.  v.  Houston,  85  Tenn.  Morrissey,   14  Neb.   198;    15.  N.  W. 

224;   Farnham  v.  Chapman,  61  Vt.  233;  Clay  v.  Tyson,  19  Neb.  531;  26 

395;  18  Atl.  152;  Kelley  v.  Schupp,  N.  W.  240;  Joseph  v.  Smith,  39  Neb. 

60  Wis.  70;   18  N.  E.  725.  259;  42  Am.  St.  Rep.  571;  57  N.  W. 

2  Scott  V.  White,  71  111.  287;  Par-  1012;    Rogers  v.   Hardware  Co.,   24 

ker  V.  Dillingham,  129  Ind.  542;  29  Neb.  653;  39  N.  W.  844;  Mathews  v. 

N.  E.  23;  Crawford  v.  King,  54  Ind.  Scaver,  34  Neb.  592;  52  N.  W.  283.) 

€;  Schaafs  v.  Wentz,  100  la.  708;  69  3  Smith  v.  Delaney,  64  Conn.  264; 


940 


PAGE    ON    CONTRACTS. 


promise  bj  A,  who  is  a  partner  of  C,  to  pay  C's  debt  to  B  if  B 
■will  not  seek  to  enforce  C's  debt  against  partnership  property 
is  not  within  the  statute/  nor  is  A's  promise  to  pay  a  debt  of  C, 
deceased,  if  B  will  withdraw  opposition  to  the  probate  of  the 
will  and  if  the  estate  proves  solvent  and  pays  all  debts  and  lega- 
cies.^ A  modiiication  of  this  view  is  held  by  those  courts  which 
seek  to  make  the  motive  of  the  promisor  A  in  agreeing  to  pay 
C's  debt  to  B,  the  test  of  the  application  of  the  statute.  If  A's 
main  purpose  is  to  secure  some  benefit  to  himself  the  promise  is 
not  within  the  statute;  otherwise  it  is.^     The  objection  to  this 


42  Am.  St.  Eep.  181;  29  All.  496; 
Garvey  v.  Crouch  (Ky.),  35  S.  W. 
273 ;  Durgin  v.  Smith,  115  Mich.  239 ; 
73  N.  W.  361;  Joseph  v.  Smith,  39 
Neb.  259;  42  Am.  St.  Rep.  571;  57 
X.  W.  1012.  "Where  the  third 
party  is  himself  to  receive  the  bene- 
fit for  which  his  promise  is  ex- 
changed, it  is  not  usually  material 
whether  the  original  debtor  remains 
liable  or  not."  Calkins  v.  Chand- 
ler, 36  Mich.  320,  324 ;  24  Am.  Rep. 
593,  597;  quoted  in  Perkins  v. 
Hershey,  77  Mich.  504;  43  X,  W. 
1021. 

4Swayne  v.  Hill,  59  Xeb.  652;  81 
X.  W.  855. 

5  Rowell  V.  Dunwoodie,  69  Vt. 
Ill;  37  Atl.  227;  and  see  for  similar 
facts  Templetons  v.  Baseom,  33  Vt. 
132. 

6 "  Whenever  the  main  purpose 
and  object  of  the  promise  is  not  to 
answer  for  another,  but  to  subserve 
some  pecuniary  or  business  purpose 
of  his  own  involving  either  benefit 
to  himself  or  damage  to  the  other 
contracting  party,  his  promise  is  not 
within  the  statute,  although  it  may 
be  in  form  a  promise  to  pay  the  debt 
of  another,  and  although  the  per- 
formance of  it  may  incidentally 
have  the  effect  of  extinguishing  that 
liability."      Emerson    v.    Slater,    22 


How.  (U.  S.)  28,  43;  quoted  in  Fisk 
V.  Reser,  19  Colo.  88;  34  Pac.  572. 
"  Where  the  leading  object  of  a  par- 
ty promising  to  pay  the  debt  of  an- 
other is  to  promote  his  own  interest 
and  not  to  become  guarantor,  and 
the  promise  is  made  on  sufficient 
consideration,  it  will  be  valid  though 
not  in  writing."  Fitzgerald  v.  Mor- 
rissey,  14  Xeb.  198,  201 ;  quoted  in 
Joseph  V.  Smith,  39  Xeb.  259;  42 
Am.  St.  Rep.  571;  57  X.  W.  1012. 
To  the  same  effect  see  Davis  v.  Pat- 
rick, 141  U.  S.  479;  Emerson  v. 
Slater,  22  How.  (U.  S.)  28;  Choate 
V.  Hoogstraat,  105  Fed.  713;  Con- 
radt  V.  Sullivan,  45  Ind.  180;  15 
Am.  Rep.  261;  Calkins  v.  Chandler, 
36  Mich.  320;  24  Am.  Rep.  593; 
Winn  v.  Hillyer,  43  Mo.  App.  139; 
Mathews  v.  Seaver,  34  Neb.  592; 
Ward  V.  Hasbrouek,  169  N.  Y.  407; 
62  X.  E.  434 ;  Mallory  v.  Gillett,  21 
X.  Y.  412;  Bailey  v.  Marshall,  174 
Pa.  St.  602;  34  Atl.  326;  Elkin  v. 
Timlin,  151  Pa.  St.  491;  25  Atl. 
139;  Fehlinger  v.  Wood,  134  Pa.  St. 
517;  19  Atl.  746;  Xugent  v.  Wolfe, 
111  Pa.  St.  471;  56  Am.  Rep.  291; 
4  Atl.  15;  Muller  v.  Riviere,  59  Tex. 
640;  46  Am.  Rep.  291;  Lemmon  v. 
Box,  20  Tex.  329;  Clapp  v.  Webb^ 
52  Wis.  638;  9  X.  W.  796. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       941 

rule  is  that  in  terms  it  places  A's  contract  to  guarantee  C's  debt 
to  B  outside  of  the  operation  of  the  statute  if  any  consideration 
passes  to  AJ  Cases  of  this  class  are  clearly  within  the  statute 
in  accordance  with  the  view  held  by  the  weight  of  authority. 
Many  of  the  cases  cited  in  support  of  this  rule  could  be  ex- 
plained as  well  by  the  second  rule  given  above,  and  it  may  be 
said  that  the  tendency  now  is  for  states  to  pass  from  the  third 
class  to  the  second.  The  modification  of  this  theory  that  makes 
promisor's  motive  the  test  is  still  more  objectionable.  Actions 
and  vvords,  not  motives,  should  be  the  oj^erative  facts  in  contract 
law;  and  it  is  substituting  conjecture  for  certainty  to  make  the 
validity  of  the  contract  turn  on  what  either  court  or  jury  may 
think  was  the  predominant  motive  in  the  mind  of  the  promisor. 

§615.    Theory  that  new  consideration  of  any  kind  is  test. 

(4)  Some  courts  hold  that  if  A's  promise  rests  on  a  new  con- 
sideration, distinct  from  C's  liability  the  statute  does  not  apply, 
whether  the  consideration  is  a  benefit  to  the  promisor  or  a  detri- 
ment to  the  iDromisee.^  Some  of  the  states  which  adopt  this 
theory  have  done  so  as  an  extension  of  the  theory  discussed  in 
the  preceding  section,  where  such  extension  is  made  necessary 
to  uphold  the  promise  sought  to  be  enforced.  This  principle  is 
sometimes  invoked  where  strictly  it  is  not  necessary.  Thus 
where  B  bought  an  engine  of  C,  under  a  guaranty  as  to  its  qual- 
ity and  a  promise  to  deliver  it,  and  at  C's  request  B  made  his 
note  for  such  machine  payable  to  A,  A  guaranteeing  perform- 
ance of  C's  contract,  B  could  set  up  C's  breach  in  an  action  by 

'Graves  v.  Shulman,  59  Ala.  406.      404;   32  Am.  Dec.   180;    Swayne  v. 


1  Cliapline  v.  Atkinson,  45  Ark 
67;  55  Am.  Rep.  531;  Hughes  v 
Lawson,  31  Ark.  613;  Kurtz  v 
Adams,  12  Ark.  174;  Craft  v.  Ken 
drick,  39  Fla.  90;  21  So.  803;  Car 
raher  v.  Allen,  112  la.  168;  83  N.  W 
902;  Creel  v.  Bell,  2  J.  J.  Mar 
(Ky.)  309;  Dearborn  v.  Parks.  5 
Greenl.  (Me.)  81;  17  Am.  Dec.  206 
Jones  V.  Hardesty,  10  G.  &  J.  (Md.) 


Hill,  59  Neb.  652;  81  N.  W.  855; 
Leonard  v.  Vredenburgb,  8  Johns. 
(N,  Y.)  29;  5  Am.  Dec.  317;  White- 
hurst  V.  Hyman,  90  N.  C.  487; 
Cooper  V.  Chambers,  4  Dev.  L.  (N. 
C.)  261;  25  Am.  Dee.  710;  Tindal  v. 
Tonchberry,  3  Strobh.  (S.  C.)  177; 
49  Am.  Dec.  637;  Templeton  v.  Bas- 
com,  33  Vt.  132. 


942  PAGE    ON    CONTEACTS. 

A."  If  this  theory  is  literally  enforced,  every  contract  of  guar- 
anty made  after  the  original  debt  is  incurred  is  unaffected  Ly  the 
statute ;  since  at  Common  Law  it  must  be  supported  by  a  con- 
sideration, which  if  the  original  debt  has  been  already  incurred 
must  necessarily  be  a  new  and  distinct  consideration ;  and  under 
this  theory  the  statute  requires  nothing  more.  The  statute  can, 
therefore,  apply  only  to  cases  where  the  liability  as  guarantor 
was  incurred  at  the  same  time  as  the  liability  of  the  principal 
debtor.  For  these  reasons  this  theory  may  be  said  to  be  dis- 
credited by  modern  decisions  and  the  states  which  have  enter- 
tained it  are  passing  into  the  second  or  third  classes.^ 

§616.     Comparison  of  theories. 

It  will  be  noticed  that  the  same  state  often  appears  as  enforc- 
ing two  or  more  theories.  There  are  two  reasons  for  this :  first, 
certain  facts  in  one  case  may  require  the  court  to  invoke  a  theory 
which  is  not  an  extreme  one,  such  as  the  first  or  second  of  those 
given,  while  in  a  subsequent  case  presenting  different  facts  the 
court  may  be  willing  to  take  a  more  extreme  theory  such  as  the 
third  or  fourth.  Second,  the  courts  of  one  state  may  at  different 
times  have  held  two  or  more  of  these  theories,  as  has  been  already 
suggested.  For  example,  the  history  of  the  various  changes 
which  this  doctrine  has  undergone  in  ISTew  York,  is  well  set  forth 
in  a  N^ew  York  case.^  The  original  test  was  whether  the  pri- 
mary debt  continued  to  exist  concurrently  with  the  new  promise. 
If  it  did,  the  statute  of  frauds  was  held  to  apply ;  otherwise  not. 
As  the  courts  departed  from  this  case,  the  first  position  taken 
was,  that  an  original  promise  was  one  founded  on  a  new  or 
further  consideration  of  benefit  or  harm  moving  between  the 
promisor  and  promisee.^  It  was  soon  evident  that  since  every 
contract  had  to  have  some  consideration,  the  "  terms  of  the  defi- 

2  Gale  V.  Harp,  64  Ark.  426;   43  (X.     Y.)      29;     5     Am.     Dec.     317. 
S.  W.  144.  (There    must    be    "some    new    aud 

3  West  V.  Grainger,  —  Fla.  — ;  original  consideration  of  benefit  or 
35  So.  91.  harm  moving  between  the  newly  con- 

1  White  V.  Rintoul,  108  N.  Y.  222;  tracting  parties."  5  Am.  Dec.  317, 
15  X.  E.  31S.  320.) 

2  Leonard  v.  Vredenburgh,  8  John. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITXK^G.       943 

nition,"  already  given,  "  were  dangerously  broad  and  capable  of 
a  grave  misapprehension,  making  it  almost  possible  to  say  that  a 
promise  good  at  Common  Law  between  the  new  parties  was  good 
also  in  spite  of  the  statute."^  The  second  position  taken,  was 
that  the  consideration  must  move  to  the  promisor,  and  be  bene- 
ficial to  him.*  The  third  position  taken,  was  that  the  test  of  the 
application  of  the  statute  of  frauds  was  "  whether  the  party 
sought  to  be  charged  is  the  principal  debtor,  primarily  liable,  or 
whether  he  is  only  liable  in  the  case  of  the  default  of  a  third 
person ;  in  other  words,  whether  he  is  the  debtor,  or  whether  his 
relation  to  the  creditor  is  that  of  surety  for  the  performance  by 
some  other  person  of  the  obligation  of  the  latter  to  the  creditor."^ 
In  view  of  the  confusion  of  authorities  and  the  abstract  form  of 
the  proposition's  discussion,  it  is  better  to  consider  certain  of  the 
more  common  forms  of  contracts  concerning  which  questions  of 
the  applicability  of  this  clause  of  the  statute  have  been  raised, 
and  discuss  them  with  reference  to  the  words  of  the  statute  with- 
out invoking  the  distinction  between  "  original "  and  "  collat- 
eral "  liability. 

§617.    Essential  features  of  this  clause. —  Debt  of  third  person 
must  exist. 

In  turning  from  an  abstract  statement  of  the  principles  which 
determine  the  applicability  of  the  statute,  to  a  consideration  of 
the  adjudications  themselves,  we  find  that  while  the  cases  are  far 
from  harmonious,  they  can  be  more  nearly  reconciled  than  would 
appear  from  the  conflict  in  the  theories.  In  discussing  these 
cases,  the  words  of  this  clause  applicable  to  each  class  of  cases 
will  constantly  be  considered.  The  clause  in  effect  requires  (1) 
a  debt  of  a  third  person,  (2)  the  continued  existence  of  such 
debt,  (3)  a  promise  to  "  answer  for  "  such  debt,  (4)  which  must 
be  made  to  the  creditor  to  whom  such  debt  is  due,  and  (5)  the 

3  White  V.  Rintoul,  s;/pra.  b  Brown  v.  Weber,  38  N.  Y.  187, 

4Mallory  v.  Gillett,  21  N.  Y.  412.  189;    quoted    in    White   v.    Eintoul, 

To    the    same    eflfect    see   Nelson   v.  supra.     See  also  Ackley  v,  Parmen- 

Boynton,  3  Mete.    (Mass.)    396;   37  ter,  98  N.  Y.  425;  50  Am.  Rep.  693. 

Am.  Dee.  148. 


944  PAGE    ON    CONTRACTS, 

transaction,  as  a  corollary  from  these  elements  must  not  be  & 
promise  merely  to  pay  the  debt  of  the  promisor.  (1)  The  stat- 
ute includes  only  promises  to  answer  for  the  "  debt  default  or 
miscarriage  "  of  another.  Accordingly  if  C  is  not  liable  to  B, 
the  statute  has  no  application  since  as  between  A  and  B  there  is 
no  "  debt  of  another."^  Thus  a  contract  whereby  A,  who  is 
organizing  a  corporation,  in  order  to  induce  B  to  subscribe  to 
stock  therein,  agrees  to  jDurchase  such  stock,^  to  find  a  purchaser 
therefor,^  or  to  guarantee  dividends  thereon,'*  is  not  within  the 
statute  of  frauds.^  So  is  a  contract  whereby  the  widow  agrees  to 
make  up  the  difference  out  of  her  share  of  the  estate  in  consider- 
ation that  certain  heirs  Avill  forbear  suit  against  other  heirs  for 
allowing  advancements  made  by  decedent  to  such  other  heirs.* 
So  an  agreement  by  A,  who  claims  to  have  control  over  the 
debtor's  (B's)  property  to  surrender  certain  property  of  debtor 
to  C  who  was  about  to  become  surety  for  B,  as  indemnity,  is  an 
original  contract  between  A  and  C,  and  is  not  within  the  statute.^ 
For  this  reason  a  promise  to  indemnify  one  against  loss,  as  in  the 
case  of  insurance,  which  may  be  incurred  in  the  future  without 
any  liability  on  the  part  of  any  third  person  therefor  is  not 
within  the  statute.*  So  where  A,  who  was  getting  up  a  school 
exhibition,  asked  B  to  assist  him  and  to  procure  music  therefor 
and  promised  to  indemnify  him  for  his  expenses  if  enough  for 
that  purpose  was  not  raised  by  subscription,  A's  promise  was 
not  within  the  statute  since  there  was  no  third  person  liable  to  B 
and  hence  no  debt  of  another.^     So  where  A  demanded  a  certain 

1  Kilbride  v.  Moss,  113  Cal,  432;  130;  38  Am.  Eep.  564;  Thompson  v. 
54  Am.  St.  Rep.  361;  45  Pac.  812;  Whitney,  20  Utah  1;  57  Pac.  429. 
McKinney  v.  Armstrong,  97  111.  App.  s  Contra,  that  a  contract  to  pay  to 
208;  Voris  v.  Loan  Association,  20  the  vendee  the  amount  paid  by  him 
Ind.  App.  630;  50  N.  E.  779;  Boos  for  his  stock  if  the  corporation  does 
V.  Hinkle,  18  Ind.  App.  509;  48  N.  not  return  it  to  him  is  within  the 
E.  383;  Stewart  v.  Patton,  65  Mo.  statute.  Gansey  v.  Orr,  173  Mo. 
App.  21;  Walker  v.  Norton,  29  Vt.  532;  73  S.  W.  477. 

226.  6  Fain  v.  Turner,  96  Ky.  634;  29 

2  Kilbride  v.  Moss,  113  Cal.  432;       S.  W.  628. 

54  Am.  St.  Rep.  361 ;  45  Pac.  812.  '  Waid  v.   Hobson,   17   Colo.   App. 

3  Green  v.  Brookins,  23  Mich.  48;  54;  67  Pac.  176. 
9  Am.  Rep.  74.  «  See  §  634. 

4  Moorehouse  v.  Crangle,  36  0.  S.  9  Walker  v.  Morton,  29  Vt.  226. 


COXTRACTS    WHICH    MUST    BE    PROVED    BY    WEITING.       945 

sum  for  constructing  a  railway,  and  the  railway  company  offered 
a  smaller  sum,  the  promise  of  a  third  person  to  pay  to  A  a  cer- 
tain sum  in  addition  to  that  offered  by  the  railway  company  to 
induce  him  to  undertake  such  contract  is  not  within  the  statute." 
So,  where  a  married  woman's  contract  is  void,  a  promise  to  an- 
swer for  her  debt  is  not  within  this  clause  of  the  statute/^  If, 
however,  C's  liability  is  voidable,  but  not  void,  as  where  C  is  a 
minor,^^  A's  promise  is  within  the  meaning  of  this  clause. 


§618.     Effect  of  sole  liability  of  promisor. 

A  contract  whereby  A  agrees  to  pay  B  for  property,  services, 
and  the  like  to  be  delivered  to  C  by  B,  or  performed 
for  him,  is  valid,  as  the  detriment  to  B  is  a  consideration 
for  C's  promise.^  The  liability  on  these  facts  rests  upon  A 
alone.  Accordingly  such  a  promise  is  not  included  in  this  clause 
of  the  statute,  even  though  C  receives  the  benefit  of  the  promise 
as  the  debt  is  not  C's  and  never  was.^  This  is,  therefore,  an 
illustration  of  the  principle  discussed  in  the  preceding 
section.^     Thus  if  B  delivers  goods  to  C,*  or  furnishes  C  with 


10  Cliamplain  Construction  Co.  v. 
O'Brien,  117  Fed.  271,  788. 

11  Miller  v.  Long,  45  Pa.  St.  350. 
Of  course,  this  rule  does  not  apply 
where  the  married  woman  is  liable 
personally  by  statute,  or  her  estate 
is  charged  with  her  debts.  Con- 
nerat  v.  Goldsmith,  6  Ga.  14. 

12  Dexter  v.  Blanchard,  11  All. 
(Mass.)    365;    Brown  v.   Bank,    88 

Tex.  265;  33  L.  R.  A.  359;  31  S.  W. 
285;  reversing  on  this  point,  31  S. 
W.  216.  Contra,  but  obiter,  King  v. 
Summitt,  73  Ind.  312;  38  Am.  Rep. 
145. 

iSee  §  276. 

-  Jenkins,  etc.,  Co.  v.  Landgren, 
85  111.  App.  494;  Cox  v.  Peltier,  159 
Ind.  355;  65  X.  E.  6;  Collins  v. 
Stanfield,  139  Ind.  184;  38  N.  E. 
1091;  Marr  v.  By.,  121  la.  117:  96 
X.  W.  716;  Biglane  v.  Hicks,  — 
Miss.  — ;  33  So.  413;  Williams  v. 
60 


Auten,  62  Xeb.  832;  87  X".  W.  1061; 
Peyson  v.  Conniff,  32  Xeb.  269;  49 
X.  W.  340;  Kesler  v.  Cheadle,  12 
Okla.  489;  72  Pac.  367;  Xixon  v. 
Jacobs,  22  Tex.  Civ.  App.  97;  53  S. 
W.  595. 

3  See  §  617. 

4  Clark  V.  Jones,  87  Ala.  474;  6 
So.  362;  Sears  v.  Flodstrom,  5  Ida. 
314;  49  Pac.  11;  Lusk  v.  Throop, 
189  111.  127;  59  X.  E.  529;  affirming, 
89  111.  App.  509 ;  Clark  v.  Smith,  87 
111.  App.  409;  Foster,  etc.,  Co.  v. 
Felcher,  119  Mich.  353;  78  X.  W. 
120;  Maurin  v.  Fogelberg,  37  Minn. 
23;  5  Am.  St.  Rep.  814;  32  X.  W. 
858 ;  Chick  v.  Coal  Co.,  78  Mo.  App. 
234;  Gill  v.  Reed,  55  Mo.  App.  246; 
Lindsey  v.  Heaton,  27  Xeb.  662 ;  43 
X.  W.  420;  Xesbitt  v.  Reduction 
Co.,  22  Xev.  260;  38  Pac.  670;  Gal- 
lagher V.  McBride,  66  X.  J.  L.  360; 
49  Atl.  582;  White  v.  Tripp,  125  X. 


946 


PAGE    ON    COKTKACTS. 


board/  or  care,*'  or  a  house/  or  if  B  furnishes  a  coffin  for  C/  or 
if  B  performs  services  for  C/  such  as  services  of  an  attorney,"  or 
a  physician,"  or  services  in  transporting  property,^"  in  reliance 
on  A's  promise  to  pay,  A's  contract  is  not  within  this  clause  of 
the  stature  of  frauds  as  long  as  no  liability  exists  against  C. 
Still  less  is  A's  jiromise  within  the  statute  if  A  has  some  interest 
in  C's  property  on  which  B  does  work  relying  on  A's  j)romise  to 
pay  him,"  as  where  A  is  a  mortgagee  of  the  property."  So  if 
A  is  the  president  of  a  corporation,  C,  and  to  induce  B  to  give  an 
option  to  C  A  agrees  personally  to  pay  C's  exj)enses  and  attorney 
fees  arising  out  of  such  transaction  if  the  corporation  does  not 
accept  such  option  is  not  within  the  statute/^ 

§619.     Effect  of  independent  liability  of  party  leceiving  benefit. 

If  B  is  to  furnish  goods  to  C  and  is  to  hold  C  and  A  both  liable 


C.  523;  34  S.  E.  686;  Grand  Forks, 
«tc.,  Co.  V.  Tourtelot,  7  N.  D.  587; 
75  N.  W.  901 ;  Kesler  v.  Cheadle,  12 
Okla.  489;  72  Pae.  367;  Mackey  v. 
Smith,  21  Or.  598;  28  Pae.  974; 
First  National  Bank  v.  Cotton  Co., 

24  Tex.  Civ.  App.  645;  60  S.  W.  828; 
Hamilton  v.  Mfg.  Co.,  15  Tex.  Civ. 
App.  338;  39  S.  W.  641;  Hopkins  v. 
Stefan,  77  Wis.  45;  45  N.  W.  676. 

5Marr  v.  Ry.,  121  la.  117;  96  N. 
W.  716;  King  v.  Lumber  Co.,  80 
Minn.  274;  83  N.  W.  170;  Breeler  v. 
Finnel,  85  Mo.  App.  438;  Doremus 
V.  Daniels   (N.  J.  Eq.),  20  Ail.  147. 

6  Harlan  v.  Harlan,  102  la.  701; 
72  N.  W.  286. 

TShafer  v.  Cherry,  5  Colo.  App. 
513;  39  Pae.  345. 

8  Cox  V.  Peltier,  1.59  Ind.  355;  65 
N.  E.  6. 

9  Milliken  v.  Warner,  62  Conn.  51 ; 

25  Atl.  450;  Mitchell  v.  Beck,  88 
Mich.  342:  50  N.  W.  305;  Sproule  v. 
Hopper  (Miss.),  16  So.  901;  Lyons 
V.  Daugherty  (Tex.  Civ.  App.)  ,  26 
S.  W.  146. 


10  Stein  v.  Blake,  56  111.  App.  525; 
James  v.  Carson,  9J-  Wis.  632 ;  69  N. 
W.  1004;  Murphey  v.  Gates,  81  Wis, 
370;  51  N.  W.  573;  Xvenson  v.  Cald- 
well, 3  Wyom.  465;  27  Pae.  563. 

11  Wellman  v.  Jones,  124  Ala. 
580;  27  So.  416;  Crowder  v.  Keys, 
91  Ga.  180;  16  S.  E.  986:  Brandner 
V.  Krebbs,  54  111.  App.  652 ;  Biglane 
V.  Hicks,  —  Miss.  — ;  33  So.  413; 
Rounsevel  v.  Osgood,  68  N.  H.  418; 
44  Atl.  535;  Boston  v.  Farr,  148  Pa. 
St.  220;  23  Atl.  901;  Speer  v.  Mes- 
chine,  46  S.  C.  505;  24  S.  E.  329; 
Clark  V.  Waterman,  7  Vt.  76;  29 
Am.  Dec.  150. 

12  Proprietors  of  the  Upper  Locks 
V.  Abbott,  14  N.  H.  157;  40  Am. 
Dec.  184. 

13  Backus  V.  Clark,  1  Kan.  303: 
83  Am.  Dec.  437 ;  Keyes  v.  Allen,  65 
Vt.  667;  27  Atl.  319. 

14  Conradt  v.  Sullivan,  45  Ind. 
180;  15- Am.  Rep.  261;  Greene  v. 
McDonald,  70  Vt.  372;  40  Atl.  1035. 

isManary  v.  Kunyon,  43  Or,  495; 
73  Pae.  1028. 


CONTEACTS    WHICH    MUST    BE    PKOVED    BY    WEITING.       047 

therefor,  A's  promise  is  in  effect  to  pay  the  debt  of  another  and 
his  promise  is  within  this  clause  of  the  statute  of  frauds,  if  the 
real  transaction  is  not  a  joint  contract  by  A  and  C  on  one  side 
and  B  on  the  other.^  However,  the  fact  that  B  made  the  charge 
on  his  books  against  A  and  C  jointly  is  not  conclusive  that  the 
liability  was  not  A's  alone.^  On  the  other  hand  the  fact  that  B 
made  the  charge  against  A  is  not  sufficient  to  show  that  the  real 
transaction  was  not  a  guaranty.^  If  the  contract  is  really  a  joint 
one  between  A  and  C  on  one  side  and  B  on  the  other,  A's  lia- 
bility is  not  within  the  statute.* 

§620.    Promisor  must  incur  liability  on  debt  of  other. 

To  come  within  this  clause  of  the  statute  the  promise  must  be 
one  to  "  answer  for,"  that  is,  to  incur  some  liability  on  the  debt 
of  another.  Hence,  if  A's  promise  to  B  is  not  to  incur  liability 
on  C's  debt,  but  to  buy  it,^  or  to  waive  a  prior  lien  held  by  A  so 
as  to  advance  the  priority  of  B's  claim,^  or  to  share  the  benefit  of 
his  alleged  lien  with  an  unsecured  creditor,^  or  to  redeem  bonds 

iPakev.  Wilson,  127  Ala.  240;  28  Yerg.     (Tenn.)    576;    26    Am.    Dee. 

So.  665;   Webb  v.  Lumber  Co.,   101  247;  Mead  v.  Watson,   57  Vt.  426; 

Ala.  630;  14  So.  407;  Wills  v.  Ross,  Radcliflf  v.   Poimdstone,   23  W.   Va. 

77  Ind.  1;  40  Am.  Rep.  279;  Lang-  724. 

don  V.  Ricbardson,  58  la.  610;  12  N.  2  Lusk  v.  Throop,  189  111.  127;  59 

W.  622;   Norris  v.  Graham,  33  Md.  N.   E.   529;    affirming,    89   111.   App. 

56;  Biigbee  v.  Kpndricken,  130  Mass.  509. 

437;  Ford  v.McLane,  131  Mich.  371;  3  Indiana    Trust    Co.    v.    Finitzer, 

91  N.  W.  617;  Welch  v.  Marvin,  36  160  Ind.  647;  67  N.  E.  520. 
Mich.    59;    Cole   v.   Hutchinson,    34  4  Boyce  v.  Murphy,  91  Ind.  1;  46 

Minn.  410;  26  N,  W.  319;  Bloom  v.  Am,   Rep.   567;   Swift  v.  Pierce,   13 

McGrath,  53  Miss.  249;    Swigart  v.  All.   (Mass.)  136;  Eddy  v.  Davidson, 

Gentert,    63    Neb.    157 ;    88    N.    W.  42  Vt.  52. 

159;    Williams    v.    Auten,    62    Neb.  i  Stillman  v.  Dresser,  22  R.  L  389; 

832;    87    N.    W.    1061;    Walker    v.  48  Atl.  1. 

Richards,  39  N.  H.  259;  Hayden  v.  2  Townsend  v.  White,  102  la.  477; 

Weldon,  43  N.  J.   L.   128;    39   Am.  71  N.  W.  337;  Chism' v.  Alcorn,  71 

Rep.  551;  Hetfield  v.  Dow,  27  N.  J.  Miss.  506;  15  So.  73. 
L.  440;   Matteson  v.   Moone,   —  R.  3  Wolff  v.  Bank,  131  Mich.  655;  92 

I.  — ;  54  Atl.  1058:  Wood  v.  Patch,  N.  W.  287. 
11  R.  I.  445;  Matthews  v.  Milton,  4 


9.1:8  PAGE    ON    CONTKACTS. 

pledged  by  A  to  B  for  C's  debt  where  in  consideration  of  B's 
releasing  a  mortgage  given  by  C,  A  pledged  such  bonds  and 
agreed  to  redeem  them  at  par  within  one  year,*  or  to  obtain  mort- 
gage security  for  the  debt/  or  to  buy  certain  property,"  the 
statute  has  no  application. 

§621.    Debt  of  "another." — Promise  cannot  be  made  to  original 
debtor. 

To  be  included  in  this  clause  of  the  statute  the  promise  must 
be  to  answer  for  the  debt  of  "  another."  A  promise  by  A  to  B  to 
pay  B's  debt  is  not  a  promise  to  pay  the  debt  of  "  another  " 
within  the  meaning  of  the  statute,  even  though  the  ultimate  effect 
of  performance  by  A  will  be  to  discharge  a  debt  owing  from  B 
of  another.^  Thus  an  oral  promise  made  by  A  to  B  to  pay  taxes 
which  B  owes,"  or  to  pay  attorney's  fees  which  B  owes,^  are  none 
of  them  within  the  statute.  This  principle  often  operates  in 
connection  Avith  the  principle  that  a  promise  by  one  to  pay  his 
own  debt  is  not  within  the  statute  even  if  performance  operates 
to  discharge  the  debt  of  the  promisee. 

§622.     Promise  to  pay  one's  own  debt. 

If  the  promisor  is  promising  merely  to  pay  his  own  debt  it  is 
not  a  promise  to  pay  the  debt  of  "  another  "  within  the  statute, 
even  if  the  effect  of  such  payment  will  be  to  discharge  the  debt 


4  Booth  V.  Eighmie,  60  N.  Y.  238;  2  N.  E.  303;  Mereliant  v.  O'Rourke, 

19    Am.    Rep.    171.     For    a    similar  111  la.  351;  82  N.  W.  759;   Botkin 

case  in  which  stock  was  pledged  see  v.  Land  Co.    (Ky.),  66  S.  W.  747; 

Taft  V.  Church,   162  Mass.  527;   39  Spadone    v.    Reed,    7    Bush.     (Ky.) 

N.  E.  283.  455;     McCartney     v.     Shepard,     21 

sResseter   v.   Waterman,    151    111.  Mo.    573;    64    Am.    Dec.    250;    Gill 

169;    37    X.   E.    875;    reversing,    45  v.  Ferrin,  71  K  H.  421 ;  52  Atl.  558; 

111.  App.  155.  .  Hoile  v.  Bailey,  58  Wis.  434;   17  N. 

6  Goodman   v.    Cohen,    132    N.   Y,  E.  322;    Fosha  v.  Prosser,  —  Wis. 

205;  30  N.  E.  399   (where  the  insur-  — ;  97  N.  W.  924. 
ance  appraiser  agreed  to  buy  dam-  2  Gill  v.  Ferrin,  71  N.  H.  421 ;  52 

aged   goods,  the  loss  to   which   was  Atl.  558. 
covered  by  the  insurance).  3  w^eilage   v.   Abbott    (Neb.),    90 

1  Windell  v.  Hudson,  1U2  Ind.  521;  K.  W.   1128, 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       949 

of  another/  Thus  an  oral  promise  made  by  a  partner  after  dis- 
solution to  pay  a  debt  of  the  firm  contracted  while  he  was  a  mem- 
ber,' or  a  promise  by  one  bound  to  keep  certain  property  clear  of 
liens  to  pay  a  certain  claim  which  might  have  been  secured  by 
lien  on  consideration  that  the  holders  thereof  would  not  resort 
to  a  lien  to  secure  the  same,^  is  not  within  the  statute. 

§623.    Assumption  of  debt  of  other. 

A  may  incur  an  obligation  to  C,  which  he  agrees  with  C  to 
discharge  by  paying  the  amount  due  thereon  to  B  in  payment  of, 
or  as  credit  upon,  C's  debt  to  B.  This  transaction  between  A 
and  C  is  not  a  novation  since  C's  debt  to  B  is  not  released  until 
payment  in  the  absence  of  B's  consent;  and  B's  consent  is  not 
essential  to  the  validity  of  A's  promise.  As  between  A  and  C, 
no  question  of  the  application  of  the  statute  of  frauds  can  arise, 
since  it  is  not  the  promise  to  answer  for  the  debt  of  "  another," 
that  is,  for  the  debt  of  a  third  person ;  since  A  is  merely  promis- 
ing C  to  discharge  A's  liability  in  a  specified  manner.^  Thus, 
where  B  assigns  a  lease  to  A  in  consideration  of  which  A  prom- 
ises to  B  to  pay  to  B  a  claim  held  by  him  against  C,  such 
promise  is  not  included  in  this  clause  of  the  statute."  The  com- 
plicating element  which  introduces  the  statute  of  frauds  into  the 
discussion  of  this  subject  is  that  in  many  jurisdictions  B  can 
treat  such  promise  as  one  made  for  his  benefit  and  can  enforce 

1  Meyer  v.  Parsons,  129  Cal.  653;  S.  E.  608;  Dumanoise  v.  Townsend, 
62  Pac.  216;  Tuttle  v.  Armstead,  53  80  Mich.  302;  45  N.  W.  179;  Garner 
Conn.  175;  22  Atl.  677;  Reid  v.  Wil-  v.  Hudgins,  46  Mo.  399;  2  Am.  Rep. 
son,    109    Ga.   424;    34    S.    E.    608;  520. 

Boldenwick 'V.  Cahill,   187  111.  218;  3  Stephen  v.  Yeomans,   112   Mich. 

58  N.  E.  351;  affirming,  86  111.  App.  624;  71  N.  W.  159. 

561 ;    Darst   v.   Bates,    95    111.   493 ;  i  Pratt  v.   Fishwild,   121   la.  642 ; 

Dumanoise    v.    Townsend,    80   Mich.  96  N.  W.  1089;   Goodspeed  v.  Fuller, 

302;  45  N.  W.  179;  James  v.  Hicks,  46  Me.  141;  71  Am.  Dec.  572;  Goetz 

58  Mo.  App.  521;   Smart  v.  Smart,  v.  Foos,  14  Minn.  265;  100  Am.  Dec. 

97  N.  Y.  559;   Thompson  v.   Chees-  218;   Ware  v.  Allen,  64  Miss.   545; 

man,    15    Utah    43;    48    Pac.    477;  60  Am.  Rep.  67;   1  So.  738. 

Hooper  v.  Hooper,  32  W.  Va.  526;  9  2  Duncan   v.   Grant,   87   Me.   429; 

S.  E.  937.  32  Atl.  1000. 

2  Reid  V.  Wilson-,  109  Ga.  424;  34 


950 


PAGE    ON    CONTRACTS. 


it.^  Where  B  can  enforce  such  contracts,  the  question  is  often 
raised  whether  A's  promise  is  not  to  answer  for  the  debt  of 
another  and  hence  within  the  statute  of  frauds.  The  view  enter- 
tained by  the  great  majority  of  the  courts  is  that  even  between 
A  and  B,  A's  promise  is  to  pay  his  own  debt  and  not  that  of 
"  another,"  and  hence  that  this  section  of  the  statute  of  frauds 
does  not  apply.  Furthermore,  A's  liability  to  C  is  not  de- 
pendent on  the  continuance  of  C's  liability  to  B.*  Thus,  if  A  is 
indebted  to  C  and  promises  to  pay  such  debt  by  paying  C's  debt 
to  B,  such  promise  is  not  within  the  statute.^  So  if  A  buys 
property  of  C  and  agrees  to  pay  therefor  by  discharging  C's  debt 
to  B,  B,  if  he  can  maintain  an  action  upon  such  contract  at  all 
can  do  so  whether  A's  promise  can  be  proved  in  writing  or  not,* 
even  if  C  is  not  released  from  liability  by  B.'^     Thus  where  C 


3  See  Ch.  LX. 

4  For  this  reason  such  promises 
fall  within  the  principle  of  the  sec- 
ond theory  given  above.    See  §  613. 

5  Nordby  v.  Winsor,  24  Wash. 
535;  64  Pac.  726. 

6  De  Walt  V.  Hartzell,  7  Colo.  601 ; 
4  Pac.  1201 ;  Mulvany  v.  Gross,  1 
Colo.  App.  112;  27  Pac.  878;  Tuttle 
V.  Armstead,  53  Conn.  175;  22  Atl. 
677;  Boldenwick  v.  Cahill,  187  111. 
218;  58  N.  E.  351;  affirming,  86  111. 
App.  561;  Knisely  v.  Brown,  95  111. 
App.  516;  Rothermel  v.  Coal  Co.,  79 
111.  App.  667 ;  McCasland  v.  Doorley, 
47  111.  App.  513;  Dickson  v.  Conde, 
148  Ind.  279;  46  N.  E.  998;  Bate- 
man  v.  Butler,  124  Ind.  223;  24  N. 
E.  989;  Deering  v.  Armstrong,  14 
Ind.  App.  44;  42  N.  E.  372;  Mor- 
rison V.  Hogue,  49  la.  574;  Neis- 
wanger  v.  McClellan,  45  Kan.  599; 
26  Pac.  18 ;  Mudd  v.  Carico,  104  Ky. 
719;  47  S.  W.  1080;  Flint  v.  Land 
Co.,  89  Me.  420;  36  Atl.  634;  Ware 
V.  Allen,  64  Miss.  545;  60  Am.  Rep. 
67 ;  1  So.  738 ;  Lee  v.  Newman,  55 
Miss.  365;  Sohufeldt  v.  Smith,  139 
Mo.   367;   40  S.  W.  887;   Duerre  v. 


Ruediger,  65  Mo.  App.  407 ;  Barnett 
V.  Pratt,  37  Neb.  349;  55  N.  W. 
1050;  Mason  v.  Wilson,  84  N.  C.  51; 
37  Am.  Rep.  612;  Jarmusch  v.  Steel 
Co.,  23  Ohio  C.  C.  122;  Feldman  v. 
McGuire,  34  Or.  309;  55  Pac.  872; 
Fehlinger  v.  Wood,  134  Pa.  St.  517; 
19  Atl.  746;  Delp  v.  Brewing  Co., 
123  Pa.  St.  42;  15  Atl.  871;  Wynn 
V.  Wood,  97  Pa.  St.  216;  Townsend 
V.  Long,  77  Pa.  St.  143;  18  Am. 
Rep.  438;  Sargent  v.  Johns,  206  Pa. 
St.  386;  55  Atl.  1051;  Morris  v. 
Gaines,  82  Tex.  255;  17  S.  W.  538; 
Gay  v.  Pemberton  (Tex.  Civ.  App.), 
44  S.  W.  400;  Thompson  v.  Chees- 
man,  15  Utah  43;  48  Pac.  477; 
Keyes  v.  Allen,  65  Vt.  667;  27  Atl. 
319;  Don  Yook  v.  Mill  Co.,  16  Wash. 
459;  47  Pac.  964;  Silsby  v.  Frost, 
3  Wash.  Terr.  388;  17  Pac.  887; 
Hooper  v.  Hooper,  32  W.  Va.  526 ;  9 
S.  E.  937 ;  Martin  v.  Davis,  80  Wis. 
376;  50  N.  W.  171. 

7  Rothermel  v.  Coal  Co.,  79  111. 
App.  667;  Gay  v.  Pemberton  (Tex. 
Civ.  App. )  ,  44  S.  W.  400 ;  Keyes 
V.  Allen,  65  Vt.  667;  27  Atl.  319. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING. 


951 


conveys  realty,^  or  assigns  a  lease  of  realty,"  or  transfers  person- 
alty^" to  A,  who  in  consideration  of  such  transfer  agrees  to  dis- 
charge C's  debt  to  B,  A's  promise  is  not  affected  by  this  clause 
of  the  statute.  So  where  there  is  a  change  in  the  membership  of 
a  firm  and  the  incoming  partner,"  or  the  partner  who  remains 
in  tlie  firm,^"  agrees  as  payment  for  the  interest  acquired  by  him 
to  pay  the  debts  of  the  partnership,  such  contract  is  not  within 
this  clause  of  the  statute.     In  some  jurisdictions  such  contracts 


8  Smith  V.  Caldwell,  6  Ida.  436; 
55  Pac.  1065;  Mudd  v.  Carico,  104 
Ky.  719;  47  S.  W.  1080;  Daniels  v. 
Gibson  (Ky.)  ,  47  S.  W.  621;  Jen- 
nings V.  Crider,  2  Bush.  ( Ky. )  322 ; 
92  Am.  Dec.  487;  Coffin  v.  Brad- 
bury, 89  Me.  476;  36  Atl.  988;  Flint 
V.  Land  Co.,  89  Me.  420;  36  Atl. 
634;  Reynolds  v.  Deitz,  39  Neb.  180; 
58  N.  W.  89;  Moore  v.  Booker,  4  N. 
D.  543;  62  N.  W.  607;  Taylor  v. 
Preston,  79  Pa.  St.  436;  Johnson 
V.  Elmen,  94  Tex.  168;  86  Am.  St. 
Rep.  845;  52  L.  R.  A.  162;  59  S.  W. 
253;  Morris  v.  Gaines,  82  Tex.  255; 
17  S.  W.  538;  Beitel  v.  Dobbin  (Tex. 
Civ.  App.),  44  S.  W.  299;  Thompson 
V.  Cheesman,  15  Utah  43;  48  Pac. 
477 ;  Skinker  v.  Armstrong,  86  Va. 
1011;  11  S.  E.  977;  Morgan  v.  Lake 
View  Co.,  97  Wis.  275;  72  X.  W. 
872.  In  a  Massachusetts  ease,  de- 
cided under  Rhode  Island  law,  B's 
suit  against  A  was  held  to  release 
C  and  to  take  the  case  out  of  the 
statute.  Aldrich  v.  Carpenter.  160 
Mass.  166;   35  N.  E.  456. 

9Wolke  V.  Fleming.  103  Ind.  105; 
53  Am.  Rep.  495;   2  X.  E.   325. 

"loAultman  v.  Fletcher.  110  Ala. 
452;  18  So.  215;  Tevis  v.  Savage, 
130  Cal.  411;  62  Pac.  611;  Mul- 
vany  v.  Gross,  1  Colo.  App.  112; 
27  Pac.  878;  American  Lead  Pencil 
Co.  V.  Wolfe,  30  Fla.  360;  11  So. 
488:   Rothermel  v.  Coal  Co.,  79  111. 


App.  667 ;  Scudder  v.  Carter,  43  111. 
App.  252;  Dickson  v.  Conde,  148 
Ind.  279;  46  N.  E.  998;  Deering  & 
Co.  V.  Armstrong,  14  Ind.  App.  44; 
42  X\  E.  372 ;  Clinton  Xational  Bank 
V.  Studemann,  79  la.  104;  37  N.  W. 
112;  Watson  v.  Perrigo,  87  Me.  202; 
32  Atl.  876;  Armitage  v.  Saunders, 
94  Mich.  482;  54  X.  W.  174;  Brit- 
tain  V.  Kelly.  86  Mich.  278;  49  N. 
W.  53;  Schufeldt  v.  Smith,  139  Mo. 
367;  40  S.  W.  887;  Deal  v.  Bank, 
79  Mo.  App.  262 ;  Wills  v.  Bank.  23 
Xev.  59;  42  Pac.  490;  Townsend  v. 
Long,  77  Pa.  St.  143;  18  Am.  Rep. 
438;  Wood  v.  Moriarty,  15  R.  I. 
518;  9  Atl.  427;  Dimmick  v.  Col- 
lins, 24  Wash.  78;  63  Pac.  1101; 
Gilmore  v.  Box  Factory,  20  Wash. 
703;  56  Pac.  934;  Don  Yook  v. 
Mill  Co.,  16  Wash.  459;  47  Pac. 
964 ;  Lessel  v.  Zillmer,  105  Wis.  334 ; 
81  N.  W.  403 ;  J.  &  H.  Clasgens  Co. 
V.  Silber,  93  Wis.  579;  67  N.  W. 
1122;  Green  v.  Hadfield,  89  Wis. 
138;  61  X.  W.  310.  In  Georgia  A 
is  not  bound  by  an  oral  promise  of 
this  sort,  Strauss  v.  Garrett,  101 
Ga.  307;  28  S.  E.  850.  except  where 
B's  claim  is  a  lien  on  the  personalty 
transferred  from  C  to  A.  Wooten  v. 
Wilcox,  87  Ga.  474;  13  S.  E.  595. 

iiBartlett  v.  Smith  (Xeb.).  98 
N.  W.  687. 

12  Dickson  v.  Conde,  148  Ind.  279; 
46  X.  E.  998. 


952  PAGE    ON    CONTRACTS. 

are  within  the  statute  of  frauds  unless  the  original  debtor  is  re- 
leased by  agreement  of  all  the  parties/^ 

§624.     Guaranty  as  part  of  contract  of  assignment. 

If  A  sells  to  B  an  obligation  of  C  which  A  o^vns,  and  as  part 
of  the  sale  A  guarantees  the  obligation  such  promise  is  not  within 
the  statute  of  frauds.^  Thus,  if  A  in  payment  of  certain  prop- 
erty sold  to  him  by  B  assigns  to  B  a  certificate  of  deposit 
issued  by  a  bank  C,  and  also  gives  a  check  on  such  bank,  A's 
promise  to  B  to  pay  such  certificate  of  deposit  and  check  if  C 
does  not  pay  by  a  certain  time  is  not  within  the  statute."  The 
same  rule  applies  where  A  sells  to  B,  C's  property  left  with  A  to 
sell  and  apply  the  proceeds  to  A's  debt,  and  A  agrees  to  protect 
B  against  a  pending  replevin  suit  brought  by  X.^ 

§625.     Promise  to  pay  out  of  debtor's  funds. 

If  A  has  in  his  hands  money  or  property  belonging  to  C,  out 
of  w^hich  he  has  authority  to  pay  C's  debt  to  B,  and  A  promises 
to  pay  C's  debt  to  B,  A's  promise  is  not  within  this  clause  of  the 
statute.^     Thus  a  promise  by  an  employer  to  pay  a  debt  of  his 


13  Stowell  V.  Gram,  184  Mass 
562;   69  N.  E.   342. 

1  Carter  v.  Odom,  121  Ala.  162 
25  So.  774 ;  Smith  v.  Corege,  53  Ark 
295;  14  S.  W.  93;  Chapline  v.  At 
kinson,  45  Ark.  67;  55  Am.  Rep 
531;  Power  v.  Rankin,  114  111.  52: 
29  N.  E.  185;  Voris  v.  Loan  Asso 
ciation,  20  Ind.  App.  630;  50  N.  E 
779;  Fears  v.  Storv,  131  Mass.  47; 


tra,  Dows  v.  Sweet,  120  Mass.  322, 
where,  however,  A  was  not  the 
holder  of  the  note  guaranteed.  See, 
however,  the  same  ease  in  134  Mass. 
140;  45  Am.  Rep.  310.  The  ques- 
tion of  the  value  of  this  case  as  au- 
thority turns  in  part  on  the  question 
of  the  value  of  a  case  where  the 
record  discloses  one  combination  of 
facts   (that  A  did  not  own  the  note) 


Crane  v.  Wheeler,  48  Minn.  207 ;  50  and  the  opinion  of  the  court  assumes 

N.  W.  1033;  Wilson  v.  Hentges.  29  another   (that  A  did  own  the  note)^ 

Minn.    102;    12  N.   W.   151;   Barker  2  Kiernan   v.   Kratz,   42   Or.   474; 

V.    Scudder,   56   Mo.   272;    Bruce   v.  69  Pac.  1027;  70  Pac.  506. 

Burr,   67   N.   Y.   237;    Crawford   v.  3  Farnham    v.    Chapman,    61    Vt. 

Pyle.  190  Pa.  St.  263;  42  Atl.  687;  395;  18  Atl.  152. 

Malone  v.  Keener.  44  Pa.   St.   107;  1  Hughes  v.  Fisher,  10  Colo.  383; 

Hall  V.  Rodgers.  26  Tenn.  236;  Wy-  15  Pac.   702;  Clarke  v.  Palmer,  129 

man  v.  Goodrich.  26  Wis.  21.     Con-  Mass.  373;  Bice  v.  Building  Co..  96 


COXTRACTS    WHICH    MUST    BE    PROVED    BY    WRITIXG.       953 

employee's  out  of  wages  due  the  latter  in  the  former's  hands,"  as 
where  A  promises  B  to  pay  C's  board  to  B  out  of  C's  wages  due 
from  A^  is  not  within  the  statute.  So  if  C  transfers  property 
to  A  to  be  used  in  paying  C's  debt  to  B,  A's  promise  to  B  to 
make  such  use  of  the  proceeds  of  the  property  is  not  within  the 
statute.*  So  where  A  owns  property  for  the  improvement  of 
which  he  has  let  a  contract  to  C,  and  C  has  employed  B,  and  A 
promises  to  pay  B  out  of  funds  owing  by  him  to  C,  A's  promise 
is  not  within  the  statute.^  If  C  has  a  lien  on  B's  property  to 
secure  his  debt,  C's  contract  with  A  whereby  he  waives  his  lien 
and  allows  A  to  sell  the  property,  and  A  agrees  to  pay  C's  debt 
out  of  such  proceeds  is  not  within  the  statute.^  If  A  is  pro- 
tected by  a  mortgage  given  by  C  as  indemnity  his  promise  to 
pay  C's  debt  to  B  is  held  not  within  the  statute,^  and  A's  prom- 
ise to  E  that  A  will  get  a  mortgage  from  C  to  protect  B  against 
liability  as  surety  both  on  the  debt  in  question  and  on  a  former 
debt,  is  held  not  to  be  within  the  statute.^  In  some  jurisdic- 
tions this  proposition  must  be  stated  with  the  qualification  that 
if  the  original  liability  of  C  is  extinguished  A's  promise  is  not 
within  the  statute  of  frauds,  but  if  C's  liability  remains,  A's 
promise  is  within  the  statute.^  If  A  has  C's  property  in  his 
hands,  without  any  authority  from  C  to  expend  it  in  paying  C's 
debts,  A's  promise  to  B  to  pay  C's  debt  is  within  the  statute.^" 


Mich.  24;   55  N.  W.  382;  Dibble  v.  8  Resseter  v.   Waterman,    151   111. 

De   Mattos,   8   Wash.   542;    3G   Pac.  169;  37  N.  E.  875;  reversing  45  111. 

485.  -^PP-    155,    and    citing    Bushnell    v. 

2  Hefferlin  v.  Karlman,  —  Mont.  Beavan,  1  Bing.  N.  C.  103. 

— ;   74  Pac.  201.  9  West  v.  Grainger,  —  Fla.  — ;  35 

3  Baldwin  Coal  Co.  v.  Davis,  15  So.  91;  O'Connell  v.  Mt.  Holyoke 
Colo.  App.  371;   62  Pac.  1041.  College,    174   Mass.    511;    55   N.    E. 

4McIntire    v.    Sehiffer,    31    Colo.  460;     Bugbee    r.    Kendricken,     130 

246;    72   Pac.   1056.  Mass.  437;   Swift  v.  Pierce,   13  All. 

5  Bice  V.  Building  Co.,  96  Mich.  (Mass.)  136;  Allen  v.  Leavens,  26 
24 ;  55  N.  W.  382 ;  Dibble  V.  De  Mat-  Or.  164;  46  Am.  St.  Rep.  613;  26 
tos,  8  Wash.  542;  36  Pac.  485.  L.    R.   A.    620;    37    Pac.   488;    Wil- 

6  Simpson  v.  Carr  (Ky.),  76  S.  W.  loughby  v.  Florence,  51  S.  C.  462; 
346.  29  S.  E.  242;   Barto  v.  Phillips,  28 

7Chapline   v.    Atkinson,    45    Ark.  Wash.  482;  68  Pac.  895. 

67;  55  Am.  Rep.  531.  lo  Dilts  v.  Parke,  4  N.  J.  L.  219. 


954  PAGE    ON"    CONTRACTS. 

§626.    Promise  to  accept  order  or  draft. 

If  A  has  in  his  hands  money  or  property  belonging  to  C,  out 
of  which  he  has  authority  to  pay  C's  debt  to  B,  A's  promise  to 
B  to  accept  an  order  drawn  by  C  upon  such  fund  is  not  within 
the  statute.^  So,  orders  which  operate  as  payment  of  the  orig- 
inal liability  may  be  accepted  orally,^  this  being  really  a  form 
of  novation. 

If  A  has  no  funds  of  C's  in  his  hands  and  is  not  indebted  to 
C,  his  promise  to  accept  C's  order  to  B  is  within  the  statute.^ 
Thus,  a  promise  by  a  widow,  who  is  the  beneficiary  of  an  insur- 
ance certificate  taken  out  by  her  husband  in  a  beneficial  associa- 
tion, to  pay  his  debts  out  of  this  fund,  is  within  the  statute,* 
since  this  fund  is  not  property  which  ever  belonged  to  the  de- 
ceased husband.  Since  a  bill  of  exchange  merges  the  liability 
of  the  drawee  to  the  drawer,  it  may  be  accepted  orally  without 
violating  the  statute  of  frauds,^  except  in  those  jurisdictions 
where  by  special  statute  acceptance  of  a  bill  of  exchange  must 
be  in  writing.^  However,  a  promise  by  the  drawee  of  a  bill  of 
exchange  to  a  prospective  purchaser  thereof  to  repay  to  him 

1  Durkee  V.  Conklin,  13  Colo.  App.  111.  36;  95  Am.  Dec.  510;  Louis- 
313;  57  Pac.  486;  Lavell  v.  Frost,  ville,  etc.,  Ry.  v.  Caldwell,  98  Ind. 
16  Mont.  93;  40  Pac.  146.  If  A  is  245;  Cook  v.  Baldwin,  120  Mass. 
indebted  to  C,  his  promise  to  accept  317;  21  Am.  Rep.  517;  Dunavan 
C's  order  to  B  is  said  to  be  vin-  v.  Flynn,  118  Mass.  537;  Pierce  v. 
necessary.     Barnett  v.  Lumber  Co.,  Kittredge,    115   Mass.   374;    Spauld- 

43  W.  Va.  441;   27   S.  E.  209.  ing    v.    Andrews,    48    Pa.    St.    411; 

2  Cook  V.  VVolfendale,  105  Mass.  Fisher  v.  Beckwith,  19  Vt.  31;  46 
401;     Parkhurst    v.    Dickerson,    21      Am.  Dec.  174. 

Pick.     (Mass.)     307;     Washburn    v.  6  Flato   v.   Mulhall,    72   Mo.   522; 

Cordis,  15  Pick.   (Mass.)  53.  Haeberle  v.  O'Day,  61  Mo.  App.  390; 

sKillough  V.  Payne,  52  Ark.  174;  Nichols  v.   Bank,   55  Mo.  App.   81; 

12  S.  W.  327;  Chapline  v.  Atkinson,  Risley  v.   Bank,   83   N.   Y.   318;    38 

45  Ark.  67;  55  Am.  Rep.  531;  Win-  Am.  Rep.  421.     By  statute  in  Penn- 

burn  V.  Building  Association,  110  la.  sylvania   acceptance  of  a   bill  draft 

374;  81  N.  W.  682;  \^  ill  is  v.  Shinn,  or  order  for  the  payment  of  money 

42  N.  J.  L.  138.  exceeding  twenty  dollars  cannot  be 

*  Fisher  v.  Donovan.  57  Neb.  361;  enforced  unless  it  is  in  writing.   Na- 

44  L.  R.  A.  383;  77  N.  W.  778.  tional  State  Bank  v.  Linderman.  161 
sTownsley  V.  Sumrall,  2  Pet.  170;  Pa.   St.  199;  28  Atl.   1022;  Maginn 

Kennedy  v.  Geddes,  3  Ala.  581;   37      v.   Bank,   131   Pa.   St.   362;    18   Atl. 
Am.  Dec.  714;   Nelson  v.   Bank.  48      901. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       955 

the  amount  expended  by  him  in  purchasing  such  bill  is  not 
within  this  statute/  A  promise  by  one  not  indebted  to  another 
to  indorse  bills  drawn  by  such  other  in  favor  of  his  creditor,  on 
consideration  that  such  creditor  would  refrain  from  issuing 
execution,  is  within  the  statute.^ 

§627.    Del  credere  agency. 

If  A  is  B's  agent,  and  as  part  of  the  contract  of  employment, 
A  agrees  to  be  personally  liable  to  B  on  all  contracts  made  by 
A  for  B  Avitli  third  persons,  A's  promise  is  not  within  this 
clause  of  the  statute/  In  such  cases  A  is  known  as  a  del  credere 
agent.  Like  some  of  the  other  rules  on  this  subject  it  is  easier 
to  state  this  than  to  explain  it.  Probably  the  best  explanation 
why  such  a  promise  is  not  within  the  statute  is  that  it  is  not 
intended  by  the  parties  as  a  promise  to  pay  the  debt  of  others,, 
though  it  can  be  performed  only  by  paying  such  debts,  but,  like 
a  contract  of  insurance,  it  provides  for  indemnity  against  loss 
due  to  the  acts  of  such  agent. 

§628.     Promise  to  discharge  liens. 

If  A  buys  property  from  C  which  is  encumbered  by  liens  held 
by  B,  and  A  is  not  bound  by  his  contract  with  C  to  pay  off  the 
liens  but  subsequently  in  consideration  of  a  release  of  the  lien^ 

TKelley    v,    Greenough,    9    Wash.  White,    71    111.   287;    Williamson   v. 

659;  38  Pac.  158.  Rexroat,   55  111.  App.   116;    McCas- 

sHarbury,     etc.,     Co.     v.    Martin  land  v.   Doorley,  47   111.   App.   513; 

(1902),  1  K.  B.  778.  Parker  v.  Dillingham,  129  Ind.  542; 

1  Sutton  V.  Grey    (1894),   1  Q.  B.  29  N.  E.  23;   Crawford  v.  King,  54 

285;     Swan    v.    Nesmith,     7    Pick.  Ind.    6;    Spooner   v.   Dunn,    7    Ind. 

(Mass.)   220;   19  Am.  Dec.  282;  Os-  81;    63   Am.   Dec.   414;    Vaughn   v. 

borne  v.   Baker,   34  Minn.   307;    57  Smith,  65  la.   579;   22  N.  W.  684; 

Am.  Rep.   55;    25   N.   W.   606;    Bui-  Stewart  v.    Campbell,    58    Me.   439; 

Iowa  V.  Orgo,  57  N.  J.  Eq.  428;  41  Fears  v.  Story,  131  Mass.  47;  Hodg- 

Atl.  494;   Guggenheim  v.  Rosenfeld,  ins  v.  Heaney,  15  Minn.  185;  Joseph 

9    Baxt.     (Tenn.)     533;    Bradley    v.  v.  Smith,  39  Xeb.  259;   42  Am.  St. 

Richardson,  23  Vt.  720.  Rep.  571;   57  X.  W.   1012;   Proven- 

1  Choate  v.  Hoogstraat,   105  Fed.  chee  v.  Piper,  68  N.  H.  31 ;  36  Atl. 

713;  Wooten  v.  Wilcox,  87  Ga.  474;  552;   Blackford  v.   Gaslight  Co.,  43 

13    S.    E.    595;    Power    v.    Rankin,  N.  J.  L.  438;  Rees  v.  Jutte,  153  Pa. 

114  111.  52;   29  N.  E.   185;  Scott  v.  St.  56;  25  Atl.  998;  Powell  v.  Dun- 


956  PAGE    ON    CONTRACTS. 

or  a  reduction  of  the  amount  thereof"  promises  to  pay  the  debt 
secured  by  the  lien,  the  promise  is  not  within  tlie  statute.  It  is 
*'  a  mere  arrangement  to  relieve  the  property  of  a  lien."^  Thus, 
if  B  holds  a  chattel  mortgage  on  C's  horse,  and  C  sells  said  horse 
to  A,  A's  subsequent  promise  to  B  to  pay  the  mortgage  note  if 
C  will  release  the  lien  is  not  within  the  statute.*  A  promise  to 
pay  a  claim  in  order  to  acquire  or  retain  property  has  been  held 
not  to  be  within  the  statute  even  if  the  j)romisor  was  under  no 
prior  personal  liability  to  anyone.  Where  property  has  passed 
to  A  out  of  the  estate  of  C,  deceased,  and  A,  in  consideration 
that  B  will  refrain  from  attempting  to  apply  such  property  to 
the  satisfaction  of  C's  debt  to  B,  agrees  to  pay  it  himself,  such 
contract  is  not  included  in  this  clause  of  the  statute.^  Thus, 
if  a  lessee  of  realty  dies,  and  his  widow  in  order  to  retain  pos- 
session agrees  to  pay  the  rent  personally,  her  promise  is  not 
"within  the  statute.**  Where  A  has  not  received  property  from 
C's  estate,  but  expects  to  gain  personally  by  delay,  his  promise 
to  pay  C's  debt  has  been  held  to  be  within  the  statute.'^ 

If  the  lien  is  not  waived,  the  contract  on  these  facts  is  within 
the  statute.®     So  if  the  lien  is  prospective,  and  B  agrees  in 


woodie,  69  Vt.  Ill;  37  Atl.  227  (eit-  but  for  the  purchase  of  the  plain- 
ing Ide  V.  Stanton,  15  Vt.  685;  40  tiff's  interest  in  the  horse.") 
Am.  Dec.  698)  ;  McGraw  v.  Frank-  5  French  v.  French,  84  la.  655;  15 
lin,  2  Wash.  17;  25  Pac.  911;  26  L.  R.  A.  300;  51  N.  W.  145;  Muller 
Pac.  810;  Weisel  v,  Spenee,  59  Wis.  v.  Riviere,  59  Tex.  640;  46  Am, 
301;   18  N.  W.  165.  Rep.  291. 

2Fisk  V.   Reser,    19   Colo. -88;    34  6  Linam  v.   Jones,   134  Ala.  570; 

Pac.   572.     The    court    said    that    it  33   So.  343. 

was  "  as  between  himself  and  payee  7  Schaafs  v.  Wentz,   100  la.   708 ; 

an   original    agreement    based    upon  69  X,  W.   1022.     A  was  C's  falher- 

a   new   and    sufficient    consideration  in-law   and   was   already   surety   on 

moving  from  the  creditor  and  prom-  another  claim.    The  estate  proved  to 

ise  to  himself  for  his  benefit."  be  insolvent.     Distinguishing  Helt  v. 

3  Williamson   v.    Rexroat,    55    111.  Smith.    74   la.   667;    39   N.   W.   81; 

App.    116.     "An  original   undertak-  Wilson  v.  Smith,  73  la.  429;  35  X. 

ing   on    a    valuable    consideration.''  W.  506. 

Wooten  V.  Wilcox,  87  Ga.  474,  476;  »  Greene  v.  Latcham,  2  Colo.  App. 

13  S.  E.   595.  416;  31  Pac.  233;  Vaughn  v.  Smith, 

4Provenchee   v.    Piper,    68   X.   H.  65  la.  579;  22  N.  W.  684;   Stewart 

31;  36  AtL  552.      (It  is  "  not  a  con-  v.  Campbell,  58  Me.  439;  Brightman 

tract  for  the  payment  of  (C's)   debt,  v.  Hicks,   108  Mass.  246. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       957 

advance  to  waive  it  if  A  pays  the  debt,  A's  promise  is  not  within 
the  statute,"  but  without  B's  agreement  to  waive  it  A's  promise 
is  within  the  statute/'*  So  if  A  has  a  lien  on  B's  stock  for  feed- 
ing it,  and  X  claiming  a  lien  on  the  same  stock,  promises  to  paj 
A  the  amount  of  his  lien  if  A  will  release  it,  X's  promise  is  not 
within  the  statute/^ 

§629.     Discharge  of  liability. —  Novation. 

If  A  is  indebted  to  C  and  C  is  indebted  to  B,  a  contract  be- 
tween the  three  whereby  B  releases  C  and  C  releases  A  and  A 
agrees  to  pay  to  B  the  indebtedness  originally  owed  by  him  to 
C  is  not  infrequently  made.  This  kind  of  contract  is  called  a 
novation.  The  clause  of  the  statute  of  frauds  under  discus- 
sion does  not  apply  to  it,  as  it  is  not  primarily  a  promise  by  A 
to  pay  C's  debt,  but  a  promise  by  A  to  pay  his  own  debt.  Hence 
it  is  not  a  promise  to  pay  the  debt  of  "  another,"  although  the 
transaction  has  the  effect  of  discharging  C's  debt  to  B.  Further- 
more, C's  liability  to  B  is  discharged  by  the  transaction  and 
no  liability  of  "  another  "  remains  in  existence.  Accordingly 
A  does  not  undertake  to  answer  for  the  liability  of  another.^ 

It  is  therefore  necessary  to  bring  a  case  within  the  principle 
of  novation  contracts  that  the  original  debtor  should  be  released 
from  liability.     If  he  remains  bound,  the  contract  cannot  be  a 


»Laiiikin  v.  Palmer,  164  N.  Y, 
201;  58  N.  E.  123;  Bailey  v.  Marsh 
all,  174  Pa.  St.  602;  34  Atl.  326. 

10  Tanquary  v.  Walker,  47  111.  App 
451. 

11  Joseph  V.  Smith,  39  Neb.  259 
42  Am.  St.  Rep.  571;  57  N,  W 
1012. 

1  Dillaby  v.  Wilcox,  60  Conn.  71 
25  Am.   St.  Rep.  299;    13  L.   R.  A 


Cunningham,  183  Mass.  505;  67  N. 
E.  660;  Trudeau  v.  Poutre.  165  Mass. 
81;  42  N.  E.  508;  Eden  v.  Chaffee, 
160  Mass.  225;  35  N.  E.  675; 
Martin  v.  Curtis,  119  Mich.  169; 
77  N.  W.  690;  Hummel's  Es- 
tate, 55  Minn.  315;  sub  nomine, 
Haggenmiller  v.  Passavant,  56  N.  W. 
1064;  Wilson  v.  Vass,  54  Mo.  App. 
221;    Mallory  v.   Gillett,   21   N.    Y. 


643;  22  Atl.  491;  Pratt's  Appeal,  41  412;  Warren  v.  Smith,  24  Tex.  484; 

Conn.    191;    Packer    v.    Benton,    35  76    Am.    Dec.    115;    First    National 

Conn.  343;   95  Am.  Dec.  246;  Llnd-  Bank  v.   Border,   9   Tex.   Civ.   App. 

ley   V.    Simpson,   45   111.   App.   648;  670;  29  S.  W.  6.59;  Bates  v.  Sabin, 

Hyatt  V.  Bonham,  19  Ind.  App.  256;  64  Vt.  511;  24  Atl.  1013;  Putnam  v. 

49   N.  E.    361;    Fain  v.   Turner.   96  Farnham,  27  Wis.  187;  9  Am.  Rep. 

Ky.   634;   29   S.   W.  628;   Griffin  v.  459. 


958  PAGE    OiST    CONTKACTS. 

novation  and  the  statute  of  frauds  applies."  Thus,  where  B 
took  C's  note  under  such  circumstances  as  not  to  extinguish 
his  claim  against  C,  and  A  agreed  to  discount  C's  note  -without 
recourse  on  B,^  or  B  has  pledged  C's  claim  and  cannot  release 
it,*  the  contract  is  essentially  one  to  answer  for  the  debt  of 
"  another." 

The  original  debtor  must  assent  to  the  contract  to  make  it  a 
novation.  If  he  does  not  assent,  he  is  not  released,  nor  is  his 
debtor ;  and  the  contract  between  A  and  B  not  only  lacks  consid- 
eration but  is  within  the  statute  of  frauds.^  Thus  where  the 
proposition  was  made  to  the  original  debtor  when  he  was  "  too 
sick  to  talk  "  and  he  neither  accepted  nor  rejected  it,  the  con- 
tract between  A  and  B  was  within  the  statute.®  The  intention 
of  the  parties  to  effect  a  novation  depends  upon  the  construction 
of  the  contract  as  a  whole.  On  the  one  hand  a  promise  "  to  pay 
and  guarantee"  the  debt  of  another  was  held  to  contemplate 
his  discharge  from  liability.^  On  the  other  an  offer  by  a  wife, 
with  reference  to  her  husband's  note,  "  I  will  pay  this  note  when 
it  comes  due  " ;  accepted  "  I  will  take  you,  then,  in  your  hus- 
band's place,"  was  held  from  the  entire  contract  not  to  contem- 
plate the  husband's  discharge  from  liability  thereon.^ 

§630.     Promise  to  "  answer  for  "  antecedent  liability. 

Where  A  promises  to  pay  a  pre-existing  debt  of  C's  to  B  in 
case  C  does  not  pay  it,  and  C's  liability  to  B  is  unaffected,  A's 
promise  is  within  the  statute.^     Thus  where  the  administrator  of 

2  Perkins  v.  Hershey,  77  Mich.  4  Haeberle  v.  O'Day,  61  Mo.  App. 
504;    43    N.    W.    1021;    Hanson    v.      390. 

Nelson,    82    Minn.    220;    84   N.    W.  s  Hanson  v.  Nelson,  82  Minn.  220; 

742;    Giles    v.    Mahoney,    79    Minn.  84  N,  W.  742. 

309;  82  N.  W.  583;   Nelson  v.  Lar-  e  Hanson  v.  Nelson,  82  Minn.  220; 

son,  57  Minn.  133;   58  N.  W.  687;  84  N.  W.  742. 

Cornwell  v.  Megins,   39  Minn.  407 ;  ^  Packer  v.  Benton,  35  Conn.  343 ; 

40   N.  W.   610;   Haeberle  v.  O'Day,  95, Am.  Dec.  246. 

61  Mo.  App.  390.  8  Giles  v.  Mahoney,  79  Minn.  309 ; 

3  Dougherty  v.  Bash,   167  Pa.  St.  82  M.  W.  583. 

429;  31  Atl.  729:  citing  and  follow-  i  Harris   v.    Frank,    81    Cal.    280; 

ing  Mallet  v.  Bateman,  L.  R.  1  C.  P.      22  Pac.   856 ;   Turner  v.  Hubbell,   2 
163.  Day   (Conn.)   457;  2  Am.  Dec.  115; 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING. 


059 


a  mortgagee's  estate  promises  a  tax  collector  to  pay  a  tax  levied 
against  mortgagor  if  he  will  forbear  to  levy  on  the  mortgaged 
property,^  or  where  the  widow  of  a  decedent  promises  to  pay  a 
claim  for  taxes  owing  from  such  decedent  and  paid  by  another 
if  such  other  would  refrain  from  suit  to  enforce  such  claim,^ 
or  where  a  vendor  of  land  covenants  that  a  certain  railroad  near 
such  land  will  operate  permanently,*  such  promise  is  within  the 
statute.  Where  B  incorporates  an  item  for  which  C  is  liable 
into  his  account  against  A,  and  by  A's  verbal  agreement  the 
entire  account  becomes  an  account  stated,  the  statute  neverthe- 
less applies  to  the  item  for  which  C  was  liable.^ 


Cross  V.  Kistler,  14  Colo.  571;  23 
Pae.  903;  Hersey  v.  Tully,  8  Colo. 
App.  110;  44  Pac.  854;  Bluthenthal 
V.  Moore,  111  Ga.  297;  36  S.  E. 
689 ;  Flanagan  v.  Scott,  102  Ga.  399 ; 
31  S.  E.  23;  Calverly  v,  VVirth, 
59  111.  App.  553;  Hahn  v.  Maxwell, 
.33  111.  App.  261 ;  Blumenthal  v.  Tib- 
•  bits,  160  Ind.  70;  66  N.  E.  159; 
Brant  v.  Johnson,  46  Kan.  389;  26 
Pac.  735;  Strickland  v.  Hamlin,  87 
Me.  81;  32  Atl.  732;  Richardson  v. 
Williams,  49  Me.  558;  Stewart  v. 
Campbell,  58  Me.  439;  4  Am.  Rep. 
296;  Doyle  v.  White,  26  Me.  341; 
45  Am.  Dec.  110;  Slingluflf  v.  Sup- 
ply Co.,  89  Md.  557;  43  Atl.  759; 
Ames  V.  Foster,  106  Mass.  400;  8 
Am.  Rep.  343;  Nelson  v.  Boynton,  3 
Met.  (Mass.)  396;  37  Am.  Dec.  148; 
Dean  v.  Ellis,  108  Mich.  240;  65 
N.  W.  971;  Preston  v.  Zekind,  84 
Mich.  641;  48  N.  W.  180;  Perkins  v. 
Hershey,  77  Mich.  504;  43  N.  W. 
1021;  Stewart  v.  Jerome,  71  Mich. 
201;  15  Am.  St.  Rep.  252;  38  N. 
W.  895;  Wallace  v.  Wortham,  25 
Miss.  119;  57  Am.  Dec.  197;  Bissig 
V.  Britton,  59  Mo.  204;  21  Am.  Rep. 
379;  Nunn  v.  Carroll,  83  Mo.  App. 
135;  Simpson  v.  Harris,  21  Nev. 
353;  31  Pac.  1009;  Chesebrough  v. 
Tirrill,  61  N.  J.  L.  628;  41  Atl. 
215;  Ackley  v.  Parmenter,  98  N.  Y. 


425;  50  Am.  Rep.  693;  Belknap  v. 
Bender,  75  N.  Y.  446;  31  Am.  Rep. 
476;  Duffy  v.  Wunsch,  42  N.  Y. 
243;  1  Am.  Rep.  514;  Mallory  v. 
Gillett,  21  N.  Y.  412;  Carville  v. 
Crane,  5  Hill  (N.  Y.)  483;  40  Am. 
Dec.  364;  Haun  v.  Burrell,  119  N. 
C.  544;  26  S.  E.  Ill;  Pinson  v. 
Prentise,  8  Okla.  143;  56  Pac.  1049; 
Gump  V.  Halberstadt,  15  Or.  356; 
15  Pac.  467;  Branson  v.  Kitchen- 
man.  148  Pa.  St.  541;  24  Atl.  61; 
Allshouse  V.  Ramsey,  6  Whart.  (Pa.) 
331;  37  Am.  Dec.  417;  Taylor  v. 
Drake,  4  Strobh.  Law.  (S.  C.)  431; 
53  Am.  Dec.  680;  Durham  v.  Ar- 
ledge,  1  Strobh.  Law.  (S.  C.)  5; 
47  Am.  Dec.  544;  Rentfrow  v.  Lan- 
caster, 10  Tex.  Civ.  App.  321;  31  S. 
W.  229 ;  Hughes  v.  Frum,  41  W.  Va. 
445;  23  S.  E.  604;  Gray  v.  Herman, 
75  Wis.  453;  6  L.  R.  A.  691;  44  N. 
W.  248;  Hooker  v.  Russell,  67  Wis. 
257;   30  N.  W.  358. 

2Dillaby  v.  Wilcox,  60  Conn,  71; 
25  Am.  St.  Rep.  299;  13  L.  R.  A. 
643;  22  Atl.  491. 

3  Blumenthal  v.  Tibbits,  160  Ind. 
70;  66  N.  E.  159. 

■iBradfield  v.  Land  Co.,  93  Ala. 
527;  8  So.  383. 

sMartyn  v.  Arnold,  36  Fla.  446; 
18  So.  791. 


960 


PAGE    ON     CONTRACTS. 


Since  for  purposes  of  doing  business  a  corporation  is  a  legal 
entity  distinct  from  its  officers  and  stockholders,  a  promise  by 
an  officer,*^  stockholder^  or  receiver^  of  a  corporation  binding 
himself  personally  to  pay  the  debts  of  the  corporation  is  within 
the  statute.  So  where  a  cashier  of  a  bank  is  not  personally  lia- 
ble for  loss  on  a  loan  made  by  him,  his  promise  to  pay  such 
debt  if  the  debtor  does  not  is  within  the  statute.^  If  C  claims  a 
commission  from  A,  the  former  owner  of  realty,  for  effecting  a 
sale  thereof  to  B,  B's  promise  to  C  to  pay  such  commission  is 
within  the  statute.^" 

§631.     Promise  to  "  answer  for  "  contemporaneous  liability. 

Where  A  promises  to  pay  to  B  a  liability  of  C's  incurred  at 
the  time  that  A's  promise  is  made,  if  C  does  not  pay  it,  as  where 
B  furnishes  C  with  goods,^  such  as  lumber"  or  fodder  for  horses,^ 
or  renders  services,*  or  where  B  leases  realty  to  C,^  or  furnishes 
board  to  C,''  such  promises  are  included  in  this  clause  of  the 
statute.  ' 


6  Beattie  v.  Dinnick,  27  Ont.  285 ; 
Temple  v.  Bush,  76  Conn.  41 ;  55 
Atl.  557;  Ramsdell  v.  Power  Co., 
103  Mich.  89;  61  N.  W.  275. 

7  Trustees,  etc.,  v,  Flint,  13  Met. 
(Mass.)  539;  Searight  v.  Payne,  2 
Tenn.  Ch.  175. 

8  Bray  v.  Pareher,  80  Wis.  16;  27 
Am.  St.  Rep.  17;  49  N.  W.  HI. 

9  First  National  Bank  v.  Gaddis, 
31  Wash.  596;  72  Pac.  460. 

loWulff  V.  Lindsay,  —  Ariz.  — ; 
71  Pac.  963. 

iTevis  V.  Savage,  130  Cal.  411; 
62  Pac.  611 ;  Schotte  v.  Puscheck,  79 
111.  App.  31;  Indiana  Trust  Co.  v. 
Finitzer,  IGO  Ind.  647;  67  N.  E.  520; 
Newman  v.  Newman,  7  Kan.  App. 
77;  52  Pac.  908;  Goodman  v.  Felch- 
er,  116  Mich.  348;  74  N.  W.  511; 
Loonie  v.  Hogan,  9  N.  Y.  435;  61 
Am.  Dec.  683;  Putnam  Machine  Co. 
V.  Cann,  173  Pa.  St.  392;  34  Atl. 
67. 


2  Webb  V.  Lumber  Co.,  101  Ala. 
630 ;  14  So.  407 ;  Engleby  v.  Harvey, 
93  Va.  440;  25  S.  E.  225. 

3  Stevens  v.  Mayberry,  82  Me.  65 ; 
19  Atl.  92. 

4  Walker  v.  Irwin,  94  la.  448;  62 
N.  W.  785  (services  of  an  attor- 
ney) ;  Slone  v.  Berlin,  88  la.  205; 
55  N.  W.  341  (services  of  a  teach- 
er) ;  Chappell  v.  Barkley,  90  Mich. 
35;  51  N.  W.  351  (services  of  a 
physician)  ;  Russell  v.  Fenner,  21 
Ohio  C.  C.  527;  11  Ohio  C.  D.  754; 
Aldrich  v.  Jewell,  12  Vt.  125;  36 
Am.  Dec.  330. 

5  Moses  V.  Norton.  36  Me.  113;  58 
Am.  Dec.  738;  Koenig  v.  Brewery 
Co.,  38  Mo.  App.  182;  Riegelman  v. 
Focht,  141  Pa.  St.  380;  23  Am.  St. 
Rep.  293;  21  Atl.  601. 

6  Perkins  v.  Westcoat.  3  Colo. 
App.  338:  33  Pac.  139;  Price  v.  R. 
R.,  40  Mo.  App.  189. 


CONTRACTS    WHICH    MUST    BE    PKOVED    BY    WRITING.       961 

§632.    What  shows  intention  to  assume  primary  liability. 

Wliat  form  of  words  shows  an  intention  to  assume  a  primary 
liability  for  the  debt  in  question  cannot  be  determined  in  ad- 
vance by  arbitrary  rules.  Promises  to  "  see  that  B  is  paid/'^ 
that  ''  B  will  get  his  pay,"^  to  "  see  him  through,"  referring  to 
the  original  debtor/  or  that  "  whatever  sum  should  become  due 
should  be  paid  by  "  C/  are  held  to  import  a  promise  to  pay  the 
debt  of  another. 

On  the  other  hand,  there  are  many  authorities  which  hold 
that  a  promise  to  "  see  that  B  is  paid  "  is  not  necessarily  a 
promise  to  answer  for  the  debt  of  another,  but  may  be  a  promise 
incurring  primary  liability.^  These  are  cases  where  from  the 
entire  transaction,  including  the  relationship  of  the  various 
parties  to  the  transaction,  the  court  found  that  the  real  inten- 
tion of  the  parties  was  to  incur  a  primary  liability.** 

A  promise  to  "  pay '"  or  to  "  assume  "^  a  certain  obligation 
ordinarily  imports  a  primary  obligation.  A  promise  to  "  pay 
and  guarantee  "  C's  debt  has  been  held  to  create  liability  to  pay 
one's  own  debt.^ 

On  the  other  hand,  a  promise  to  "  pay  B  if  C  does  not "  im- 
ports a  liability  dependent  on  the  debt  of  another.^"     So  a  prom- 

1  Jenkins,  etc.,  Co.  v.  Lundgren,  408;  Raabe  v.  Squier,  148  N.  Y.  81; 
85  111.  App.  494;  Butters,  etc.,  Co.  42  N.  E.  516;  Meldrum  v.  Kenefick, 
V.   Vogel,   130  Mich.  33;   89  N.  W.       15  S.  D.  370;  89  N.  W.  863. 

560;  Garrett-Williams  Co.  v.  Ham-  e  In  Davis  v.  Patrick,  141  U.  S. 
ill,  131  N.  C.  57;  42  S.  E.  448;  479,  489,  the  court  said:  "  The  real 
Birchall  v.  Neaster,  36  O.  S.  331 ;  character  of  a  promise  does  not  de- 
Lewis  V.  Mfg.  Co.,  156  Pa.  St.  217;  pend  altogether  upon  the  form  of 
27  Atl.  20.  expression  but  largely  on  the  situa- 

2  Fuller,  etc.,  Co.  v.  Houseman,  tion  of  the  parties ;  and  the  question 
117  Mich.  553;  76  N.  W.  77.  always  is,  what  the  parties  mutually 

3  Malone  v.  Ice  Co.,  88  Wis.  542 ;  understood  by  the  language,  whether 
60  N.  W.  999.  they  understood  it  to  be  a  direct  or 

4  Harris  v.  Harris,   9   Colo.  App.  a  collateral  promise." 

211;  47  Pac.  841.  7  Herendeen  Mfg.  Co.  v.  Moore,  66 

5  Davis  V.  Patrick.  141  U.  S.  479;  N.  J.  L.  74;  48  Atl.  525. 
Berkowsky    v.    Viall    66    111.    App.  « Schultz  v.  Babcock.  64  111.  App. 
349;    Phelps    v.    Stone,    172    Mass.  199. 

355;   52  N.  E.  517;   Amort  v.  Chis-  9  Packer  v.  Benton,  35  Conn.  343; 

tofferson.  57  Minn.   234;    59  N.  W.  95  Am.  Dec.  246. 

304;  Osborn  v.  Emery,  51  Mo.  App.  lo  Warner      v.      Willoughby,      60 
61  ' 


962 


PAGE    ON    CONTEACTS, 


ise  "  if  he  fails  to  pay  I  -will  "  has  been  held  a  promise  to  pay 
the  debt  of  another.^^  An  oifer  "  I  will  pay  this  debt  when  it 
comes  due,"  accepted  "  very  well,  I  will  take  you,  then,  in  your 
husband's  place,"  has  been  held  a  promise  to  pay  the  debt  of 
another/" 

§633.     Application  of  foregoing  rules  to  building  contracts. 

A  common  illustration  of  these  rules  is  found  where  A  owns 
realty,  lets  a  contract  to  C  for  erecting  a  building  thereon  and 
subsequently  finding  that  C  cannot  get  credit  from  B,  A  agrees 
to  pay  B  for  certain  articles  to  be  furnished  by  B  to  C  for  use 
on  A's  property.  In  such  cases  if  A's  promise  is  such  as  to 
make  him  primarily  liable,  his  promise  is  not  within  this  clause 
of  the  statute  of  frauds.^  Similar  considerations  control  A's 
promise  to  pay  B  for  labor  done  for  C.^  The  same  rule  applies 
where  A  is  the  chief  contractor,  C  a  subcontractor  and  A  prom- 
ises B  to  pay  for  supplies  furnished  to  C.^     If,  on  the  other 


Conn.  468;  25  Am.  St.  Rep.  343;  22 
Atl.  1014. 

11  Garrett- Williams  Co.  v.  Ham- 
ill,  131  N.  C.  57;  42  S.  E.  448. 

12  Giles  V.  Mahoney,  79  Minn. 
309;  82  N.  W.  583.  (The  only  con- 
sideration being  an  extension  of 
time  to  the  husband. ) 

1  Buchanan  v.  Moran,  62  Conn. 
83;  25  Atl.  396;  Craft  v.  Kendrick 
39  Fla.  90;  21  So.  803;  Sext  v 
Geise,  80  Ga.  698;  6  S.  E.  174 
Berkowsky  v.  Viall,  66  111.  App 
349;  Schultz  v.  Babcock,  64  111.  App 
199;  Cornell  v.  Electric  Co.,  61  111 
App.  325;  Lynch  v.  Scroth,  50  111 
App.  668;  Gibson  County  Commis 
sioners  v.  Heating  Co.,  128  Ind.  240 
12  L.  E.  A.  502;  27  N.  E.  612 
Cedar  Valley  Mfg.  Co.  v.  Starbard 
(la.)  ,  89  N.  W.  14;  Hall  v.  Alford, 
105  Ky.  664;  49  S.  W.  444;  Phelps 
V.  Stone,  172  Mass.  355;  52  N.  E. 
517;    Rand    v.    Mather,    11    Cush. 


(Mass.)  1;  59  Am.  Dec.  131;  Wil- 
helm  V.  Voss,  118  Mich.  106;  76  N. 
W.  308;  McLaughlin  v.  Austin,  104 
Mich.  489;  62  N.  W.  719;  Lamont  v. 
La  Fevre,  96  Mich.  175;  55  N.  W. 
687;  Bice  v.  Building  Co.,  96  Mich. 
24;  55  N.  W.  382;  Herendeen  Mfg. 
Co.  V.  Moore,  66  N.  J.  L.  74 ;  48  Atl. 
525;  Crawford  v.  Edison,  45  O.  S. 
239;  13  N.  E.  80. 

2  Franks  v.  Stevens,  82  Mich.  192; 
46  N.  W.  369;  Lewis  v.  Mfg.  Co., 
156  Pa.  St.  217;  27  Atl.  20.  In 
Wilhelm  v.  Voss,  118  Mich.  106;  76 
N.  W.  308,  it  was  said  that  if  B 
abandons  his  contract  with  C  and 
looks  to  A  alone,  the  statute  of 
frauds  does  not  apply,  but  that 
otherwise  it  does. 

sLedbetter  v.  McGhees,  84  Ga. 
227;  10  S.  E.  727;  Barras  v.  Coal 
Co.,  38  Neb.  311;  56  N.  W.  890; 
Mackey  v.  Smith,  21  Or.  598;  28 
Pac.  974. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITIXG.       963 

hand,  A's  promise,  whether  he  is  owner  or  contractor,  leaves  C 
still  liable,  and  is  merely  a  promise  to  pay  C's  debt  in  case  C 
does  not  pay  it,  the  statute  of  frauds  applies.*  Thus  where  the 
subcontractor  asked  the  owner  on  settlement  with  the  contractor 
to  withhold  the  amount  due  from  such  contractor  to  such  sub- 
contractor, and  the  owner  replied  that  he  would  have  to  pay 
the  contractor  when  he  called  for  his  money,  it  was  held  that 
if  such  answer  purported  to  create  any  sort  of  liability  it  was 
liability  for  the  debt  of  another.^ 


§634.     Contracts  of  indemnity. 

If  A  promises  to  indemnify  B  against  certain  liabilities,  the 
question  of  the  application  of  this  clause  of  the  statute  of  frauds 
depends  on  A's  previous  relation  to  such  liability.  If  the  lia- 
bility is  A's  primarily  and  A  induces  B  to  assume  this  liability 
to  C  by  promising  to  indemnify  B,  A's  promise  is  to  pay  his  own 
debt,  not  that  of  another,  and  the  contract  is  not  within  the 
statute.^  Thus  if  A  induces  B  to  become  surety  for  him,"  or 
for  himself  and  X,^  though  the  business  is  conducted  in  the 
name  of  X  alone,*  or  to  accept  a  bill  of  exchange  drawn  on  B 
by  A^  under  promise  by  A  to  indemnify  B  against  loss  by  reason 

4  Warner  v.  Willoughby,  60  Conn.  Atl.  496;  Tighe  v.  Morrison,  116  K 
468;  25  Am.  St.  Rep.  343;  22  Atl.  Y.  263;  5  L.  R.  A.  617;  22  N.  E. 
1014;  Heggie  v.  Smith,  87  111.  App.  164;  Mays  v.  Joseph,  34  O.  S.  22; 
141;  Wookey  v.  Slemmons,  65  111.  Evans  v.  Mason,  1  Lea  (Tenn.)  26; 
App.  553 ;  Parker  v.  Dillingham,  129  Farnum  v.  Chapman,  61  Vt.  395 ; 
Ind.  542;  29  N.  E.  23;  Gill  v.  Her-  18  Atl.  152;  Earth  v.  Graf,  101  Wis. 
rick,    111    Mass.    501;    Fuller,    etc.,  27;  76  N.  W.  1100. 

Co.  V.  Houseman,  117  Mich.  553;  76  2  Barry  v.  Ransom,  12  N.  Y.  462; 

N.  W.  77;   Dupius  v.  Improvement  Earth  v.  Graf,  101  Wis.  27;   76  X. 

Co.,   88  Mich.   103;    50  N.   W.    103;  W.  1100.     See  a  similar  principle  in 

Birchall   v.   Neaster,   36  0.   S.   331;  §   621. 

Lewis  v.  Mfg.  Co.,  156  Pa.  St.  217;  3  Tighe    v.    Morrison,    116    N.    Y. 

27  AtL  20;   Loftus  v.  I\y,   14  Tex.  263;   5  L.  R.  A.  617;   22  N.  E.  164 

Civ.  App.  701;  37  S.  W.  766.  (A  and  X  being  administrators). 

5  Wood  V.  R.  R.,  131  N.  C.  48;  42  4  Smith  v.  Delaney,  64  Conn.  264; 
S.  E.  462.  42  Am.  St.  Rep.  181;  29  Atl.  496. 

iLerch    v.    Gallup,    67    Cal.    595;  s  Guild  v.  Conrad   (1894),  2  Q.  B. 

8   Pac.    322;    Smith   v.   Delaney,   64      885. 
Conn.  264;  42  Am.  St.  Rep.  181;  29 


964  PAGE    ON    CONTRA.CTS. 

of  such  transaction,  A's  promise  is  not  within  the  statute  of 
frauds.  So  if  A  is  already  liable  as  surety  for  C,  and  he  prom- 
ises B  to  repay  any  money  advanced  hy  C  to  pay  such  debt,  his 
promise  is  not  within  the  statute.® 

If  A,  in  order  to  induce  B  to  become  surety  for  C,  promises 
to  indemnify  him  against  any  loss  arising  out  of  such  suretyship, 
the  question  of  the  application  of  the  statute  of  frauds  depends 
on  the  view  of  such  transaction  taken  by  the  courts.  A's  prom- 
ise may  be  regarded  as  a  promise  to  B  to  pay  B's  debt  to  the 
obligee.  If  this  view  of  the  essential  nature  of  the  transaction 
is  entertained,  A's  promise  is  not  within  the  statute  of  frauds.'^ 
Other  authorities  look  on  A's  promise  as  a  promise  to  pay  C's 
debt  to  B  if  C  does  not,  and  hence  within  the  statute.^  Thus  a 
promise  by  a  payee  to  save  certain  makers  harmless  is  within 
the  statute,"  and  so  is  a  contract  between  creditors  who  are 
working  together  to  collect  their  claims  whereby  they  agree  to 
pro  rate  any  loss  which  either  sustains  in  enforcing  his  claim. ^* 
If  A  is  surety  for  B  and  C,  and  to  induce  B  to  pay  the  entire 


8  Sweet  V.  Colleton,  96  Mich.  391 ;  Melras,   31   Wis.  306;    11  Am.   Rep. 

55  N.  W.  984.  608. 

"Marcy    v.    Crawford,    16     Conn.  s  Spear  v.  Bank,   156  111.  555;   41 

549;  41  Am.  Dec.  158;   Anderson  v.  N.    E.    164;    affirming,    49    111.   App. 

Spence,   72   Ind.   315;    37   Am.   Rep.  509;     May"  v.    Williams,    61    Miss. 

162;    overruling,    Brush    v.    Carpen-  125;  48  Am.  Rep.  80;  Hurt  v.  Ford, 

ter,  6  Ind.  78;   Mills  v.  Brown,   11  142  Mo.  283;  41  L.  R.  A.  823;  44  S. 

la.   314;   George  v.  Hoskins    (Ky.),  W.  228;    Bissig  v.  Britton,   59  Mo. 

30  S.  W.  406;  Jones  v.  Letcher,  13  204;    21  Am.  Rep.   379;   Hartley  v. 

B.   Mon.    363 ;    Aldrich    v.   Ames,    9  Sandford,  66  N.  J.  L.  627 ;  55  L.  R. 

Gray    (Mass.)    76;  Boyer  v.  Soules,  A.  206;   50  Atl.  454;   reversing,  48 

105  Mich.  31;  62  N.  W.  1000;  Esch  Atl.  1009;  Kelsey  v.  Hibbs,  13  O.  S. 

V.  White,  76  Minn.  220;   78  N.  W.  340;  Easter  v.  White,  12  0.  S.  219; 

1114;   Fidelity,  etc.,  Co.   v.  Lawler,  Nugent  v.   Wolfe,   111   Pa,   St.  471; 

64  Minn.  144 ;  66  N.  W.  143 ;  Minick  56  Am.  Rep.  291 ;  4  Atl.  15 ;  Wolver- 

V,  Huff,  41  Neb.  516;  59  N.  W.  795;  ton  v.  Davis,  85  Va.  64;   17  Am.  St. 

Cortelyon  v.  Hoagland,  40  N.  J.  Eq.  Rep.  56;  6  S.  E.  619. 

1;    Sanders    v.   Gillespie,   59   N.   Y.  o  Hurt  v.  Ford,  142  Mo.  283;   41 

250;   Harrison  v.  Sawtel,  10  Johns.  L.  R.  A.  823;  44  S.  W.  228. 

(N.  Y.)   242;   6  Am.  Dec.  337;   Bea-  lo  Spear  v.  Bank,  156  111.  555;  41 

man  v.  Russell.  20  Vt.  205;  49  Am.  N.   E.    164;    affirming,   49   111.    App. 

Dec.   775 ;    Faulkner  v.   Thomas,   48  509. 
W.  Va.  148;  35  S.  E.  915;  Vogel  v. 


CONTRACTS    "WHICH    MUST    BE    PROVED    BY    WRITING.       965 

debt  A  agrees  to  indemnify  him  for  one-half  the  amount,  A's 
promise  is  within  the  statute/^ 

The  confusion  in  the  American  authorities  is  due  largely  to 
their  adherence  to  different  inconsistent  English  authorities. 
The  original  English  rule  was  that  such  a  contract  was  not 
within  the  statute.^^  This  case  was  subsequently  either  dis- 
tinguished or  overruled/^  and  finally  Green  v.  Creswell  was 
overruled^*  and  the  original  doctrine  established.  The  vacilla- 
tion in  England  has  led,  first,  to  the  division  in  American  cases 
already  set  forth ;  and,  second,  to  an  attempt  on  the  part  of  some 
courts  to  distinguish  the  cases  where  A  is  also  a  surety  with  B 
from  those  where  B  becomes  a  surety  and  A  does  not. 

If  A  is  already  liable  as  surety  for  C,  and  to  induce  B  to  sigTi 
as  co-surety  A  promises  to  indemnify  him  against  loss,  some 
authorities  hold  that  such  promise  is  within  the  statute/^  others 
that  it  is  not.^^ 

Agreements  between  indorsers  of  the  same  instrument,^^  or  co- 
sureties,^^ fixing  the  amounts  of  their  respective  liabilities,  are 
generally  held  not  to  be  within  the  statute. 

If  there  is  no  specific  liability  of  C's  against  the  effect  of 
which  A  promises  B  indemnity,  A's  promise  is  not  within  the 
statute.^®     Hence  A's  promise  to  save  B  harmless  from  liability 

11  Cheesman  v.  Wiggins,  122  Ind.  i7  Phillips  v.  Preston,  5  How. 
352;  23  N.  E.  945.  (U.  S.)   278;  Weeks  v.  Parsons,  176 

12  Thomas  v.  Cook,  8  Barn.  &  Mass.  570;  58  N.  E.  157;  Faulkner 
Cres.  728  (where  A  was  a  party  to  v.  Thomas,  48  W.  Va.  148;  35  S.  E, 
the  instrument) .  915. 

13  Green  v.  Creswell,  10  Ad.  &  El.  is  Rose  v.  Wollenberg,  31  Or.  269; 
453  (A  was  not  a  party).  The  65  Am.  St.  Rep.  826;  39  L.  R.  A. 
court    said     that    the    doctrine    of  378;  44  Pac.  382. 

Thomas  v.   Cook,  sujjra,  "  taken    in  i9  See   §   617. 

its  full  extent  would  repeal  the  stat-  "  If  a  promise  of  indemnity  be  not 

ute."  collateral   to   the    liability   of   some 

1-1  Wildes  V.  Dudlow,  L.  R.  19  Eq.  other  person  to  the  same  party  to 

198.  whom  the  promise  is  made  it  is  not 

15  Wolverton  v.  Davis,  85  Va.  64 ;  within  the  statute."  Beaman  7, 
17  Am.  St.  Rep.  56;  6  S.  E.  619.  Russell,    20    Vt.    205;    in    syllabus, 

16  Horn  V.  Bray,  51  Ind.  555;  19  quoted  in  Merchant  v.  O'Rourke, 
Am.  Rep,   742;   Ferrell  v.  Maxwell,  111  la.  351,  355;  82  N.  W.  759. 

28  0.  S.  383;  22  Am.  Rep.  393. 


966 


PAGE    ON    CONTRACTS. 


on  coi'iDorate  stock, ^**  or  a  contract  to  insure,' 
none  of  tlicm  within  the  statute. 


or  re-msure. 


are 


IV.       CONTKACTS  IX   CONSIDERATION  OF  MaEKIAGE. 

5635.     Contracts  in  consideration  of  marriage. 


This  clause  of  the  statute  is  held  not  to  include  contracts  to 
intermarry.^ 

According  to  some  authorities  it  does  not  include  contracts 
between  two  persons  about  to  intermarry  concerning  their  re- 
spective property  rights,"  nor  indeed  any  promise  which  does 
not  rest  upon  marriage  as  its  sole  consideration.^  Such  con- 
tracts may,  however,  be  affected  by  the  clause  in  the  statute  of 
frauds  with  reference  to  conveyances  of  realty  or  some  interest 
therein.*  In  other  jurisdictions  contracts  between  parties  about 
to  intermarry  adjusting  their  respective  property  rights  are 
within  this  clause  of  the  statute.^ 


20 Merchant  v.  O'Eourke,  111  la. 
351;  82  N.  W,  759. 

siEames  v.  Ins.  Co.,  94  U.  S. 
621;  Franklin  Ins.  Co.  v.  Colt,  20 
Wall  (U.  S.)  560;  King  v.  Cox,  63 
Ark.  204;  37  S.  W.  877;  Ins.  Co.  v. 
Kuessner,  164  111.  275;  45  N.  E. 
540;  Western  Assurance  Co.  v.  Mc- 
Alpin,  23  Ind.  App.  220 ;  77  Am.  St. 
Eep.  423;  55  N.  E.  119;  Davenport 
V.  Ins.  Co.,  17  la.  276;  Phoenix  Ins. 
Co.  V.  Ireland,  9  Kan.  App.  644;  58 
Pac.  1024;  Howard  Ins.  Co.  v. 
Owens,  94  Ky.  197;  21  S.  W.  1037; 
Sanford  v.  Ins.  Co.,  174  Mass.  416; 
75  Am.  St.  Rep.  358;  54  K  E.  883; 
Campbell  V.  Ins.  Co.,  73  Wis.  100; 

40  N.  W.  661 ;  Angell  v.  Ins.  Co.,  59 
N.  Y.  171;  17  Am.  Rep.  322. 

22P,artlett  v.  Ins.  Co.,  77  la.  155; 

41  X.  W.  601. 

1  Caylor  v.  Roe,  99  Ind.  1 ;  With- 
ers  V.  Richardson,  5  T.  B.  Mon. 
(Ky.)  94;  17  Am.  Dec.  44. 

2  Riley    v.    Riley,    25    Conn.    154; 


All  courts  agree  that  this 


Rainbolt  v.  East,  56  Ind.  538;  26 
Am.  Rep.  40;  Nowack  v.  Berger,  133 
Mo.  24;  54  Am.  St.  Rep.  663;  31  L. 
R.  A.  810;  34  S.  W.  489.  Such 
promise  is  said  to  be  "  not  in  consid- 
eration of  marriage  although  it  was 
made  in  contemplation  of  marriage." 
Riley  v.  Riley,  25  Conn.  154,  159. 
"  The  contract  in  this  case  between 
the  parties  was  not  made  in  consid- 
eration of  marriage,  but  rather  in 
contemplation  of  marriage,  and  the 
consideration  was  the  mutual  relin- 
quishment of  prospective  property 
rights."  Rainbolt  v.  East,  56  Ind. 
538,  539;  26  Am.  Rep.  40. 

sLarsen  V.  Johnson,  78  Wis.  300; 
23  Am.  St.  Rep.  404;  47  N.  W.  615. 

4  Rainbolt  v.  East,  56  Ind.  538; 
26  Am.  Rep.  40. 

5Keady  v.  White,  168  111.  76;  48 
N.  E.  314;  affirming,  G9  111.  App. 
405;  Powell  v.  Meyers  (Ky.),  64  S. 
W.  428;  Finch  v.  Finch,  10  0.  S. 
501 ;    Stanley  v.  Madison,    11   Okla. 


CO:\^TKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       967 

clause  includes  contracts  for  conveying  anything  of  value  upon 
the  sole  consideration  of  marriage/  even  if  no  realty  is  to  be 
conveyed  and  the  contract  is  to  be  performed  within  the  year/ 

V.        COXTEACT  OR  SaEE  OF  LaXDS,   TENEMENTS  OR  HEREDITA- 
MENTS. 

§636.    Scope  of  clause. 

The  wording  of  this  clause  of  the  statute  shows  the  legislative 
intention  to  include  contracts  of  every  sort  which  affect  the  title 
to  realty  or  any  interest  therein.  Accordingly  a  discussion 
of  this  clause  necessarily  involves  two  general  topics :  First,  what 
are  included  in  the  words  "  lands,  tenements  or  hereditaments 
or  any  interest  in  or  concerning  them  " ;  and,  second,  what  con- 
tracts affect  such  interests  so  as  to  come  within  this  clause  of 
the  statute. 

In  discussing  the  wording  of  this  clause  it  is  generally  as- 
sumed that  words  "  contract  or  sale  "  are  misused  for  "  con- 
tract for  the  sale."  It  is  dangerous  to  construe  a  statute 
on  the  theory  that  the  legislature  misused  language.  The  stat- 
ute of  frauds  was  passed  in  England  after  much  consideration, 
and  the  clause  in  question  has  been  adopted  by  the  legislatures 
of  many  states  in  the  exact  words  of  the  English  statute.  The 
construction  of  this  section  includes  releases,  creation  of  liens 
and  contracts  for  the  possession  of  realty  within  the  meaning 
of  "  contract  or  sale."  It  may  at  least  be  open  to  conjecture 
whether  so  broad  a  scope  would  at  the  outset  have  been  given 
to  the  words  "  contract  for  the  sale." 


288;  66  Pac.  280;  Hannon  v.  Houni-  2G;  60  Am.  Rep.  552;  11  N.  E.  397; 

han,  85  Va.  429;  12  S.  E.  157.  Brenner   v.    Brenner,    48    Ind.    262; 

6  Lloyd  V.  Fulton,  91  U.  S.  479;  White  v.   Bigelow,    154  Mass.   593; 

Peek  V.  Peek,  77  Cal.  106;   11  Am.  28   N.   E.    904;    Chase  v.   Fitz,    132 

St.  Rep.  244;  1  L.  R.  A.  185;  19  Pac.  Mass.  359;  Manning  v.  Riley,  52  N. 

227;   Moore  v.  Allen,  26  Colo.  197;  J.   Eq.   39;    27   Atl,   810;    Henry  v. 

77  Am.  St.  Rep.  255;  57  Pac.  698;  Henry,  27  O.  S.  121. 

McAnnulty  v.   McAnmilty,    120   111.  '  Brenner  v.  Brenner,  48  Ind.  262^ 


968 


PxiGE    ON    CONTRACTS. 


§637.     Duration  of  estates  included  in  this  clause. —  Freeholds. 

Any  estate  in  realty  is  included  within  the  meaning  of  the 
•words  under  discussion.  Thus  estates  in  fee^  or  for  life^  are, 
of  course,  included. 

§638.     Estates  for  years. 

An  oral  contract  to  lease  realty  for  a  term  of  years  is  within 
the  statute  if  not  specifically  excepted  therefrom.^  Hence  a 
written  contract  for  a  lease,  subsequently,  before  acceptance, 
modified  over  the  telephone  and  accepted  orally  as  modified,  is 
within  the  statute.^  So  an  oral  contract  to  extend  a  lease  for 
years,^  or  to  assign  a  lease  for  years,*  or  to  surrender  a  lease  for 


iMcKinnon  v.  Mixon,  128  Ala. 
612;  29  So.  690;  Manning  v.  Pip- 
pen,  86  Ala.  357;  11  Am.  St.  Rep. 
46;  5  So.  572;  Pond  v.  Sheean,  132 
111.  312;  8  L.  R.  A.  41-4;  23  N.  E. 
1018;  Austin  v.  Davis,  128  Ind.  472; 
25  Am.  St.  Rep.  456;  12  L.  R.  A. 
120;  26  N.  E.  890;  Jackson  v.  My- 
ers, 120  Ind.  504;  22  N.  E.  90;  23 
N.  E.  86;  McLennan  v,  Boutell,  117 
Mich.  544;  76  N.  W.  75;  McDonald 
V.  Maltz,  78  Mich.  685;  44  N.  W. 
337;  Fargusson  v.  Improvement 
Co.,  56  Minn.  222;  57  N.  W.  480; 
Taylor  v.  Von  Schroeder,  107  Mo. 
206;  16  S.  W.  675;  Bloomfield  State 
Bank  v.  Miller,  55  Neb.  243;  70  Am. 
St.  Rep.  381 ;  44  L.  R.  A.  387;  75  N. 
W.  569;  Jordan  v.  Furnace  Co.,  126 
N.  C.  143;  78  Am.  St.  Rep.  644;  35 
S.  E.  247 ;  Kling  v.  Bordner,  65  O. 
S.  86;  61  N.  E.  148;  Cleveland  v. 
Evans,  5  S.  D.  53;  58  N.  W.  8; 
Swash  V.  Sharpstein,  14  Wash.  426; 
32  L.  R.  A.  796 ;  44  Pac.  862. 

2  Such  as  dower,  Brown  v.  Rawl- 
ings,  72  Ind,  505 ;  Gordon  v.  Gordon, 
54  N.  H.  152;  Keeler  v.  Tatnell,  23 
N.  J.  L.  62.  Even  if  imassigned ; 
Finch  V.  Finch,  10  0.  S.  501. 


1  Bailey  v.  Ferguson,  39  111.  App. 
91;  Emery  v.  Terminal  Co.,  178 
Mass.  172;  86  Am.  St.  Rep.  473;  59 
N.  E.  763;  Smalley  v.  Mitchell,  110 
Mich.  650;  68  N.  W.  978;  Smith  v. 
Phillips,  69  N.  H.  470;  43  Atl.  183; 
Unglish  V.  Marvin,  128  N.  Y.  380; 
28  N.  E.  634;  Browning  v.  Berry, 
107  N.  C.  231;  10  L.  R.  A.  726;  12 
S.  E.  195;  Jordan  v.  Furnace  Co., 
126  N.  C.  143;  78  Am.  St.  Rep.  644; 
35  S.  E.  247;  Davis  v.  Pollock,  36 
S.  C.  544;  15  S.  E.  718;  Schulz  v. 
Schirmer  (Tex.),  49  S.  W.  246; 
Utah  Optical  Co.  v.  Keith,  18  Utah 
464;  56  Pac.  155. 

2  Wiessner  v.  Ayer,  176  Mass. 
425;  57  N.  E.  672.  (The  written 
offer  was  not  accepted,  and  the  offer 
as  accepted  was  partly  oral.) 

sSidebotham  v.  Holland  (1895), 
1  Q.  B.  378;  Emery  v.  Terminal  Co., 
178  Mass.  172;  86  Am.  St.  Rep. 
473;  59  N.  E.  763. 

4  Chicago  Attachment  Co.  v.  Ma- 
chine Co.,  142  111.  171;  15  L.  R.  A. 
754;  31  N.  E.  438;  affirming  on  re- 
hearing, 28  N.  E.  959;  reversing,  25 
N.  E.  669.  (Distinguishing  Web- 
ster V.   Nichols,    104  111.   160,  as  a 


CONTRACTS    WHICH    MUST    BE    TROVED    BY    WRITING.       969 

^'ears/  or  to  sublet  realty  held  by  lease,^  are  each  of  them  within 
the  statute. 

A  complication  in  the  law  of  estates  for  years  arises  out  of 
exceptions  to  the  statute  of  frauds  specifically  made  in  their 
favor,  and  of  questions  of  the  effect  of  such  exceptions  or  of  part 
performance  upon  the  clause  of  the  statute  concerning  contracts 
not  to  be  performed  within  the  year.  Short  leases,  usually  of 
from  one  to  three  years,  are  in  some  jurisdictions  specifically 
excepted  from  the  operation  of  the  statute  of  frauds.'^  The 
original  statute  of  frauds  excepted  leases  for  three  years  or  less.^ 
The  proviso  that  the  rent  reserved  in  such  leases  must  amount 
to  "  two-thirds  part  at  the  least  of  the  thing  demised  "  refers 
to  two-thirds  of  the  rental  value  and  not  of  the  fee.^  Where 
such  a  statute  is  in  force  an  additional  statute  making  such 
short  leases  valid  without  acknowledgment  and  the  like  does 
not  prevent  them  from  being  excepted  from  the  statute  of 
frauds.^"  Under  a  statute  of  frauds  which  excepts  leases  for  a 
year  from  its  operation  as  far  as  it  deals  with  realty,  a  contract 
for  a  lease  for  a  year  to  begin  in  the  future  is  not  within  the 
operation  of  the  clause  concerning  interests  in  realty.^^  Whether 
it  is  a  contract  which  cannot  be  performed  within  a  year  from 
the  date  of  the  making  thereof,  and  hence  within  another  clause 
of  the  statute,  is  a  question  upon  which  the  courts  have  divided. 
Some  courts  hold  that  such  contracts  are  not  within  the  clause 
of  the  statute  concerning  contracts  which  cannot  be  performed 
within  the  year.^-     Two  reasons  are  advanced  for  this  view: 

case  in  which  the  oral  assignment  of  s  Childers  v.  Talbott,  4  N.  M.  336 ; 

a  lease  was  upheld  because  the  stat-  16  Pac.  275. 

ute    of    frauds    was    not    pleaded.)  9  Childers  v.  Lee,  5  N.  M.  576;  12 

Kingsley  v.   Siebrecht,    92   Me.    23;  L.  R.  A.  67;  25  Pac.  781;  Childers 

69  Am.  St.  Rep.  486;  42  Atl.  249;  v.   Talbott,   4   N.   M.    336;    16   Pac. 

Penney  v.  Lynn,  58  Minn.  371;    59  275. 

N.  W.   1043;  Nally  v.  Reading,  107  loWard    v.    Hinckley,    26    Wash. 

Mo.  350;  17  S.  W.  978;  Tiefenbrun  539;  67  Pac.  220. 

V.  Tiefenbrun,  65  Mo.  App.  253.  "  Higgins  v.  Gager,  65  Ark.  604; 

sRees  v.  Lowy,  57  Minn.  381;  59  47  S.  W.  848;  Whiting  v.  Ohlert,  52 

N.  W.  310.  Mich.  462;  50  Am.  Rep.  265;   18  N. 

ePratcher    v.    Smith,    104    Mich.  W.  219. 

537;  62  N.  W.  832.  i^TTiggins  v.  Gager,  65  Ark.  604; 

7Hosli  V.  Yokel,  57  Mo.  App.  622.  47    S.   W.    848;    Steininger   v.   Wil- 


970  PAGE    ON"    CONTRACTS. 

IFirst,  that  by  specifically  providing  for  leases  for  a  year  or  more 
the  legislature  lias  manifested  an  intention  to  exempt  such  con- 
tracts altogether  from  the  operation  of  the  clause  concerning 
contracts  not  to  he  j^rformed  within  the  year ;  second,  that  since 
taking  possession  under  the  lease  is  a  performance  of  the  con- 
tract, performance  within  the  year  is  possible  if  the  time  at 
which  the  lease  is  to  begin  is  within  a  year  from  the  date  of 
making  the  contract.  In  other  jurisdictions  a  contract  for  a 
lease  for  a  year  to  begin  in  the  future  is  held  to  be  within  the 
clause  concerning  contracts  not  to  be  performed  within  the 
year.^'  A  contract  for  a  lease  for  an  indefinite  time  which  may 
extend  beyond  a  year/*  as  a  contract  for  the  use  of  land  by  A 
until  she  receives  out  of  the  profits  the  amount  sufficient  to  pay 
her  for  caring  for  promisor's  father^^  is  within  the  statute.  So 
a  contract  for  a  lease  to  end  with  an  event  Avhich  must  in  the 
course  of  nature  last  beyond  a  year,  as  a  lease  for  one  year,  ten- 
ant to  put  in  .a  crop  of  wheat,  the  harvesting  of  which  cannot 
be  finished  for  fifteen  months  after  the  term  begins,^^  is  within 
the  statute. 

An  oral  lease  for  one  year  with  the  privilege  of  three  has  been 
held  a  lease  for  more  than  one  year  and  hence  within  the  stat- 
ute.^^.  On  the  other  hand,  if  a  tenant  holds  over  under  an  oral 
agreement  for  temporary  occupation  after  the  expiration  of  a 
lease  which  provided  for  a  term  of  one  year  with  an  option  for 


liams,  63  Ga.  475;   St.  Joseph  Hy-  struing  the  Illinois  statute);  Green- 

draulic  Co.  v.  Paper   Co.,    156   Ind.  wood  v.  Strother,  91  Ky.  482;  16  S. 

665;  59  N.  E.  995;  Jones  v.  Marcy,  W.  138;  Brosius  v.  Evans,  —  Minn. 

49  la.  188;  Sobey  v.  Brisbee,  20  la.  — ;  97  N.  \Y.  373;  Cook  v.  Redman, 

105;    Whiting   v.   Ohlert,    52    Mich.  45  Mo.  App.  397;  Beiler  v.  Devoll, 

462;    50   Am.    Rep.   265;    18   N.   W.  40  Mo.  App.  251. 

219;  McCroy  V.  Toney,  66  Miss.  233;  ^i  Contra,    if   terminable    at   will. 

2  L.  R.  A.  847;  5  So.  392;  Ward  v.  Hirsch  v.  Kohn,  20  111,  App.  330. 

Hasbrouck,  169  N.  Y.  407;  62  N.  E.  is  Sm alley  v.  Mitchell,   110  Mich. 

434;  Becar  v.  Flues,  64  N.  Y.  518;  650;  68  N.  W.  978. 

Young  V.  Dake,  5  N.  Y.  463;  55  Am.  i6  Carney    v,    Mosher,    97    Mich. 

Dec.  356.  554 ;  56  X.  W.  935. 

13  White  V.  "Levy,  93  Ala,  484;   9  "Hand  v.  Osgood,  107  Mich.  55; 

So.   164;    Cochran  v.   Ward,   5   Ind.  61   Am.  St.  Rep.  312;   30  L.  R.  A. 

App.  80.  97:   51   Am.  St.  Rep.  229;  379;  64  N.  W,  867. 
29  N.  E.  795;    31   N.  E.  581    (con- 


CONTRACTS    WHICH    MUST    BE    TROVED    BY    WRITING,        971 

three,  such  oral  agreement  may  he  shown  to  relieve  such  tenant 
from  liahility  for  rent  for  the  term  of  three  years/'^ 

If  a  written  lease  for  a  certain  term  provides  that  upon  giving 
notice  the  lease  is  to  continue  for  a  given  term  further,  the  addi- 
tional term  depends  for  its  validity  upon  the  written  lease. 
The  notice,  therefore,  which  fixes  the  right  to  the  additional 
term  is  not  within  the  statute  of  frauds.^''  Thus  even  if  a  con- 
tract for  an  estate  in  realty  can  be  executed  only  by  an  agent 
authorized  in  writing,  a  notice  of  the  sort  specified  may  be 
given  by  an  agent  without  written  authority.""  So  an  agree- 
ment in  the  written  lease  providing  for  fixing  the  rent  for  the 
renewal  period  by  having  the  property  leased  valued  by  apprais- 
ers, the  rent  to  be  a  certain  percentage  of  such  value,  does  not 
make  the  renewal  rest  on  oral  agreement  and  is  not  within  the 
statute."  If  a.  lease  is  made  for  more  than  one  year  in  such 
form  as  not  to  be  in  compliance  with  the  statute,  though  if  for 
one  year  only,  it  would  be  within  the  statute,  such  lease  cannot 
be  separated  and  held  valid  for  one  year."" 

§639.     Possessory  rights  and  land  certificates. 

A  possessory  right  to  realty  is -an  estate  therein  even  if  it  may 
be  thereafter  adjudged  to  be  inferior  to  the  right  of  one  claiming 
under  paramount  title.  Accordingly  a  contract  which  deals 
with  possessory  rights  is  within  the  statute,^  and  as  squatter's 
rights^  or  pre-emption  rights,^  to  specified  realty,  which  are 
rights  to  hold  possession  as  against  all  except  the  United  States, 

isStoreh  v.  Harvey,  45  Kan.  39;  21  Norton  v.  Gall,  95  111.  533;  35 

25  Pac.  220.  Am.  Eep.  173. 

13  McClelland  v.  Rush,  150  Pa.  St.  22  Boderre  v.  Den,   106   Cal.   594; 

57;  24  Atl.  354.  39  Pac.  946;  f  alamo  v.  Spitzmiller, 

20Sheppard    v.    Rosenkrans,    109  120  N.  Y.  37;  17  Am.  St.  Rep.  607; 

Wis.  58;   83  Am.   St.  Rep.  886;   85  8    L.    R.    A.    221;    23    N.    E.    980; 

N.  W.  199.      (Decided  under  the  II-  Thomas  v.  Nelson,  69  N.  Y.  121. 

linois    statute,     and    distinguishing  1  Lester    v.    White,    44    111.    464 : 

Kollock  V.  Scribner,  98  W^is.  104,  as  East   Omaha   Land    Co.   v.   Hansen, 

a  case  where  the  option  was  to  "re-  117  la.  96;  90  N.  W.  705;  Hayes  v. 

new  "    or    "  extend  "    the    old    lease  Skidmore,  27  O.  S.  331. 

which    was   held    to    contemplate   a  2  Hayes  v.  Skidmore,  27  O.  S.  331. 

new  lease.)  3  Lester  v.  White,  44  111.  464. 


972  PAGE    ON    CONTKACTS. 

and  upon  certain  conditions  to  acquire  legal  title  from  the 
United  States,  and  yet  give  neither  legal  nor  equitable  interests 
in  the  realty.*  So  an  oral  contract  whereby  one  in  possession 
agrees  to  surrender  possession  to  one  who  claims  such  realty  if 
a  pending  case  is  decided  in  favor  of  such  claimant  is  not  a  lease, 
but  is  a  contract  for  the  transfer  of  realty  and  hence  within  the 
statute.^  So  a  contract  between  gi'antor  and  grantee  reserving 
to  grantor  possession  of  the  realty  conveyed  until  part  of  the 
purchase  money  should  be  paid  is  within  the  statute.^  So  in 
jurisdictions  where  a  mortgagee  has  the  right  of  possession  of  the 
realty  in  question  before  breach  of  the  condition  an  oral  agree- 
ment that  the  mortgagor  should  retain  possession  is  within  the 
statute/ 

A  certificate  from  the  government  securing  a  certain  amount 
of  land  to  the  holder  is  not  within  the  statute  as  long  as  it  is  not 
located  as  a  specific  tract.*  When  once  located  it  becomes  an 
interest  in  realty.^ 

§640.     Contracts  concerning  land  of  third  person. 

This  clause  includes  contracts  whereby  A  contracts  with  B 
to  cause  an  interest  in  C's  realty  to  be  conveyed  to  B.^  It  is 
immaterial,  under  the  language  of  the  statute  whether  the  realty 
which  is  the  subject  of  the  contract  belongs  to  the  promisor 
or  not. 

§641.     Equitable  estates. 

Equitable  estates  in  realty,  as  well  as  legal  estates,  are  within 
this  clause  of  the  statute.^     Thus  if  A  has  a  valid  contract  with. 

4  Lester  v.  \Yhite,  44  111.  464.  »  Hughes  v.  Moore,  7  Crancli.    (U. 

5  East  Omaha  Land  Co.  v.  Han-  S.)  176;  Masterson  v.  Little,  75 
sen,  117  la.  96;  90  N.  W.  705.  Tex.  682;  13  S.  W.  154. 

6  Gilbert  v.  Bulkley,  5  Conn.  262;  i  Deiderick  v.  Alexander,  58  Kan. 
13  Am.  Dee.  57.  56;   48  Pae.  594;  Haeberle  v.  Day, 

1  Norton  v.  Webb,  35  Me.  218.  61  Mo.  App.  390. 

8  Reed   v.    McGrew,    5   Ohio    375;  i  Hughes  v.  Moore,  7  Cranch.   (U. 

Miller   v.   Roberts.    18   Tex.    16;    67  S.)     176:    Eiohards    v.    Richards.    9 

Am.    Dec.    688;    Staley    v.    Hankla  Gray   (Mass.)   313;  Scott  v.  McFar- 

(Tex.  Civ.  App.),  43  S.  W.  20.  land,    13    Mass.    309;    Wendover    v. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       973 

B  for  the  purchase  of  certain  realty,  which  is  sufficient  in  equity 
to  give  A  an  equitable  interest  in  such  realty,  a  contract  whereby 
A  agrees  to  transfer  his  interest  in  such  contract  to  X  is  within 
the  statute."  So  if  A  has  bought  an  interest  in  realty  at  an 
execution  sale,*  or  a  sale  in  foreclosure,*  a  contract  whereby  he 
attempts  to  transfer  such  interest  to  X  is  within  the  statute.^ 
Hence  if  A  and  B  have  made  a  contract  whereby  A  agrees  to  sell 
realty  to  B,  and  this  contract  is  such  as  to  pass  to  B  either  a 
legal  or  an  equitable  interest  in  such  realty,  an  oral  rescission 
of  this  contract  is  within  the  statute  of  frauds.®  However, 
under  a  contract  which  requires  an  interest  in  land  to  be  trans- 
ferred only  by  act  or  operation  of  law  or  by  conveyance  in  writ- 
ing subscribed  by  the  party  granting,  it  has  been  held  that  a 
surrender  of  a  contract  for  the  sale  of  realty,  made  by  vendee 
to  vendor  with  intent  of  both  parties  to  extinguish  vendee's 
equity,  is  a  compliance  with  the  statute.^  In  most  jurisdictions 
a  conveyance  absolute  on  its  face  cannot  be  turned  into  an  ex- 
press trust  by  oral  agreement.®  In  Ohio  the  courts  have  said 
that  an  oral  contract  may  create  an  express  trust,  although  the 
conveyance  is  absolute  on  its  face,**  if  the  declaration  of  the  trust 

Baker,  121  Mo.  273;  25  S.  W.  918;  Salter,    118    Mich.    148;    76    N.    W. 

Bedell  v.  Tracy,  65  Vt.  494 ;  26  Atl.  325 ;    Sanborn   v.   Murphy.    86   Tex. 

1031;   Cauble  v.  Worsham,   96  Tex.  437;    25    S.    W.    610;    affirming,    5 

86;  97  Am.  St.  Rep.  871;  70  S.  W.  Tex.  Civ.  App.  509;  25  S.  W.  459; 

737.  Cunningham  v.  Cunningham,  46  W. 

2  Richards    v.    Richards,    9    Gray  Va.  1 ;  32  S.  E.  998. 

(Mass.)    313.  THogue  v.  Ins.  Co.,  116  Wis.  656; 

sLittell   V.    Jones,    56    Ark.    139;  93  N.  W.  849. 

19  S.  W.  497 ;  Whiting  v.  Butler,  29  «  Sherman    v.    Sandell,    106    Cal. 

Mich.   122.  373;  39  Pac.  797;  Feeny  v.  Howard, 

4  Cox    V.    Roberts,    25    Ind.    App.  79  Cal.  525;    12  Am.  St.  Rep.   162; 
252;  57  N.  K  937.  4  L.  R.  A.  826;  21  Pac.  984:  Hass- 

5  Whether   the   execution    sale   it-  hagen  v.  Hasshagen.  80  Cal.  514;  22 
self  is  \Yithin  the  statute  see  §  665.  Pac.   294;    Burden   v.    Sheridan,    36 

oCatlett    V.    Dougherty,    21     111.  la.   125;   14  Am.  Rep.  505;   Sturte- 

App.  116;  Fisher  v.  Koontz,  110  la.  vant  v.  Sturtevant,  20  N.  Y.  39;  75 

498;  80  N.  W.  551   (citing  Devin  v.  Am.  Dee.  371. 

Himer,     29     la.     297;     Dunlap     v.  o  Mannix  v.  Purcell,  46  O.  S.  102; 

Thomas,  69  la.  358;  28  N.  W.  637;  15   Am.   St.   Rep.   562;    2  L.   R.   A. 

Stem  V.  Nysonger,  69  la.  512;  29  Is.  753;  19  N.  E.  572;  Harvey  v.  Gard- 

W.  433;  Harlan  v.  Harlan,   102  la.  ner.  41  O.  S.  642;  Ryan  v.  O'Connor, 

701;    72    N.    W.    286);    Grunow   v.  41  0.  S.  368;   Mathews  v.  Leaman, 


974  PAGE    ON    CONTRACTS. 

is  contemporaneous  with  the  conveyance/**  An  implied  trust 
can  be  proved  by  oral  evidence/^  As  a  rule,  from  the  nature 
of  the  case,  oral  evidence  is  the  only  kind  that  is  available  in 
such  cases,  and  to  exclude  it  would  be  substantially  the  same  as 
to  refuse  to  enforce  implied  trusts. 

In  some  jurisdictions  a  trust  which  can  be  shown  only  by 
oral  evidence  cannot  be  released  even  to  the  holder  of  the  legal 
title  by  oral  agreement/"  If  A  has  acquired  the  legal  title  to 
realty  of  which  B  is  the  owner  in  equity,  under  such  circum- 
stances that  A  may  be  held  as  trustee  for  B,  as  where  A  gets  a 
patent  from  the  government  by  making  a  wrongful  use  of  the 
name  of  B,  who  owned  a  plat  and  a  certificate  of  survey  of  such 
realty,^^  a  contract  whereby  B  releases  his  claim  to  such  realty 
is  within  the  statute. 

However,  if  a  trust  can  be  shown  only  by  oral  evidence,  oral 
evidence  is  admissible  to  rebut  such  trust,^*  and  in  some  jurisdic- 
tions this  rule  has  been  extended  so  that  oral  evidence  which 
does  not  deny  the  original  existence  of  the  trust  is  admitted  to 
show^  that  it  has  been  released  to  the  holder  of  the  legal  title,^^  or 
to  show  that  additional  terms  have  been  added  to  the  trust  by 
oral  agreement.^"  Under  this  view  an  oral  agreement  between 
A,  who  has  agreed  orally  to  buy  realty  from  B  and  has  been  put 
in  ix)ssession,  and  is  to  have  the  legal  title  on  the  payment  of  a 
certain  sum,  whereby  it  is  further  agreed  that  B  is  to  retain  the 


24    O.    S.    615.     In    many    of    these  S.)    17G;  Darling  v.  Butler,  45  Fed. 

cases,    however,   either   the  evidence  332;  10  L.  R.  A.  469. 

was   in   writing   or   the   facts    were  i3  Hughes  v.  Moore,  7  Cranch.  (U. 

such  as  to  create  an  implied  trust.  S.)    170. 

10  Russell  V.  Bruer,  64  0.  S.  1 ;  59  i*  Livermore   v.   Aldrich,   5   Cush. 

N.  E.  740.  (Mass.)  431;  Wiser  v.  Allen,  92  Pa. 

iiCorr's   Appeal,    62    Conn.   403;  St.  317. 

26  Atl.   478;    Towle  v.   Wadsworth,  is  Rogers  v.   Tyley,   144   111.   652? 

147  111.  80;  30  N.  E.  602;  35  N.  E.  32   N.    E.    393;    Stall   v.   Jopes,   47 

73;  Maroney  V.  Maroney,  97  la.  711;  Neb.   706;   66  N.  W.  653;   Shaw  v. 

66  Pac.  911;  Ripley  v.  Seligman,  88  Walbridge,   33    O.   S.    1;    Temple   v, 

Mich.   177;  50  N.  W.   143;   Newton  Dodge,  11  Tex,  Civ.  App.  42;  31  S. 

V.  Taylor,  32  O.  S.  399;  Currence  v.  W.  686. 

Ward,  43  W.  Va.  367 ;  27  S.  E.  329.  i6  Alemania,  etc.,  Co.  v.  Franzreb, 

12  Hughes  V.  Moore,  7  Cranch    (U.  56  0.  S.  493;  47  N.  E.  497. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITING. 


975 


legal  title  as  security  for  a  further  sum  loaned  by  B  to  A,  is  not 
within  the  statute. ^^ 


§642.     Creation  of  mortgage  or  lien. 

If  a  debt  is  incurred  by  an  owner  of  realty  under  such  cir- 
cumstances that  it  does  not  become  a  lien  upon  such  realty  by 
the  operation  of  law,  an  oral  agreement  by  such  owner  that 
such  debt  shall  be  a  lien  upon  such  realty  is  a  contract  for  an 
interest  in  realty,  and  is  accordingly  within  the  statute.^  Thus 
an  oral  contract  to  give  a  mortgage,"  as  by  deposit  of  title  deeds,^ 
to  modify  a  mortgage  already  given  so  as  to  secure  debts  other 
than  those  for  which  it  was  given,*  to  pledge  land  for  advances,^ 
as  for  advances  made  by  a  third  person  to  enable  promisor  to 
pay  his  grantor  for  the  realty*'  or  for  indemnity  against  a  breach 
of  the  covenants  of  warranty  of  a  deed  conveying  other  realty,^ 
a  contract  creating  a  mechanic's  lien  in  a  manner  not  provided 


17  Alemania,  etc.,  Co.  v.  Franzreb, 
56  O.  S.  493;  47  N.  E.  497. 

1  Driver  v.  Broad  (1893),  1  Q.  B. 
744;  affirming  (1893)  1  Q.  B.  539; 
Spies  V.  Price,  91  Ala.  166;  8  So. 
405;  Merchant  v.  Cook,  7  App.  D. 
C.  391;  Pierce  v.  Parrish,  111  Ga. 
725;  37  S.  E.  79;  Vose  v.  Strong, 
144  111.  108;  33  N.  E.  189;  Slack  v. 
Collins,  145  Ind,  569;  42  N.  E.  910; 
McCue  V.  Smith,  9  Minn.  252;  86 
Am.  Dee.  100;  Bender  v.  Zimmer- 
man, 122  Mo.  194;  26  S.  W.  973; 
Curie's  Heirs  v.  Eddy,  24  Mo.  117; 
66  Am.  Dec.  699;  Bloomfield  State 
Bank  v.  Miller,  55  Neb.  243;  70 
Am.  St.  Rep.  381;  44  L.  R.  A.  387; 
75  N.  W.  569. 

2  To  mortgage  the  fee,  Hackett  v. 
Watts,  138  Mo.  502;  40  S.  W.  113; 
Bloomfield  State  Bank  v.  Miller,  55 
Neb.  243;  70  Am.  St.  Rep.  381;  44 
L.  R.  A.  387 ;  75  N.  W.  569 ;  Brown 
V.  Drew,  67  N.  H.  569;  42  Atl.  177; 
Boehl  V.  Wadgymar,  54  Tex.  589. 
Contra,  Roberge  v.  Winne,  144  N.  Y. 
709;   39  N.  E.  631.     In  this  case  A 


gave  B  a  worthless  mortgage  as  part 
of  an  executed  contract  to  exchange 
realty.  A  subsequently  agreed  to 
give  B  another  mortgage  on  other 
realty.  This  contract  was  held  not 
to  be  within  the  statute.  The  case 
was  decided  by  a  divided  court  and 
is  not  reported  in  full. 

3  Bloomfield  State  Bank  v.  Miller, 
55  Neb.  243;  70  Am.  St.  Rep.  381; 
44  L.  R.  A.  387;  75  N.  W.  569. 

4  Williams  v.  Hill,  19  How.  (U. 
S.)  246;  Pierce  v.  Parrish,  111  Ga. 
725;  37  S.  E.  79;  Irwin  v.  Hubbard, 
49  Ind.  350;  19  Am.  Rep.  679.  A 
contract  that  a  satisfied  judgment 
shall  stand  as  a  lien  for  future  ad- 
vances is  within  the  statute.  Trus- 
cott  v.  King,  6  N.  Y.  147. 

5  Curie's  Heirs  v.  Eddy,  24  Mo, 
117;    66   Am.   Dec.   699. 

6  Spies  V.  Price,  91  Ala.  166;  8 
So.  405;  McCue  v.  Smith,  9  Minn. 
252;  86  Am.  Dec.  100. 

T  Bender  v.  Zimmerman,  122  Mo. 
194;  26  S.  W.  973, 


976  PAGE    ON    CONTKACTS. 

for  by  statute,^  and  a  contract  to  give  to  one  who  is  to  perform 
certain  services  a  certain  per  cent  of  the  increase  in  the  value  of 
promisor's  reahy  as  compensation  therefor/  are  all  within  this 
clause  of  the  statute. 

Assuming,  then,  that  a  mortgage  or  lien  can  be  created  only 
in  compliance  witli  this  clause  of  the  statute,  we  find  four  other 
questions  involving  the  application  of  the  statute  of  frauds  ta 
mortgages :  ( 1 )  if  the  instrument  is  a  deed  in  form  can  oral 
evidence  be  used  to  show  that  it  is  really  a  mortgage  ?  (2)  Can 
the  right  of  redemption  be  created  or  extended  by  oral  contract  ? 
(3)  Can  the  equity  of  redemption  be  released  orally?  and  (4) 
Can  the  mortgage  be  released  orally  ?  In  each  of  the  last  three 
cases  the  mortgage  may  be  created  by  (1)  an  instrument  in 
form  a  mortgage,  or  (2)  an  instrument  in  form  an  absolute 
deed. 

(1)  A  deed  of  realty,  absolute  on  its  face,  may  be  shown  by 
extrinsic  evidence  to  be  in  reality  a  mortgage  as  between  the 
parties  thereto  in  a  suit  in  equity."     This  is  an  illustration  of 

8  Slack  V.  Collins,    145  Ind.   569;  Minn.  272;  65  N.  W.  459;  Gregg  v. 

42  N.  E.  910.  Kommers,  22  Mont.  511;  57  Pac.  92; 

9Vose  V.  Strong,  144  111.  108;  33  Fahay  v.   Bank,   1   Neb.   Unoff.   89; 

N.    E.    189     (where    treated    as    an  95  N.  W.  505;  First  National  Bank 

equitable  lien  on  the  realty).  v.  Sargeant,  65  Neb.  594;  91  N.  W. 

loPeugh  V.  Davis,  96  U.  S.  332;  595;    Kemp  v.  Small,  32  Neb.  318; 

Morris   v.   Nixon,    1    How.    (U.    S.)  49  N.  W.  169;  Stoddard  v.  Whiting, 

118;  Glass  v.  Heeronymus,  125  Ala.  46    N.    Y.    627;    Fuller   v.    Jenkins, 

140;   82  Am.   St.  Rep.   225;   28   So.  130  N.  C.  554;  41  S.  E.  706;  Ying- 

71;  Reeves  V.  Abercrombie,  108  Ala.  ling  v.   Redwine,    12   Okla.   64;    69 

535;   19  So.  41;  Adams  v.  Hopkins  Pac.   810;   Lovejoy  v.   Chapman,  23 

(Cal.),  69  Pac.  228;   Vance  v.  An-  Or.   571;    32  Pac.   687;   Hickman  v. 

derson,  113  Cal.  532;  45  Pac.  816;  Cantrell,  9  Yerg.    (Tenn.)    172;    30 

Parsons    v.    Camp,    11    Conn.    525;  Am.   Dec.    396;    Hexter   v.    Urwitz, 

Pitts  V.  Maier,  115  Ga.  281;  41   S.  6    Tex.    Civ.    App.    580;    25    S.    W. 

E.   570;    German   Ins.   Co.  v.   Gibe,  1101;   Herrick  v.  Teachout,  74  Vt. 

162  111.  251;   44  N.  E.  490;   Brown  196;   52  Atl.  432;   Tuggle  v.  Berke- 

v.  Follette,  155  Ind.  316;   58  N.  E.  ley,  101  Va.  83;  43  S.  E.  199;  Shank 

197;   Rogers  v.  Davis,   91   la.   730;  v.  Groff,  43  W.  Va.  337;  27  S.  E. 

59  N.  W.  265;   Seller  v.  Bank,  86  340;    Beebe  v.  Loan  Co.,    117   Wis. 

Ky.   128;    5   S.   W.   536;    Cullen    v.  328;    93    N.    W.    1103;    Jordan    v. 

Gary,  146  Mass.  50;   15  N.  K  131;  Warner,    107   Wis.    539;    83   N.   W. 

Carveth  v.   Winegar,   —   Mich.   — ;  946. 
94  N.  W.  381 ;  Backus  v.  Burke,  63 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       977 

the  principle  already  discussed/^  namely,  that  an  implied  trust 
may  be  proved  orally.  While  the  legal  title  may  pass  under 
the  deed,  the  facts  and  circumstances  of  the  transfer  create  the 
relation  of  mortgagor  and  mortgagee.  This  relationship  grows 
out  of  the  facts  of  the  case  and  does  not  depend  on  the  express 
oral  agreement  of  the  parties  that  the  conveyance  is  a  mort- 
gage. Such  agreement,  of  course,  strengthens  the  case  made 
by  evidence  of  the  circumstances  of  the  conveyance.  However, 
the  holding  of  equity  that  an  absolute  conveyance  is  a  mortgage 
when  intended  as  security  for  a  debt  is  so  independent  of  the 
agreement  between  the  parties  that  no  effect  will  be  given  to  an 
express  contemporaneous  oral  contract  which  provides  that  if 
the  debt  is  not  paid  when  due  no  equity  of  redemption  shall 
remain  in  the  mortgagor,^^  since  such  a  provision  is  contrary  to 
public  policy  and  void.^^  The  question  of  the  effect  of  the  parol 
evidence  rule  on  the  right  to  show  that  a  deed  absolute  on  its  face 
is  in  fact  a  mortgage  is  discussed  elsewhere/* 

Whether  in  jurisdiction  where  equitable  defenses  cannot  be 
interposed  in  actions  at  law,  a  deed  absolute  on  its  face  can  be 
shown  to  be  a  mortgage  in  an  action  at  law  is  another  question. 
According  to  some  authorities  such  evidence  is  inadmissible 
at  law.^^  Thus  the  grantor  cannot  sue  the  grantee  at  law  for 
slander  of  title  for  saying  that  the  grantor  has,  after  the  execu- 
tion of  such  deed,  no  title  to  such  realty.^"  In  a  few  jurisdic- 
tions such  evidence  was  held  to  be  admissible."  The  reasons 
for  excluding  this  evidence  at-law  are  in  part  that  such  evidence 
violates  the  statute  of  frauds,  and  in  part  that  it  violates  the 
parol  evidence  rule.  The  most  forcible  reason,  however,  is  that 
such  evidence  at  most  tends  to  show  only  an  equitable  title, 
with  which,  in  general,  a  court  of  law  has  nothing  to  do.     Ae- 

11  See   §  641.  685;      Harper     v.     Ross,      10     All. 

i2Fahay  v.   Bank,   1   Neb.  Unoff.  (Mass.)   332;  Abbott  v.  Hanson,  24 

89 ;  95  N.  W.  505.  N.  J.  L.  493. 

13  See  §  192;  and  see  Ch.  XVII.  le  Hurley   v.   Donovan,    182  Mass. 

"See  §  1199.  64;  64  N.  E.  685. 

15  Bragg   V.   Massie,    38   Ala.    89;  i7  Hayworth    v.    Worthington,    5 

79  Am.  Dec.  82;  Thomas  v.  McCor-  Blackf.     (Ind.)     361;    35    Am.    Dec. 

mack,  9  Dana  (Ky.)   108;  Hurley  v.  126;  Fuller  v.  Parrish,  3  Mich.  211. 
Donovan,   182    Mass.   64;    64   N.   E. 
63 


978  PAGE    ON    CONTRACTS. 

cordingly  in  jurisdictions  "where  equitable  defenses  may  be 
interposed  in  actions  at  law  no  trouble  is  found  in  admitting 
evidence  of  this  sort. 

§643.     Lien  created  by  operation  of  law. 

If  the  lien  is  created  by  the  operation  of  the  law  and  not  by 
the  agreement  of  the  parties,  the  statute  of  frauds  does  not,  of 
course,  apply  to  its  creation.  Thus  a  vendor's  implied  lien  on 
realty  may  be  proved  by  oral  evidence.^ 

§644.     Contract  for  reconveyance  of  mortgaged  realty. 

(2)  A  contract  for  the  reconveyance  of  realty  conveyed  by 
an  instrument  which  is  in  form  a  deed,  but  in  reality  a  mortgage, 
on  payment  of  the  debt  to  secure  which  the  instrument  is  given 
is  not  within  the  statute,  since  under  such  circumstances  the 
duty  to  reconvey  exists  independent  of  contract.^  If,  on  the 
other  hand,  the  conveyance  is  a  deed  in  reality  as  well  as  in 
form,  a  contract  to  reconvey  on  the  happening  of  some  further 
event  is  within  the  statute.^  So  a  contract  for  redemption  of 
realty  conveyed  by  a  deed,  which  is  in  law  and  equity  a  deed  as 
distinguished  from  a  mortgage,  is  within  the  statute.^ 

If  the  instrument  is  a  mortgage  on  its  face,  it  is  impossible 
for  any  question  to  arise  as  to  creating  the  right  of  redemption 
by  oral  contract.  The  question  does  often  arise,  however,  as 
to  the  possibility  of  extending  the  period  of  redemption  by  oral 
contract.  Since  in  most  jurisdictions  a  mortgage  is  treated  for 
most  purposes  as  a  lien  to  secure  a  debt  and  not  as  a  convey- 

1  White   V.   Downs,   40   Tex.   225;  Mussey  v.   Bates,   65   Vt.   449;    sub 

Halvorsen  v.  Halvorsen,  —  Wis.  — ;  nomine,  Mussey  v.  Yates,  21  L.  R. 

97  N.  W.  494.  A.  516;  2"  Atl.  167. 

1  Hodges  V.  Verner,  100  Ala.  612;  2  Brock   v.   Brock.   90  Ala.   86;    9 

13    So.   679;    Olds   V.   Marshall,    93  L.  R.  A.  287;  8  So.  11. 

Ala.  138;  8  So.  284;  Spies  v.  Price,  3  Goree  v.  Clements,  94  Ala.  337; 

91  Ala.  166;   8  So.  405;   Peagler  v.  10  So.   906;   Gibbs  v.  Ins.  Co.,   123 

Stabler,    91    Ala.    308;    9    So.    157;  111.    136;    13   N.   E.    842.      (In   this 

Bates  V.  Kelly,  80  Ala.  142;  Mitchell  last    ease,    furthermore,    the    party 

V.  Wellman,  80  Ala.  16;  Morrow  v.  seeking  to  enforce  the  contract  had 

Jones,  41  Neb,  867;  60  N.  W.  369;  not  performed  his  part.) 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       979 

ance  of  an  estate  in  realty  a  contract  extending  the  period  of  re- 
demption is  not  within  the  statute  of  frauds.* 

§645.    Release  of  equity  of  redemption. 

(3)  With  reference  to  the  oral  release  of  an  equity  of  re- 
demption, if  the  realty  in  question  is  encumbered  by  a  mortgage 
which  shows  on  its  face  that  it  is  a  mortgage,  a  contract  for  the 
sale  or  release  of  the  equity  or  redemption  of  such  realty  is  a 
contract  for  the  sale  of  lands  and  is  within  this  clause  of  the 
statute.^ 

If,  however,  the  mortgage  is  in  outward  form  an  absolute 
deed,  which  can  be  shown  to  be  a  mortgage  only  by  extrinsic 
oral  evidence,  if  at  all,"  a  contract  for  the  release  of  such  an 
equity  of  redemption  to  the  holder  of  the  legal  title  is  not  within 
the  statute.^ 

§646.    Release  or  assignment  of  liens. 

However  created,  a  lien  is  not  an  interest  in  land,  but  merely 
a  security  for  payment  of  a  debt.  From  this  it  follows  that  (4) 
a  contract  to  release  a  mortgage  is  not  within  this  clause  of  the 
statute.^  Thus  a  contract  to  extinguish  the  lien  of  the  mortgage 
on  all  the  realty^  or  to  release  certain  land  from  the  operation  of 


^Turpie  v.  Lowe,   158   Ind.   314;  476;   5  So.  145;  Cramer  v.  Wilson, 

92  Am.  St.  Rep.  310;  62  N.  E.  484;  202  111.  83;  66  N.  E.  869;  Baxter  v. 

Martin  v.  Martin,  16  B.  Mon.  (Ky.)  Pritchard,  —  la.  — ;  98  N.  W.  372; 

8 ;  Brown  v.  Lawton,  87  Me.  83 ;  32  Stall  v.  Jones,  47  Neb.  706 ;   06  N. 

All.  733;  Swon  v.  Stevens,  143  Mo.  W.  653;   Shaw  v.  Walbridge,  33  O. 

384;  45  S.  W.  270.  S.  1. 

1  Borcherdt  v.  Favor,  —  Colo.  i  Seymour  v.  Mackay,  126  111. 
App.  — ;  66  Pac.  251;  Scott  v.  Me-  341;  18  N.  E.  552;  Brooks  v.  Jones 
Farland,  13  Mass.  309;  Wendover  v.  (la.),  82  N.  W.  434;  Stevenson  v. 
Baker,  121  Mo.  273;  25  S.  W.  918;  Adams,  50  Mo.  475;  Hemmings  v. 
Montpelier,  etc.,  Co.  v.  Follett,  —  Doss,  125  N.  C.  400;  34  S.  E.  511; 
Neb.  — ;  94  N.  W.  635;  Kelley  v.  Taylor  v.  Taylor,  112  N.  C.  27;  16 
Stanberry,  13  Ohio  408;  Bedell  v,  S.  E.  924:  Bean  v.  Bean,  28  S.  C. 
Tracy,  65  Vt.  494;   26  Atl.   1031.  607;  5  S.  E.  827. 

2  Kemp  V.  Small,  32  Neb.  318;  49  2  \Vinnemucca  First  National 
N.  W.  169.  Bank  v.  Kreig,  21  Nev.  404;  32  Pac. 

3  McMillan    v.     Jewett,     85     Ala.  641. 


980  PAGE    ON    CONTRACTS. 

the  mortgage^  is  enforceable,  though  oral.  So  contracts  to  re- 
lease pre-existing  liens  as  to  waive  a  mechanic's  lien*  or  to  as- 
sign a  vendor's  lien^  or  a  contract  concerning  the  relative  prior- 
ity of  liens"  are  none  of  them  within  the  clause  of  the  statute. 
So  it  has  been  held  that  if  A  has  a  vendor's  lien  on  realty  con- 
veyed by  him  to  B  and  X  pays  B's  debt  to  A  under  an  oral 
agreement  with  B  that  X  shall  have  a  lien  on  such  realty  to  se- 
cure such  payment,  the  contract  is  not  within  the  statute  of 
frauds,  and  can  be  enforced  on  the  theory  of  subrogation.'' 
So  a  contract  for  the  sale  of  a  judgment,®  or  for  setting  a  decree 
aside,®  or  for  restricting  the  execution  to  be  issued  on  a  judgment 
already  rendered,"  or  for  releasing  the  lien  of  a  judgment,^^  are 
none  of  them  contracts  for  the  sale  of  realty,  though  they  may 
affect  title  to  realty  collaterally. 

§647.     Contract  to  acquire  legal  title  to  protect  existing  interest. 

A  contract  by  which  one  party  agrees  to  acquire  the  legal  title 
by  purchase  at  a  judicial  sale  and  to  recognize  and  protect  a  pre- 
existing equitable  interest  of  another  in  such  land  is  not  within 
the  statiite,  where  the  legal  title  has  been  acquired  under  such 
contract.  A  contract  whereby  A  agrees  to  purchase  and  does 
purchase  mortgaged  realty  at  a  foreclosure  sale  and  hold  it  sub- 
ject to  B's  right  to  redeem  it  is  not  within  the  statute  of  frauds,^ 

3  Hemmings  v.  Doss,  125  N.  C.  lo  City  of  Natchez  v.  Vandervelde, 
400;  34  S.  E.  511.  31  Miss.  706;  66  Am.  Dec.  581. 

4  Hughes  V.  Lansing,  34  Or.  118;  n  Winberry  v,  Koonce,  83  N.  C. 
75  Am.  St.  Eep.  574;  55  Pac.  95.  351. 

5  Allen  V.  Caylor,  120  Ala.  251;  i  Turpie  v.  Lowe,  158  Ind.  314; 
74  Am.  St.  Rep.  31;  24  So.  512.  92  Am.  St.  Rep.  310;  62  X.  E.  484; 

GTownsend     v.     \Yhite,     102     la.  Butt  v.  Butt,  91  Ind.  305;  Reyman 

477;     71    N.    W.    337;     Loewen    v.  v.  Mosher,  71  Ind.  596;  Fishback  v. 

Forsee,  137  Mo.  29;  59  Am.  St.  Rep.  Green,   87   Ky.    107;    7   S.   W.   881; 

489;  38  S.  W.  712;  reversing  on  re-  Griff  en  v.  Coffey,  9  B.  Mon.    (Ky.) 

hearing,  35  S.  W.  1138.  452;    50   Am.   Dec.   519;    Leahey   v. 

7  Allen  V.   Caylor,   120  Ala.   251;  \Yitte,  123  Mo.  207;  27  S.  W.  402; 

74  Am.  St.  Rep.  31 ;  24  So.  512.  Turner   v.   Johnson,   95  Mo.  431 ;    6 

sGoldbeck    v.   Bank,    147   Pa.   St.  Am.    St.    Rep.    62;    7    S.    W.    570; 

267;  23  Atl.  565.  Brown  v.  Jackson   (Tex,  Civ.  App.), 

9  Whitehead  v.  Jones,  197  Pa.  St.  40  S.  W.  162;  McGinnis  v.  Cook,  57 

511;  47  Atl.  978.  Vt.  36;  52  Am.  Rep.  115. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.        981 

as  where  the  mortgagee  agrees  to  buy  it  in  for  the  amount  of  the 
debt  if  the  mortgagor  agrees  to  pay  costs  and  attorney's  fees,^ 
or  a  third  person  agrees  to  buy  the  realty  and  then  sell  it  and 
apply  the  proceeds  to  the  mortgage  debt  and  costs,  the  balance 
if  any  to  go  to  the  mortgagor.^  So  a  contract  whereby  one  of 
two  joint  mortgagees  is  to  buy  in  the  mortgaged  property  at  judi- 
cial sale  for  the  benefit  of  both  is  not  within  the  statute  ;*  nor 
is  a  contract  whereby  a  second  mortgagee  agrees  to  buy  in  the 
property  and  pay  off  the  first  mortgage.^  So  a  contract  whereby 
a  vendor  of  realty  allows  such  realty  to  be  sold  under  proceed- 
ings foreclosing  his  lien®  is  not  within  the  statute.  So  where 
realty  is  sold  on  an  order  of  the  Probate  Court,  entered  by  con- 
sent in  an  action  to  pay  the  debts  of  the  decedent,  the  oral  con- 
tract under  which  such  order  was  entered  by  consent  may  be 
shown. '^ 

In  some  of  these  cases  the  person  whose  interest  was  to  be 
protected  took  possession  of  the  realty  and  such  part  perform- 
ance took  the  contract  out  of  the  statute.^  This  element  of  part 
performance  by  change  of  possession  is  not,  however,  a  necessary 
element  to  the  validity  of  such  contracts.  They  are  held  not 
within  the  statute  on  the  same  principle  that  a  deed  absolute  in 
form  may  be  shown  to  be  a  mortgage.  The  purcliaser  under 
such  a  contract  is  held  as  trustee  for  the  adversary  party  to  pre- 
vent him  from  retaining  the  benefits  of  the  fraud  by  means  of 
which  he  has  acquired  the  legal  title.^     Furthermore,  they  are 

2McOuat  V.  Cathcart,  84  Ind.  567.  7  Suber  v.  Richards,  61  S.  C.  393; 

Contra,  Levis  v.  Kengla,  8  App.  D.  39  S,  E.  540. 

C.  230;  citing  May  v.  Sloan,  101  U.  8  Morgan   v.   Battle,   95   Ga.   663; 

S.  231.  22  S.  E.  689;  Fishback  v.  Green,  87 

3  Murphy  V.  Murphy,  84  111.  App.  Ky.    107;    7   S.   W.   881;    Watts   v. 

292;  Jones  National  Bank  v.  Price,  Witt,   39   S.   C.   356;    17   S.  E.   822. 

37  Neb.  291;    55   N.  W.   1045;   Mc-  See  §  719,  et  seq. 

Ginnis  v.  Cook,  57  Vt.  36;   52  Api.  9  Leahey  v.  Witte,   123   Mo.   207; 

Rep.    115.  27  S.  W.  402;   Tatem  v.  Powell,  50 

4 Hunt  V.  Elliott,  80  Ind.  245;  41  N.  J.  Eq.  316;   24  Atl.  436.     "The 

Am.  Rep.  794.  statute  of  frauds  cannot  be  invoked 

5  Turner  v.  Johnson,  95  Mo.  431 ;  by  one  who  purchases  with  such  an 
6  Am.  St.  Rep.  62;  7  S.  W.  570.  agreement,  and  this  for  the  further 

6  Morris  v.  Gaines,  82  Tex.  255;  reason  that  the  statute  was  never 
17  S.  W.  538.  designed  to  aid  a  party  in  the  per- 


982  PAGE    ON    CONTRACTS. 

substantially  contracts  to  extend  the  period  of  redemption/" 
If,  however,  such  a  contract  is  made  after  the  sale,  so  that 
the  purchaser  does  not  acquire  the  legal  title  under  such  contract, 
the  statute  of  frauds  applies/^  However,  if  the  purchaser  ac- 
quires the  legal  title,  subject  to  the  right  of  the  mortgagor  to 
redeem,  given  him  by  the  statute  under  which  the  property  is 
sold,  an  oral  contract  to  extend  such  period  of  redemption  is  not 
within  the  statute.^"  A  contract  made  after  the  time  of  redemp- 
tion has  expired  to  convey  the  realty  to  another  is  within  the 
statute/^ 

If  the  person  to  whom  by  the  oral  contract  the  realty  is  to  be 
conveyed  has  no  interest  therein  outside  of  his  contract,  the 
statute  applies.^^  While  such  contracts  are  usually  made  with 
reference  to  judicial  sales,  the  same  principles  apply  to  private 
sales.  A  contract  whereby  A  agrees  to  furnish  B  money  to 
enable  him  to  redeem  mortgaged  realty,  and  B  agrees  to  and 
does  convey  to  A,  and  A  further  agrees  to  sell  such  realty  and 
pay  the  balance  over  to  B  is  not  within  the  statute/^ 

§648.     Partnership  realty. 

Whether  a  partnership  can  be  formed  by  oral  contract  for 
the  purpose  of  dealing  in  realty  and  for  sharing  the  profits  and 
losses  out  of  such  dealing  is  a  question  on  which  there  is  great 
diversity  of  judicial  opinion.  The  courts  do  not  agree  either 
on  the  general  question  of  the  application  of  the  statute  of  frauds 
or  upon  the  proper  classification  of  contracts  of  this  sort  with 

petration    of   a    fraud   but   was   in-  11    L.    R.    A.    323;    14    S.    W.    209. 
tended  to  prevent  frauds."     Turner  laTurpie  v.  Lowe,   158  Ind.  314; 

V.  Johnson,  95  Mo.  431,  447;  6  Am.  92  Am.  St.  Rep.  310;  62  N.  E.  484; 

St.  Rep.  62;  7  S.  W.  570.  Sheridan  v.  Nation,  159  Mo.  27;  59 

10  See  §  646.    Griffen  v.  Coffey,   9  S.  W.  972. 

B.   Mon.    (Ky.)    452;    50   Am.   Dec.  is  Littell  v.   Jones,   56   Ark.    139; 

519.  19  S.  W.  497  (citing,  Lucas  v.  Nich- 

11  Junkins  v.  Lovelace,  72  Ala.  ols,  66  111.  41 ;  Whiting  v.  Butler, 
303.      (The    contract    in    this    case  29  Mich.  122). 

seems  to  have  been  made  after  the  i*  Pierce  v.  Clarke,  71  Minn.  114; 

sale.     The  court  said  that  the  con-  73  N.  W.  522. 

tract  was  not  proved,  even  by  the  is  Byers    v.    Locke,    93    Cal.    493; 

oral    evidence.)      Emmel    v.    Hayes,  27  Am.  St.  Rep.  212;  29  Pae.  119. 
102  Mo.  186;  22  Am.  St.  Rep.  769; 


CONTRACTS    WHICH    MUST    BE    PEOVED    BY    WRITING.       983 

reference  to  the  application  of  the  statute.  The  cases  upon  this 
subject  may,  however,  be  grouped  into  classes  in  such  a  way  that 
the  general  weight  of  authority  in  each  class  can  be  indicated. 

(1)  A  contract  which  does  not  provide  for  vesting  any  inter- 
est in  the  land  itself  in  the  partnership,  but  which  does  provide 
for  a  division  of  the  profits  on  a  resale  of  the  land,  in  considera- 
tion of  services  in  managing  or  selling  it,  and  the  like,  is  gen- 
erally held  not  to  be  within  the  statute.^  Thus  an  oral  contract 
whereby  a  grantee  of  realty  agrees  in  consideration  of  the  con- 
veyance to  him  to  sell  the  realty  conveyed  and  to  divide  the 
profits  with  the  grantor  is  not  within  the  statute  after  the  realty 
is  conveyed  to  a  third  person,^  even  if  the  contract  to  sell  the 
realty  could  not  have  been  enforced.^  Contracts  of  this  class 
are  much  like  contracts  to  pay  an  agent  for  his  services  in 
selling  realty,  which  are  held  not  to  be  within  the  statute.* 
Thus  in  one  of  the  cases  cited,  A,  the  owner  of  realty,  conveyed 
it  to  B,  his  agent,  for  its  sale,  as  a  matter  of  convenience,  B  to 
sell  the  realty  and  account  to  A  for  the  proceeds.  The  contract 
was  held  not  within  the  statute.^ 

(2)  A  contract  between  two  or  more  persons  to  buy  land 
not  then  owned  by  any  one  of  them  on  behalf  of  the  partnership, 


1  Stuart  V.   Molt,   23   Can.    S.    C.  Pae.    247 ;     Knauss    v.    Gaboon,     7 

153,    384;    Wright    v.    Smith,     105  Utah    182;    26   Pae.   295;    Bruce   v. 

Fed.  841;  45  C.  C.  A.  87;  McElroy  Hastings,  41  Vt.  380;   98  Am.  Dec. 

V.  Swope,  47  Fed.  380;   McClintock  592;   Treat  v.  Hiles,   68   Wis.   344; 

V.  Thweatt,  —  Ark.  — ;    73   S.   W.  60  Am.  Rep.  858;  32  N.  W.  517. 

1093;  Price  v.  Sturgis,  44  Cal.  591;  2  Collins  v.  Tillou,  26  Conn.  368; 

Von  Trotha  v.  Bamberger,   15  Colo.  08  Am.  Dec.   398;    Parker  v.   Siple, 

1;   24  Pae.  883;   Bunnel  v.  Taintor,  76   Ind.   345;   Miller   v.  Kendig,   55 

4  Conn.  568;   Kilbourn  v.  Latta,   5  la.   174;   7  N.  W.   500;   Linscott  v. 

Mack    (D.    C.)    304;    60    Am.    Rep.  Mclntire,  15  Me.  201;   33  Am.  Dec. 

373;   Miller  v.  Kendig,  55   la.  174;  602;    Hall   v.    Hall,    8    N.    H.    129; 

7  N.  W.  500;  Bruns  v.  Spalding,  90  Michael  v.   Foil,   100   N.   C.   178;   6 

Md.  349;  45  Atl.  194;  Petrie  v.  Tor-  Am.  St.  Rep.  577;  6  S.  E.  264. 

rent,  88  Mich.  43;   49  N.  W.  1076;  3  Miller  v.  Kendig,  55  la.   174;   7 

Snyder  v.   Wolford,   33  Minn.    175;  N.  W.  500;  Linscott  v.  Mclntire,  15 

53  Am.  Rep.  22 ;  22  N.  W.  254 ;  Pit-  Me.  201 ;  33  Am.  Dec.  602. 

man  v.  Hodge,  67  N.  H.  101 ;  36  Atl.  4  See  §  664. 

605;  Robbins  v.  McKnight.  1  Halst.  5  Collins  v.  Tillou,  26  Conn.  368; 

(N.    J.)     642;    45    Am.    Dec.    406;  68  Am:  Dec.  398. 
Coffin  V.  Mcintosh,  9  Utah   315;  34 


984 


PAGE    ON    CONTRACTS. 


to  resell  it  and  divide  the  profits  and  losses  is  in  most  jurisdic- 
tions held  not  to  be  within  this  clause  of  the  statute.®  Even 
contracts  to  buy  a  specific  tract  of  realty,  resell  it  and  divide  the 
profits  are  held  not  to  be  within  the  statute,^  or  to  acquire  an 
estate  for  years  in  a  particular  niine.^ 

The  courts  which  take  this  view  of  these  contracts  do  not 
always  agree  as  to  grounds  on  which  their  decisions  rest.  It  is 
"  a  close  question  "  and  beset  with  difiiculties."^  The  reason 
generally  assigned  is  that  as  the  lands  are  to  be  purchased  with, 
partnership  funds  a  resulting  trust  arises,  no  matter  to  whom 
the  legal  title  is  conveyed,  and  irrespective  of  any  contract,  and 
that  as  the  profits  are  to  be  divided  the  contract  does  not  affect 
any  interest  in  the  realty  itself.  Another  reason  assigned  is  that 
after  one  partner  has  received  the  proceeds  of  the  sale,  he  is 
estopped  from  denying  the  contract  under  which  he  acquired 
it.^"  Some  courts  have  said  that  the  contract  to  sell  the  land  is 
unenforceable,  but  that  after  the  sale  the  contract  to  divide  the 
proceeds  is  enforceable.^^ 


6  Dale  V.  Hamilton,   5  Hare  369 ; 
Bates  V.   Babcock,  95  Cal.  479;    29 
Am.  St.  Rep.  133;  16  L.  R.  A.  745; 
30  Pae.   605;   Meagher  v.   Reed,   14 
Colo.    335;     sub    nomine,    Reed    v. 
Meagher,   9  L.  R.  A.  455;    24  Pac. 
681;   Van  Housen  v.  Copeland,   180 
111.  74;   54  N.  E.   169;   affirming  79 
111.  App.  139;  Speyer  v.  Desjardins, 
144  111.  641;  36  Am.  St.  Rep.  473; 
32  N.  E.  283 ;  Allison  v.  Perry,  130 
111.   9;   22  N.  E.  492;   affirming,  28 
111.  App.  396;   Holman  v.  McCrary, 
51    Ind.    358;     19    Am.    Rep.    735; 
Richards  v.  Grinnell,  63  la.  44;   50 
Am.    Rep.    727;     18    N.    W,    668 
Fountain  v.  Menard,  53  Minn.  443 
39  Am.  St.  Rep.  617;  55  N.  W.  601 
Newell   V.   Cochran,   41   Minn.   374 
43  N.  W.  84;   Perronette  v.  Pryme 
34  X.  J.  Eq.  26;  Chester  v.  Dicker 
son.  54  N.  Y.  1:   13  Am.  Rep.  550 
Flower  v.  BarnekoflF,  20  Or.  132;   11 
L.  R.  A.  149;   25  Pac.  370;  Daven- 


port V,  Buchanan,  6  S.  D.  376;  61 
N.  W.  47;  Case  v.  Seger,  4  Wash. 
492;  30  Pac.  646. 

7  Bates  V.  Babcock,  95  Cal.  479; 
29  Am.  St.  Rep.  133;  16  L.  R.  A. 
745;  30  Pac.  605;  Dudley  v.  Little- 
field,  21  Me.  418;  Fountain  v.  Me- 
nard, 53  Minn.  443;  39  Am.  St.  Rep. 
617;  55  N.  W.  601;  Williams  v.  Gil- 
lies, 75  N,  Y.  197;  Chester  v.  Dick- 
erson,  54  N.  Y.  1 ;   13  Am.  Rep.  550. 

8  Meagher  v.  Reed,  14  Colo.  335; 
sm6  nomine,  Reed  v.  Meagher,  9  L. 
R.  A.  455;  24  Pae.  681. 

9  Speyer  v.  Desjardins,  144  111. 
641 ;  36  Am.  St.  Rep.  473 ;  32  N.  E. 
283. 

10  Flower  v.  Barnekoff,  20  Or. 
132;   11  L.  R.  A.  149;  25  Pac.  370. 

11  Sprague  v.  Bond,  108  N.  C. 
382;  13  S.  E.  143;  Smith  v.  Putnam, 
107  Wis.  155;  82  N.  W.  1077;  83 
N.  W.  288. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITIXG,       985 

In  some  jurisdictions  contracts  for  the  purchase  of  realty,  to 
vest  in  the  j)artnership  in  fixed  proportions,  are  within  the 
statute." 

In  Wisconsin  it  is  "  settled  and  not  open  to  discussion  "  that 
partnership  contracts  for  the  purchase  of  realty  are  within  the 
statute.^^  Contracts  of  this  class  are  much  like  contracts 
whereby  A  agrees  to  convey  to  B  a  part  of  the  realty  which  he 
is  about  to  buy  from  X,  which  contracts  are  generally  held  to  be 
within  the  statute/* 

(3)  A  contract  by  which  land  already  owned  by  one  is  to  be 
put  into  partnership  assets  is  within  the  statute/^ 

§649.     Contracts  to  convey  partnership  realty. 

While  realty  bought  with  partnership  funds  is  treated  for 
some  purposes  as  personalty,  a  contract  to  convey  an  interest 
therein  is  within  the  statute/  However  a  contract  to  take  a 
new  partner  into  a  firm  which  owns  realty  has  been  held  not 
to  be  within  the  statute.' 

§650.     Mining  claims. 

A  contract  to  locate  mining  claims  and  divide  the  profits 
therefrom  illustrates  the  diversity  of  judicial  opinion  as  to 
partnership  contracts  for  dealing  in  realty ;  being  held  in  some 
jurisdictions  to  be  within  the  statute  of  frauds^  and  in  others 

i2Raub  V.  Smith,  61  Mich.  543;  ers  of  land  in  severalty,  bought  with 
1  Am.  St.  Rep.  619;  28  N.  W.  676.  their  several  funds,  to  form  a  part- 
is Seymour  v.  Cushway,  100  Wis.  nership  for  the  sale  of  such  lands 
580;  69  Am.  St.  Rep.  957;  76  N.  and  a  division  of  the  profits  there- 
W.  769;  McMillen  v.  Pratt,  89  Wis.  from.)  Carothers  v.  Alexander,  74 
612;  62  N.  W.  588;  Clarke  v.  Me-  Tex.  309:  12  S.  W.  4;  and  see  to  the 
Auliffe,  81  Wis.  104;  51  N.  W.  83;  same  effect.  Groome's  Estate,  94 
Bird  v.  Morrison,  12  Wis.  138.  To  Cal.  69;  29  Pae.  487. 
the  same  effect  see  Smith  v.  Burn-  i  Gray  v.  Smith.  L.  R.  43  Ch.  D. 
ham,  3  Sumner  (U.  S.)  435;  Ever-  208;  Carothers  v.  Alexander,  74 
hart's  Appeal.  106  Pa^  St.  349.  Tex.    309;    12   S.   W.   4;    Brewer   v. 

14  See   §   662.  Cropp.  10  Wash.  136;  38  Pac.  866. 

15  Goldstein    v.    Nathan.    158    111.  2  Marsh    v.   Davis,    33    Kan.    326; 
641;   42  N.  E.  72;   affirming  57  111.  6  Pac.  612. 

App.  389.      (A  contract  by  two  own-  1  Craw  v.  Wilson.  22  Xev.  385;  40 


986 


PAGE    ON    CONTKACTS. 


not."  If  there  was  no  prior  contract  for  locating  such  claims 
for  the  joint  benefit  of  the  parties  to  the  contract,  a  contract 
after  location,  whereby  the  locator  transfers  his  right  to  another 
in  whole  or  in  part,  is  within  the  statute.^ 

§651.     Easements. 

"  Any  interest "  in  lands  includes  easements  and  incorporeal 
hereditaments.  If  an  easement  passes  under  a  conveyance 
of  specific  realty  as  appurtenant  thereto,  no  separate  written 
contract  for  the  enjoyment  thereof  is  necessary.^  If  an  ease- 
ment does  not  pass  as  appurtenant  to  realty  conveyed,  a  contract 
to  create  or  to  convey  an  easement  in  realty,"  such  as  a  contract 
creating  a  right  to  use  water  taken  from  the  land  of  another,^ 
or  a  contract  creating  the  right  to  carry  water  across  the  landa 
of  another,*  or  to  overflow  the  land  of  another,^  or  to  attach 
booms  to  trees  on  the  land  of  another,®  or  a  contract  creating  a 


Pae.  1076.  But  Welland  v.  Huber, 
8  Nev.  203,  seems  to  be  decided  on 
the  opposite  principle. 

2Mortiz   V.   Lavelle,    77    Cal.    10 
11  Am.  St.  Rep.  229;   18  Pac.   803 
Gore    V.    McBrayer,     18    Cal.    583 
Meylette  v!  Brennan,  20  Colo.  242 
38    Pac.    75;    Meagher    v.   Reed,    14 
Colo.    335;     sub    nomine,    Reed    v 
Meagher,   9  L.  R.  A.  455;   24   Pac 
681;  Murley  v.  Ennis,  2  Colo.  300 
Hirbour    v.    Reeding,    3    Mont.    15 
Welland    v.    Huber,    8    Nev.     203 
Eberle  v.  Carmichael,  8  N.  M.  696 
47  Pac.  717;  affirming  on  rehearing, 
8  N.  M.  169;  42  Pac.  95;  Raymond 
V.  Johnson,   17  Wash.   232;   61  Am. 
St.  Rep.  908;  49  Pac.  492. 

3  Moore  v.  Hamerstag,  109  Cal. 
122;  41  Pac.  805;  Garthe  v.  Hart, 
73  Cal.  541;  15  Pac.  93;  Goller  v. 
Fett,  30  Cal.  481;  Reagan  v.  Mc- 
Kibben,  11  S.  D.  270;  76  N.  W\  943. 

1  Xoojin  V.  Cason,  124  Ala.  458; 
27  So.  490. 

2Hodgkins  v.  Farrington,  150 
Mass.  19;  15  Am.  St.  Rep.  168;  5  L. 


R.  A.  209;  22  N.  E.  7a;  Foss  v. 
Newbury,  20  Or.  257;  25  Pac.  669; 
Long  V.  Mayberry,  96  Tenn.  378;  36 
S.  W.  1040;  Nunnelly  v.  Iron  Co., 
94  Tenn.  397;  28  L.  R.  A.  421;  29 
S.  W\  361. 

3  Hayes  v.  Fine,  91  Cal.  391;  27 
Pac.  772;  Dorris  v.  Sullivan,  90  Cal. 
279;  27  Pac.  216;  McGinness  v. 
Stanfield,  7  Ida.  23;  59  Pac.  936; 
Weare  v.  Chase,  93  Me.  264 ;  44  Atl. 
900;  Morse  v.  Wellesley,  156  Mass. 
95;  30  N.  E.  77. 

4Deyo  V.  Ferris,  22  111.  App.  154; 
Murray  v.  Gibson,  21  111.  App.  488; 
New  Iberia,  etc.,  Co.  v.  Romero,  105 
La.  439;  29  So.  876;  Schultz  v. 
Huflfman,  127  Mich.  276;  86  N.  W. 
823;  Pifer  v.  Brown,  43  W.  Va. 
412;  49  L.  R.  A.  497;  27  S.  E.  399. 

5  Wilmington,  etc.,  Co.  v.  Evans, 
100  111.  548;  46  N.  E.  1083;  New- 
comb  V.  Royae,  42  Neb.  323;  60  N. 
W.  552;  Harris  v.  Miller,  Meigs 
(Tenn.)   158;  33  Am.  Dec.  138. 

« Smith  v.  Atkins,  110  Ky.  119; 
53  L.  R.  A.  790;  60  S.  W.  930. 


CONTEACTS    WHICH    MUST    BE    TROVED    BY    WRITING.       987 

right"  of  way  over  the  land  of  another/  or  a  contract  to  open  a 
street  extending  beyond  the  realty  conveyed  by  promisor/  or 
through  the  realty  in  question/  are  within  this  clause  of  the 
statute.  Thus  a  contract  whereby  one  railroad  agrees  to  sell 
to  another  its  road-bed,  together  with  its  rolling  stock,  is  within 
the  statute.^"  However,  it  has  been  held  that  an  oral  contract 
to  construct^^  or  to  dedicate^^  a  street  is  not  within  the  statute 
of  frauds.  A  contract  to  construct  a  street  if  the  promisee 
would  buy  lots  in  the  promisor's  land  and  erect  a  house  thereon 
is  looked  on  as  a  contract  for  work  and  labor.^^  A  parol  dedica- 
tion operates  as  a  Common-Law  conveyance  to  the  public.^* 
While  a  contract  to  dig  a  well  is  per  se  a  contract  for  work  and 
labor,^^  a  contract  to.  dig  a  well  on  the  line  between  two  adjoin- 
ing tracts,  each  owner  to  have  the  right  to  use  the  well,  is  a  con- 
tract for  an  easement  and  hence  within  the  statute.^^ 

A  contract  by  the  owner  of  realty  by  which  he  agrees  not  to 
make  a  specified  use  of  certain  realty  is  within  the  statute. ^^ 
On  the  other  hand,  a  personal  contract  by  an  owner  of  realty 
not  to  carry  on  a  certain  kind  of  business  on  certain  realty 


7  Phoenix  Ins.  Co.  v.  Haskett,  64  i*  Mann    v.    Bergmann,    203    III, 
Kan.    93;    67    Pac.    446;    Barnes   v.  406;  67  N.  E.  814. 

Beverly   (Ky.),  32  S.  W.  174;   Cole  is  See  §  656. 

V.  Hadley,  162  Mass.  579;  39  N.  E.  le  Pkmkett  v,   Meredith,  —  Ark. 

279;   Morse   v.   Wellesly,   156  Mass.  — ;   77  S.  W.  600. 

95;    30  N,   E.   77.     As  the  right  of  i7  Rice  v.   Roberts,   24   Wis.   461; 

way  of  a  railway.     Pitkin  v.  R.  R.,  1   Am.   Rep.   195.     Thus  a  contract 

2   Barb.  Ch.    (N.  Y.)    221;   47  Am.  by  A  to  build   a  warehouse  on  his 

Dec.  320.  own   land   and  to  allow   B  to   store 

8  Hall  V.  Fisher,   126   N.   C.   205 ;  goods  therein  free  of  charge  in  eon- 
35  S.  E.  425.  sideration  of  B's  agreeing  never  to 

9  Richter  v.  Irwin,  28  Ind.  26.  construct   a   warehouse   on   his   own 

10  Cumberland,    etc.,    Ry.    v.    Ry.,  land  is  within  the  statute.     Clanton 
—  Ky.  — ;  77  S.  W.  690.  v.  Scruggs,  95  Ala.  279;   10  So.  757. 

11  Drew    V.    Wiswall,    183    Mass.  Contra,  Ware  v.  Langmade,  9  Ohio 
554;  67  N.  E.  666.  C.  C.  85;  6  Ohio  C.  D.  43,  where  a 

12  Mann    v.    Bergmann,    203    111.  contract    between    adjoining   owners 
406;  67  N.  E,  814.  of   oil   and   gas   lands    not   to    drill 

13  Drew    V.    Wiswell,    183    Mass,  within  two  hundred  feet  of  the  line 
554:   67  N.  E.  666.  between   them   was   held   not    to   be 

within  the  statute. 


988  PAGE    ON    CONTKACTS. 

is  not  within  the  statute/^  If  he  were  to  dis^wse  of  al?  'he 
realty  owned  by  him,  his  contract  not  to  engage  in  busi/iess 
would  be  just  as  binding  as  ever  and  just  as  important  to  the 
promisee.  The  distinction  between  these  last  two  classes  of 
cases  is  that  in  the  first,  the  contract  is  primarily  with  reference 
to  the  use  of  the  realty,  while  in  the  second,  it  is  primarily 
with  reference  to  the  personal  conduct  of  the  promisor. 

§652.    Party  walls  and  fences. 

Whether  contracts  to  erect  and  maintain  party  walls  and 
fences  are  contracts  within  the  statute  of  frauds  depends  on 
whether  they  are  regarded  as  contracts  creating  easements  or 
as  contracts  for  work  and  labor.  If  a  contract  provides  for 
the  erection,  maintenance  and  permanent  use  of  a  party  wall, 
it  is  looked  upon  as  a  contract  creating  an  easement,  and 
within  the  statute  of  frauds.^  It  has  been  doubted  whether 
a  contract  by  the  owner  of  adjoining  realty  to  pay  one-half  of 
the  cost  of  a  party  w^all  built  on  the  division  line,  was  within 
the  statute  at  all.^  If  the  oral  contract  imposes  no  greater 
liability,  and  a  liability  in  no  way  different  from  that  imposed 
by  statute,  such  oral  contract  is  enforceable.^  An  oral  agree- 
ment with  reference  to  the  permanent  maintenance  of  a  division 
fence  ;*  as  a  contract  whereby  A  releases  B  from  his  liability  for 
one-half  of  the  cost  of  maintaining  such  fence,  and  B  releases 
to  A  his  interest  therein^  is  within  the  statute ;  while  a  contract 
imposing  a  personal  liability  merely,  as  an  agreement  by  grantee 
in  part  consideration  of  the  conveyance  to  build  a  fence  between 

18 Hall  V.  Solomon,  61  Conn.  476;  the      cost      is      held      enforceable.) 
29  Am.  St.  Rep.  218;   23  Ail.  876;  3  Swift  v.  Calnan.  102  la.  206;  63 

Leinau      v.      Smart,      11      Humph.  Am.  St.  Rep.  443;  37  L.  R.  A.  462; 

(Tenn.)    308.  71  N.  W.  233. 

iTillis    V.    Treadwell,     117     Ala.  4  Rudisill  v.  Cross,  54   Ark.  519; 

445;   22  So.  983;   Price  v.  Lien,  84  26  Am.  St.  Rep.  57;  16  S.  W.  575; 

la.  590;  51  N.  W.  52;  Rice  v.  Rob-  Knox  v.  Tucker,  48  Me.  373;  77  Am. 

erts,  24  Wis.  461 ;  1  Am.  Rep.  195.  Dec.  233 ;  Kellogg  v.  Robinson,  6  Vt. 

2  Stuht  V.   Sweesy,   48  Neb.   767 ;  276 ;  27  Am.  Dec.  550. 
67  N.   W.  748.      (After  the  wall  is  s  Rudisill  v.   Cross.  .54  Ark.   519; 

constructed     under     such     contract,  26  Am.  St,  Rep.  57;  16  S.  W.  575. 
a  new   promise  to  pay  one-half  of 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       989 

the  land  conveyed  and  the  land  of  grantor,"  is  not  within  tho 
statute. 

§653.     Contracts  for  licenses. 

A  license  is  an  authority  given  to  one  person  to  do  some 
act  upon  the  land  of  the  licenser,  without  passing  any  estate  in 
such  land.^  Such  authority  is  ordinarily  revocable  at  the  will 
of  the  licenser,"  unless  especial  circumstances  of  estoppel  exist^ 
or  unless  it  is  coupled  with  some  other  interest  in  the  same 
realty.*  If  revocable,  it  is  also  revoked  by  the  death  of  either 
party,^  or  by  a  sale  of  the  licenser's  interest,^  or  by  a  contract 
for  the  sale  thereof.^  Acts  done  under  a  revocable  license  can- 
not be  made  trespasses  by  a  revocation  of  the  license,*  and  in 
this  consists  the  chief  importance  of  the  oral  revocable  license. 

A  license  is  not,  therefore,  within  the  statute  of  frauds,  and 
an  oral  contract  for  a  license  is  not  affected  by  the  statute.* 


6  Dodder  v.  Snyder,  110  Mich.  60; 
67  N,  W.  1101. 

1  Rhodes  v.  Otis,  33  Ala.  578;  73 
Am.  Dec.  439;  Prince  v.  Case,  10 
Conn.  375;  27  Am.  Dec.  675;  De 
Montague  v.  Baeharach,  181  Mass. 
256;  63  N,  E.  435;  Rockport  v. 
Granite  Co.,  177  Mass.  246;  51  L.  R. 
A.  779;  58  N.  E.  1017;  Hodgkins  v. 
Farrington,  150  Mass.  19;  15  Am. 
St.  Rep.  168;  5  L.  R.  A.  209;  22  N. 
E.  73;  Cook  v.  Stearns,  11  Mass. 
533;  Ainsworth  v.  Stone,  73  Vt. 
101 ;  50  Atl.  805. 

2Hitchens  v.  Shaller,  32  Mich. 
496;  Whittemore  v.  R.  R.,  174 
Mass.  363;  54  N.  E.  867;  Hodgkins 
V.  Tarrington,  150  Mass.  19;  15  Am, 
St.  Rep.  168;  22  N.  E.  73;  Ewing 
V.  Rhea,  37  Or.  583;  82  Am.  St. 
Rep.  783;  52  L.  R.  A.  140;  62  Pac. 
790. 

3  Legg  V.  Horn,  45  Conn.  409 ; 
Hiers  v.  Mill  Haven  Co.,  113  Ga. 
1002;  39  S.  E.  444;  Wilson  v.  Chal- 
fant,    15    Ohio    248;    45    Am.    Dec. 


574;  Ainsworth  v.  Stone,  73  Vt. 
101;  50  Atl.  805. 

4  Greenwood  v.  School  District, 
126  Mich.  81;  85  N.  W.  241;  Bol- 
land  V.  O'Neal,  81  Minn.  15;  83  Am. 
St.  Rep.  362;  83  N.  W.  471. 

sLambe  v.  Manning,  171  111.  612; 
49  N.  E.  509;  Spacy  v.  Evans,  152 
Ind.  431;  52  N,  E.  605;  Emerson  v. 
Shores,  95  Me,  237 ;  85  Am.  St.  Rep. 
404;  49  Atl.  1051;  Hallett  v. 
Parker,  68  N.  H.  598;  39  Atl.  433; 
Eckert  v.  Peters,  55  N.  J.  Eq.  379; 
36   Atl.   491. 

6  Fish  V,  Capwell,  18  R.  I.  667; 
49  Am.  St.  Rep.  807;  29  Atl.  840. 

7  Bruley  v.  Garvin,  105  Wis.  625 ; 
81  N.  W.  1038. 

8  Hodgkins  v,  Farrington,  150 
Mass.  19;  15  Am.  St.  Rep.  168;  5 
L.  R.  A.  209 ;  22  N.  E.  73 ;  Cheever 
V.  Pearson,  16  Pick.  (Mass.)  273; 
Metcalf  V.  Hart,  3  Wyom.  513;  31 
Am.  St.  Rep.  122;  27  Pac.  900;  31 
Pae.  407. 

9  De  Montague  v.  Baeharach,   181 


990  PAGE    ON"    CONTRACTS. 

This  discussion  of  licenses  has  been  solely  with  reference  to  the 
effect  of  the  statute  of  frauds  on  oral  contracts  for  a  license. 
^Vhether  a  license  may  have  become  irrevocable  or  not,  or 
whether  on  revocation  any  liability  attaches,  are  questions  which 
are  not  here  considered.  The  statute  of  frauds  is  often  invoked, 
however,  in  cases  where  an  irrevocable  license  is  claimed,  but 
as  this  question  is  one  of  an  executed  grant,  it  is  rather  a 
question  for  real  property  law  than  for  contracts.  What  con- 
tracts concern  licenses  only,  and  what  attempt  to  create  ease- 
ments or  leases  under  the  form  of  licenses  by  oral  agreement 
is  a  question  on  which  there  is  some  divergent  of  judicial  opin- 
ion. The  right  of  control  of  the  premises  by  the  licenser  has 
been  suggested  as  the  essential  distinction.  On  this  distinction 
a  contract  to  let  a  public  hall  for  four  specified  days  at  a  certain 
price,^"  or  a  contract  by  a  boarding  house  keei^er  to  furnish  a 
man  and  his  family  with  board  and  three  specified  rooms,  to- 
gether with  light  and  heat,^^  have  been  held  to  be  licenses,  and 
hence  enforceable  though  oral.  Permission  to  cut  timber  and 
remove  crops  has  been  held  a  license.^"  Permission  to  make 
use  of  a  wall  on  promisor's  land  as  a  permanent  means  of 
support  for  timbers  of  a  building  of  promisee's  has  been  held  a 
contract  for  an  easement  and  within  the  statute.^^  An  agree- 
ment in  consideration  of  permission  to  make  a  temporary 
change  in  the  channel  of  an  artificial  water-course  to  restore  it 
to  its  original  channel  on  request,  is  not  within  the  statute. ^^ 

Mass,  256;   63  N.  E.  435;   Johnson  v.  Carson,  33  Ind.  94;   5  Am.  Rep. 

V.  Wilkinson,  139  Mass.  3;   52  Am.  184. 

Rep.   698;    29    N.   E.   62;    White   v.  "White   v.   Maynard,    111   Mass. 

Maynard,    111   Mass.   250;    15   Am.  250;  15  Am.  Rep.  28. 

Rep.    28;    Turner    v.    Stanton,    42  12  Wliitmarsh  v.    Walker,    1   Met. 

Mich.  506;  4  N.  W.  204;   Olmstead  (Mass.)    313. 

V.  Abbott,  61  Vt.  281;  18  Atl.  315.  is  Hodgkins    v,    Farrington,     150 

10  Johnson  V.  Wilkinson,  139  Mass.  Mass.  19;  15  Am,  St.  Rep.  168;  5  L. 

3;  52  Am.  Rep.  698;   29  N.  E.  62.  R.   A.   209;    22   N.   E.   73.     Contra, 

On  the  other  hand  a  contract  for  the  that  such  a  contract  is  for  a  mere 

use  of  a  church  edifice  as  a  place  of  license.     Russell  v.  Hubbard,  59  111. 

worship   when   not  occupied  by  the  335. 

religious  society  which  owned  it,  has  i*  Hamilton,  etc.,  Co.  v.  R.  R.,  29 

been  held  a  contract  for  a  lease  and  0.  S.  341. 
hence  withn  the  statute.     Brumfield 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       991 

§654.     Fixtures. 

Contracts  for  the  sale  of  fixtures  which  are  held  to  be  part 
of  the  realty  are  within  this  clause  ;^  while  contracts  for  the  sale 
of  such  fixtures  as  are  removable  and  are  held  to  be  personalty- 
are  not  within  this  clause."  If,  however,  a  fixture  which  is 
treated  as  realty  is  to  be  severed  by  the  vendor  and  delivered 
by  him  to  the  vendee,  a  contract  for  the  sale  of  such  fixture  is 
not  within  the  statute.  Thus  a  contract  for  the  sale  of  a  dwell- 
ing house  to  be  severed  from  the  realty  and  delivered  on  rollers^ 
is  not  ^vithin  the  statute.  As  in  the  case  of  growing  trees,* 
some  jurisdictions  seem  to  hold  that  an  oral  agreement  between 
vendor  and  vendee  for  the  sale  as  a  chattel  of  a  fixture  which 
is  ordinarily  part  of  the  realty  may  operate  as  a  conversion 
thereof  into  personalty  so  far  that  it  is  not  within  this  section 
of  the  statute.^  A  contract  to  permit  the  removal  of  personalty 
annexed  to  realty  of  lessor  by  lessee,  but  still  remaining  per- 
sonalty, is  not  within  this  clause  of  the  statute.® 

§655.     Trees  and  crops. 

Growing  trees,  other  than  trees  in  a  nursery,  are  held  in 
most  jurisdictions  to  be  realty.  Accordingly  a  contract  for 
the  sale  of  growing  trees,  as  such,  to  be  removed  by  the  vendee 

1  Towson  V.  Smith,  13  App.  D.  C.  been  treated  as  hopelessly  contradic- 

48 ;   Smith  v.  Price,  39  111.  28 ;   89  tory  to  the  above  cases.     It  seems  in 

Am.  Dee.  284;  Aldrich  v.  Husband,  the  latter  case  that  vendee  was  to 

131   Mass,  480;   Noble  v.  Bosworth,  remove  the  property  sold.     Whether 

19    Pick.    (Mass.)    314;    Connor   v.  the  court  was  correct  in  holding  such 

Coffin,  22  N,  H.  538;  Bond  v.  Coke,  articles    as    scattered    brick    to    be 

71  N.  C.  97.  realty,  the  question  of  who  was  to 

-  Bostwick      v.      Leach,      3      Day  sever  or  remove  the  property  sold  is 

(Conn.)   476;  Brown  v.  Roland,  11  the  point  of  distinction  between  the 

Tex.  Civ.  App.  648;  33  S.  W.  273.  two  classes  of  cases. 

3  Long  v.  White,  42  O.  S.  59.     To  4  See  §  655. 

the  same  effect,  see  Rogers  v.  Cox,  5  McCraken    v.   Hall,    7    Ind.    30 ; 

96  Ind.  157;  49  Am.  Rep.  152;  Key-  South    Baltimore   Co.   v.   Muhlbach, 

son  V.  School  District,  35  N.  H.  477.  69  Md.  395;  1  L.  R.  A.  507;  16  Atl. 

The  case   of  Meyers  v.   Schemp,   67  117. 

111.  469,  in  which  a  contract  for  the  6  Broaddus  v.  Smith,  121  Ala.  335; 

sale  of  the  ruins  of  a  burned  build-  77  Am.  St.  Rep.  61;  26  So.  34. 
ing  was  held  within  the  statute,  has 


992 


PAGE    ON    CONTKACTS. 


is  within  this  clause  of  the  statute.^  So  a  contract  for  the 
.  sale  of  growing  wild  grass  is  within  the  statute.^ 

Some  American  courts  follow  the  rule  which,  after  much, 
vacillation,  was  finally  adopted  by  the  English  courts,^  that  if 
the  i^arties  in  contracting  contemplate  the  sale  of  growing  trees 
solely  as  chattels  and  do  not  intend  that  they  shall  remain  at- 
tached to  the  realty  for  an  indefinite  or  unreasonable  time,  and 
do  not  intend  that  they  shall  derive  a  benefit  from  allowing  them 
to  remain  attached  to  the  realty,  the  contract  is  not  within  this 
clause  of  the  statue.'* 

Some  jurisdictions  hold  that  if  the  contract  for  the  sale  of 
growing  trees  contemplates  an  immediate  severance  of  them 
from  the  soil,  they  are  to  be  treated  as  personalty  and  hence 
not  within  this  clause  of  the  statute,^  while  if  they  are  to 
be  removed  at  the  discretion  of  the  vendee  they  are  realty,  and 
within  the  statute.^     If  the  contract   requires  the  vendor  to 


1  Alabama  Mineral  Land  Co.  v. 
Jackson,  121  Ala.  172;  77  Am.  St. 
Rep.  46;  25  So.  709;  Garner  v.  Ma- 
honey,  115  la.  356;  88  X.  W.  828; 
Wiggins  V.  Jackson  (Ky.),  73 
S.  W.  779;  Broussard  v.  Yerret,  43 
La.  Ann.  929;  9  So.  905;  White  v. 
King,  87  Mich.  107;  49  N.  W.  518; 
Kileen  v.  Kennedy,  —  Minn.  — ; 
97  N.  W.  126;  Walton  v.  Lowery, 
74  Miss.  484;  21  So.  243;  Nelson  v. 
Lawson,  71  Miss.  819;  15  So.  798; 
Harrell  v.  Miller,  35  Miss.  700;  72 
Am.  Dec.  154;  Kingsley  v.  Holbrook, 
45  N.  H.  313;  86  Am.  Dec.  173; 
Putney  v.  Daly,  6  N.  H.  430 ;  25  Am. 
Dec.  470;  Slocum  v.  Seymour,  36  N. 
J.  L.  138;  13  Am.  Rep.  432;  Drake 
V.  Howell,  133  N.  C.  162;  45  S.  E. 
539;  Clark  v.  Guest,  54  O.  S.  298; 
43  N.  E.  862;  Hirth  v.  Graham,  50 
O.  S.  57;  40  Am.  St.  Rep.  641;  19 
L.  R.  A.  721;  33  N.  E.  90;  Fluharty 
V.  Mills,  49  W.  Va.  446;  38  S.  E. 
521;  Seymour  v.  Cushway,  100  Wis. 
580;  69  Am.  St.  Rep.  957;  76  N.  W. 


769.  So  an  oral  reservation  of  grow- 
ing trees  from  a  conveyance  of  the 
realty  is  within  the  statute.  Jones 
V.  Timmons,  21  O.  S.  596. 

2  Kirkeby  v.  Erickson,  —  Minn. 
— ;  96  N.  W,  705. 

sLavery  v.  Pursell,  L.  R.  39  Ch. 
Div.  508;  Marshall  v.  Green,  L.  R. 
1  C.  P.  Div.  35. 

4  Bostwick  V.  Leach,  3  Day 
(Conn.)  476;  Cain  v.  McGuire,  13 
B.  Mon.  (Ky.)  340;  Byasse  v.  Reese, 
4  Met.  (Ky.)  372;  83  Am.  Dec.  481; 
Tilford  V.  Dotson,  106  Ky.  755; 
51  S.  W.  583;  Cutler  v.  Pope,  13 
Me.  377;  Leonard  v.  Medford,  85 
Md.  666;  37  L.  R.  A.  449;  37  Atl. 
365;  Smith  v.  Bryan,  5  Md.  141;  59 
Am.  Dec.  104;  Xettleton  v.  Sikes,  8 
Met.  (Mass.)  34;  Claflin  v.  Carpen- 
ter, 4  Met.  (Mass.)  580;  38  Am. 
Dec.  381. 

sRobbins  v.  Farwell,  193  Pa.  St. 
37;  44  Atl.  260;  McClintock's  Ap- 
peal, 71  Pa.  St.  365. 

ePattison's    Appeal,    61    Pa.    St. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       993 

sever  and  deliver  the  trees,  they  are  treated  as  personalty  and 
such  contract  is  not,  therefore,  within  this  clause  of  the  statute/ 
If  a  valid  written  contract  is  entered  into  between  A,  the  owner 
of  realty,  and  B,  whereby  B  acquires  the  right  to  sever  and 
remove  certain  standing  timber,  such  timber  is  so  far  to  be 
regarded  as  personalty  that  a  contract  between  B  and  X  whereby 
B  agrees  to  give  X  a  lien  on  such  timber  for  advances  to  be 
made  by  X  to  B  is  not  within  this  section  of  the  statute.® 

A  contract  for  the  sale  of  such  growing  crops  as  are  held  to 
be  personalty  is  not  within  this  clause  of  the  statute^  nor  is  an 
oral  reservation  of  them.^°  Thus  a  contract  for  the  sale  of 
timothy  seed  is  not  within  the  statute.^^  In  West  Virginia 
growing  wheat  is  treated  as  realty  within  the  meaning  of  the 
statute  of  frauds.^^ 

§656.     Contracts  for  work  on  realty. 

A  contract  to  do  work  on  the  land  of  another  is  not  within 
this  section  of  the  statute  of  frauds,  even  if  the  work  consists 
in  annexing  something  to  the  realty,  as  planting  crops,^  erecting 
a  barn,^  or  digging  a  well,^  or  drilling  an  oil-well.*     ISTor  does 

294;  100  Am.  Dec.  637;  Huff  v.  Mc-  n  Wimp  v.  Early,  —  Mo.  App.  — ; 

Cauley,  53  Pa.  St.  206;  91  Am.  Dec.  78  S.  W.  343. 

203.  12  Kerr   v.   Hill,   27   W.    Va.    576. 

7  Dorris  v.  King  ( Tenn.  Ch.  ( This  decision  follows  Crews  v.  Pen- 
App.),  54  S.  W.  683;  Kleeb  v.  Bard,  dleton,  1  Leigh  (Va.)  297;  19  Am. 
7  Wash.  41;  34  Pac.  138.  Dec.    750,   in   holding   that   growing 

8  Helfrech,  etc.,  Co.  v.  Honaker,  wheat  passes  with  the  land  if  no  res- 
(Ky. ),  76  S.  W.  342.  ervation    is    made.     It   goes    beyond 

9  Smock  V.  Smock,  37  Mo.  App.  the  latter  case,  it  holding  that  even 
56.  a  reservation  of  it  or  contract  con- 

10  Benner  v.  Bragg,  68  Ind.  338 ;  cerning  it  is  to  be  treated  as  dealing 
Flynt  V.   Conrad,  Phil.  Law,  61   N.      with  realty.) 

C.  190;   93  Am.  Dec.  588;  Youmans  i  State  v.  Sanders,  52  S.  C.  580; 

V.   Caldwell,   4   0.   S.   71;    Baker   v.  30  S.  E.  616. 

Jordan,  3  0.  S.  438 ;  Backenstoss  v.  2  Scales  v.   Wiley,  68  Vt.   39 ;    33 

Stabler,  33  Pa.  St.  251;  75  Am.  Dec.  Atl.  771. 

592.     Contra,  Fiske  v.  Soule,  87  Cal.  3  Pkmkett   v.    Meredith,    —   Ark. 

313;     25    Pac.    430;     Chapman    v.  — ;  77  S.  W.  600.      (A  contract  for 

Veach,    32    Kan.    167;    4   Pac.    100;  the  permanent  use  of  such  well  may 

Mcllvaine   v.   Harris,    20   Mo.    457;  be  a  contract  for  an  easement.) 

64  Am.  Dec.  196,  *  Haight  v.  Conners,   149   Pa.   St. 

297;  24  Atl.  302. 
63 


994  PAGE    ON    CONTRACTS. 

the  statute  include  promises  by  a  land-owner  to  pay  for  im- 
provements erected  on  his  own  realty  by  some  other  person,^ 
or  made  by  another  on  public  land  which  the  promisor  after- 
wards acquires.®  A  contract  to  remove  earth  from  a  tract  of 
land  is  not  within  the  statute  if  the  primary  object  of  the  parties 
was  the  removal  of  the  earth,  as  this  is  a  contract  for  work  and 
labor;  but  if  a  contract  primarily  for  the  earth  itself,  it  is 
Avithin  the  statute.'^ 

§657.    What  contracts  are  within  this  clanse. 

The  "  contract  or  sale  "  referred  to  in  this  clause  is  one  which 
creates  or  transfers  an  estate  or  interest.  The  first  test  to 
apply,  therefore,  in  determining  the  eifect  of  this  clause  of  the 
statute  upon  a  contract  is  whether  or  not  the  contract  creates, 
modifies  or  destroys  interests  of  the  parties  in  realty.  If  the 
interests  in  realty  which  belong  to  the  parties  to  the  contract 
are  the  same  under  the  contract  as  without  it,  the  contract  is 
not  within  the  statute.^  Thus  where  A  grants  an  easement  to 
a  railroad  in  writing,  and  orally  reserves  the  right  to  use  a 
spring  on  the  tract  included  in  such  grant,  such  oral  reservation 
is  not  within  the  statute,  as  A  had  a  pre-existing  legal  right  to 
such  spring."  Another  illustration  of  this  principle  is  a  con- 
tract providing  for  the  right  of  redemption  of  property  conveyed 
by  an  instrument  which  is  in  form  a  deed,  but  in  reality  a 
mortgage.     Such  a  contract  is  not  within  the  statute.^ 

So  the  statute  of  frauds  does  not  apply  to  adverse  possession 
during  the  statutory  period,  even  if  oral  evidence  is  necessary 


5  Godeffroy    v.    Caldwell,    2     Cal.  i  Smith    v.    Holloway,     124    Ind. 

489;    56    Am.    Dec.    360;    Clark    v.  329;  24  N.  E.  886;  Swift  v.  Calnan, 

Shultz,  4  Mo.  235 ;  Frear  v.  Harden-  102  la.  206 ;   63  Am.  St.  Rep.  443 ; 

bergh,  5  Johns.   (N.  Y.)   272;  4  Am.  37   L.   R.   A.   462;    71    N.   W.   233; 

Dec.  356;  Thouvenin  v.  Lea,  26  Tex.  Mussey  v.   Bates,   65   Vt.   449;    sub 

612.  nomine,  Mussey  v.  Yates,  21   L.  R. 

eZickafoss    v.    Hulick,    1    Morris  A.  516;  27  Atl.  167. 

(la.)   175;  39  Am.  Dec.  458.  2  Smith    v.    Holloway,     124     Ind. 

7  Welever  v.  Detwiler  Co.,  16  Ohio  329;  24  N.  E.  886. 

C.  C.  680;  8  Ohio  C.  D.  668.  3  See  §  644. 


CONTEACTS    WHICH    MUST    BE    PKOVED    BY    WRITING.       995 

to  connect  the  different  adverse  possessions  and  to  show  that 
thej  have  been  continuous.* 

§658.     Contracts  to  convey  or  devise  realty. 

This  clause  of  the  statute  includes  contracts  which  create  or 
convey  any  interest  in  or  concerning  realty  except  such  interests 
as  may  be  specifically  or  impliedly  excepted  therefrom  l)y 
statute.  It  includes  contracts  to  convey  realty  or  some  estate 
therein  inter  vivos}  Thus  a  contract  by  a  husband  to  convey 
community  real  estate  to  his  wife  is  within  the  statute.^  So  an 
oral  contract  whereby  a  number  of  heirs  agree  that  if  a  co-heir 
will  defend  a  suit  brought  against  them  and  save  them  from 
all  costs,  he  shall  have  all  the  realty  inherited  by  them  from 
their  common  ancestor,  is  within  the  statute.^  Thus  an  oral 
executory  contract  to  partition  realty  among  co-tenants,*  or  to 
exchange  realty,^  is  within  the  statute.  So  is  an  oral  contract 
to  warrant  title  to  realty,*'  or  to  submit  to  arbitration  a  question 


4  Illinois  Steel  Co.  v.  Budzisz,  106 
Wis.  499;  80  Am.  St.  Rep.  54;  48 
L.  R.  A.  830;  81  N.  W.  1027  (re- 
hearing denied),  82  N.  W.  5.34. 

1  McKinnon  v.  Mixon,  128  Ala. 
612;  29  So.  690;  Tolleson  v.  Black- 
stock,  95  Ala.  510;  11  So.  284; 
Lyons  v.  Bass,  108  Ga.  573;  34  S.  E. 
721;  Jackson  v.  Myers,  120  Ind. 
504;  22  N.  E.  90;  23  N.  E.  86; 
Hershman  v.  Pascal,  4  Ind.  App. 
330;  30  N.  E.  932;  Bishop  v.  Mar- 
tin (Ky.),  65  S.  W.  807;  Fuqua  v. 
Fuqua  (Ky.),  16  S.  W.  353;  Mc- 
Lennan V.  Boutell,  117  Mich.  544; 
76  N.  W.  75;  McDonald  v.  Maltz, 
78  Mich.  685;  44  N.  W.  337;  Far- 
gusson  V.  Improvement  Co.,  56 
Minn.  222 ;  57  N.  W.  480 ;  Watson  v. 
Ry.,  46  Minn.  321;  48  N.  W.  1129; 
Taylor  v.  Von  Schraeder,  107  Mo. 
206;  16  S.  W.  675;  Bloomfield  State 
Bank  v.  Miller,  55  Neb.  243 :  70  Am. 
St.  Rep.  381;   44  L.  R.  A.  387;    75 


N.  W.  569;  Vick  v.  Vick,  126  N.  C. 
123;  35  S.  E.  257;  Jordan  v.  Fur- 
nace Co.,  126  N.  C.  143;  78  Am.  St, 
Rep.  644;  35  S.  E.  247;  Reed  v. 
Adams,  172  Pa.  St.  127;  33  Atl.  700; 
Bowen  v.  Sayles,  23  R.  I.  34;  49 
Atl.  103;  Cleveland  v.  Evans,  5  S. 
D.  53;  58  N.  W.  8;  Lombard  In- 
vestment Co.  V.  Carter,  7  Wash.  4 ; 
38  Am.  St.  Rep.  861 ;  34  Pac.  209. 

2  Churchill  v.  Stephenson,  14 
Wash.  620;  45  Pac.  28. 

sHowton  V.  Gilpin  (Ky.),  69  S. 
W.  766. 

4  Berry  v.  Seawell,  65  Fed.  742; 
13  C.  C.  A.  101. 

sPurcell  V.  Miner,  4  Wall.  (U. 
S.)  513;  Webb  v.  Ballard,  90  Ala. 
357;  7  So.  443;  Dennis  v.  Kuster, 
57  Kan.  215;  45  Pac.  602;  Newlin  v. 
Hoyt,  —  Mipn.  — ;  98  N.  W.  323. 

6  Bishop  V.  Little.  5  Greenl. 
CNle.)  362:  Aird  v.  Alexander,  72 
Miss.  358;  18  So.  478;  Kelly  v.  Pal- 


996 


PAGE    ON    CONTRACTS. 


involving  title  to  realty/  It  also  includes  contracts  to  devise 
realty.®  Since  the  question  of  the  application  of  the  statute  to 
contracts  to  devise  seems  to  turn  on  the  nature  of  the  property 
of  decedent,  owned  by  him  at  his  death  when  his  will  takes 
effect,  the  statute  applies  if  decedent's  property,  owned  by  him 
at  his  death,  is  realty,**  and  does  not  apply  if  it  is  personalty.^" 
A  contract  not  to  make  a  will  to  affect  the  interests  of  a  given 
heir  is  within  the  statute  as  being  a  negative  method  of  con- 
tracting for  a  conveyance  of  realty.^^ 

§659.     Releases. 

A  release  of  an  interest  in  realty  is  within  the  statute,  whether 
the  release  attempts  to  pass  a  fee,^  or  a  life  estate,^  or  a  term  of 
years,^  or  an  equitable  interest.*     So  an  agreement  by  an  heir 


mer,   42   Neb,   423;    60   N.    W.   924. 

7  Stork  V.  Cannady,  3  Litt.  (Ky.) 
399;  14  Am.  Dec.  76   (obiter). 

8  Manning  v.  Pippen,  86  Ala.  357 ; 
11  Am.  St.  Eep.  46;  5  So.  572;  Pond 
V.  Sheean,  132  111.  312;  8  L.  R.  A. 
414;  23  N.  E.  1018;  Alerding  v.  Al- 
lison, 31  Ind.  App.  397;  68  N.  E. 
185;  Orth  v.  Orth,  145  Ind.  184;  57 
Am.  St.  Rep.  185;  32  L.  R.  A.  298; 
42  N.  E.  277 ;  rehearing  denied,  145 
Ind.  206;  57  Am.  St.  Rep.  201;  32 
L.  R.  A.  308;  44  N.  E.  17;  Austin  v. 
Davis,  128  Ind.  472 ;  25  Am.  St.  Rep. 
456;  12  L.  R.  A.  120;  26  N.  E.  890; 
Hamilton  v.  Thirston.  93  Md.  213; 
48  Atl.  709 ;  Emery  v.  Burbank,  163 
Mass.  326;  47  Am.  St.  Rep.  456;  28 
L.  R.  A.  57;  39  N.  E.  1026;  De  Moss 
V.  Robinson,  46  Mich.  62;  41  Am. 
Rep.  144;  8  N.  W.  712;  Teske  v. 
Dittberner,  63  Neb.  607;  88  N.  W. 
658;  Smith  v.  Smith,  28  N.  J.  L. 
208;  78  Am.  Dec.  49;  Blount  v. 
Washington,  108  N.  C.  2.30;  12  S.  E. 
1008;  Kling  v.  Bordner,  65  O.  S. 
86;  61  N.  E.  148;  Shahan  v.  Swan, 
48  O.  S.  25;   29  Am.  St.  Rep.  517; 


26  N.  E.  222;  Richardson  v.  Orth, 
40  Or.  252;  66  Pac.  925;  69  Pac. 
455;  Swash  v.  Sharpstein,  14  Wash. 
426;  32  L.  R.  A.  796;  44  Pac.  862; 
In  re  Sheldon's  Estate,  —  Wis.  — ; 
97  N.  W.  524. 

9  Austin  V.  Davis,  128  Ind.  472; 
25  Am.  St.  Rep.  456;  12  L.  R.  A, 
120;  26  N.  E.  890. 

lOTurnipseed  v.  Sirrine,  57  S.  C. 
559;  76  Am.  St.  Rep.  580;  35  S.  E. 
757;  rehearing  denied,  35  S.  E. 
1035. 

iiDicken  v.  McKinley,  163  111. 
318;  54  Am.  St.  Rep.  471;  45  N.  E. 
134. 

1  Hughes  V.  Moore,  7  Cranch  (U. 
S.)  176;  Brands  v.  De  Witt,  44  N. 
J.  Eq.  545;  6  Am.  St.  Rep.  909;  10 
Atl.  181;  14  Atl.  894. 

2  As  dower,  Brown  v.  Rawlings, 
72  Ind.  505:  Wright  v.  De  Graff,  14 
Mich.  164;  Gordon  v.  Gordon,  54  N, 
H.  152. 

sLammott  v.  Gist.  2  H.  &  G. 
(Md.)  433;  18  Am.  Dec.  295. 

4  Hughes  V.  Moore,  7  Cranch  ( U. 
S.)    176;   Fisher  v.  Koontz,  110  la. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.       997 

whereby  he  releases  his  expectancy  in  his  ancestor's  estate  falls 
within  this  clause  of  the  statute.^ 

§660.     Reservations. 

An  oral  reservation  of  an  interest  in  realty  is  as  much  within 
the  statute  as  an  oral  contract  to  convey.^  Thus  an  oral  reser- 
vation of  growing  trees,"  or  a  right  of  pasture,^  is  within  the 
statute. 

§661.     Contracts  to  purchase  realty. 

This  clause  of  the  statute  includes  contracts  to  purchase 
realty  as  well  as  contracts  to  sell  it.^  It  makes  no  difference 
as  to  the  application  of  the  statute  which  party  to  the  contract 
is  attempting  to  enforce  it. 

§662.     Purchase  from  one,  under  contract  to  sell  to  another. 

If  A  buys  land  from  X  with  A's  own  money,  and  takes  the 
title  in  his  own  name,  under  a  contract  with  B  to  convey  such 
realty  to  B  when  B  should  pay  to  A  the  price  of  such  realty, 
A's  contract  is  within  the  statute.^  Thus  if  a  A  agrees  to  buy 
at  foreclosure  sale  for  B,  who  has  probably  no  interest  in  the 
realty,  such  contract  is  within  the  statute."  The  same  rule 
obtains  where  B  is  to  pay  a  part  of  the  purchase  price  and  to 


498;  80  N.  W.  551;  Grunow  v.  Sal-  i  Williams  v.  Gibson,  84  Ala.  228 

ter,  118  Mich.  148;  76  N.  W.  325.  5    Am.    St.    Rep.    368;    4    So.    350 

5  Gary  v.  Newton,  201  111.  170;  66  Sehlanker  v.  Smith,  27  Mo.  App.  516 

N.  E.  267.  1  McDearmon  v.  Burnham,  158  111 

iFiske  V.  Soule,  87  Cal.  313;   25  55;   41  N.  E.   1094;  Rogers  v.  Sim 

Pac.  430;  Smith  V.  Price,  39  111.  28;  mons,    55    111.    76;    Benge   v.   Benge 

89  Am.  Dec.  284;  Dodder  v.  Snyder,  (Ky.)  ,  23  S.  W.  668;  Nagengast  v. 

110  Mich.  69;  67  N.  W.  1101.  Alz,  93  Md.  522;  49  Atl.  333;  Ran- 

2  Dodder  v.  Snyder,  110  Mich.  69;  dall  v.  Constans,  33  Minn.   329;   23 
67    N.    W.    1101     (citing   Adams   v.  N.  W.  530. 

Watkins,   103  Mich.  431 ;   61  N.  W.  2  IMcDearmon  v.  Burnham.  158  111. 

774;    Vanderkarr   v.    Thompson,    19  55;  41  N.  E.  1094.     A  different  rule 

Mich.  82)  ;  Jones  v.  Timmons,  21  O.  would  seem  to  apply  if  B  has  an  in- 

S.  596.  terest  in  the  realty,  such  as  that  of 

3  Dodder  v.  Snyder,  110  Mich.  69;  mortgagor. 
67  N.  W.  1101.     ^  See  §  647. 


998 


PAGE    ON    CONTRACTS. 


receive  a  part  interest  in  the  realty.^  Thus  where  A  and  B 
agreed  to  buy  at  an  executor's  sale  a  tract  of  land  lying  between 
their  respective  holdings  and  divide  such  tract  equally  between 
them,  such  contract  is  within  the  statute.*  Thus  if  A  is  B's 
agent  and  buys  land  with  A's  money,  A's  promise  to  convey 
to  B  is  within  the  statute.'^  Indeed  a  contract  whereby  A 
agrees  to  buy  land  for  B,  as  B's  agent,  is  within  the  statute  as 
long  as  B's  money  is  not  actually  expended  in  the  purchase 
of  such  property.^  Some  authorities,  however,  hold  that  such 
breach  of  contract  by  an  agent  amounts  to  a  constructive 
fraud,  and  makes  him  trustee  of  an  implied  trust.  W'Tiere  this 
theory  is  adopted  the  statute  of  frauds  has,  of  course,  no 
application  in  equity.'^  If  the  parties  are  in  a  fiduciary  relation 
outside  of  the  mere  contract  of  agency,  such  breach  of  contract 
may  be  treated  as  constructive  fraud.^  In  this  case  the  statute 
of  frauds  will  not  prevent  relief  in  equity.^ 


sDunphy  v.  Ryan,  116  U.  S.  491; 
McElroy  v.  Swope,  47  Fed.  380 ;  Rob- 
bins  V.  Kimball,  55  Ark.  414;  29 
Am.  St.  Rep.  45;  18  S.  W.  457; 
Roughton  V.  Rawlings,  88  Ga.  819; 
16  S.  E.  89;  Morton  v.  Nelson,  145 
111.  586;  32  N.  E.  916;  31  N.  E. 
168;  Furber  v.  Page,  143  111.  622; 
32  N,  E.  444;  Parsons  v.  Phelan, 
134  Mass.  109;  Schultz  v.  Waldons, 
60  N.  J.  Eq.  71;  47  Atl.  187;  Levy 
V.  Brush,  45  N.  Y.  589;  Bruce  v. 
Hastings,  41  Vt.  380;  98  Am.  Dec. 
592;  Walker  v.  Tyler,  94  Va.  532; 
27  S.  E.  434.  Cases  of  this  class 
where  A  buys  land  from  X  under 
contract  to  convey  a  part  thereof  to 
B,  should  be  studied  in  connection 
with  oral  contracts  to  form  a  part- 
nership to  deal  in  realty. 

See  §  648. 

*  Roughton  V.  Rawlings,  88  Ga. 
819;  16  S.  E.  89. 

5  James  v.  Smith  (1891),  1  Ch. 
384;    Burden    v.    Sheridan,    36    la. 


125;  14  Am.  Rep.  505;  Fowke  v. 
Slaughter,  3  A.  K.  Mar.  (Ky.)  56; 
13  Am.  Dec.  133;  Nagengast  v.  Alz, 
93  Md.  522;  49  Atl.  333;  Bourke  v. 
Callanan,  160  Mass.  195;  35  N.  E. 
460;  Nestal  v.  Schmid,  29  N.  J.  Eq. 
458;  Watson  v.  Erb,  33  O.  S.  35; 
Whiting  V.  Dyer,  21  R.  I.  278;  43 
Atl.  181. 

6  James  v.  Smith  (1891),  1  Ch. 
384;  Raub  v.  Smith,  61  Mich.  543; 
1  Am.  St.  Rep.  619;  28  N.  W.  676; 
Xesbitt  V.  Cavender,  27  S.  C.  1;  2 
S.  E.  702. 

7  Irvine  v.  Marshall,  20  How.  (U. 
S.)  558;  Boswell  v.  Cunningham,  32 
Fla.  277;  21  L.  R.  A.  54;  13  So. 
354;  Rose  v.  Hayden,  35  Kan.  106; 
57  Am.  Rep.  145;   10  Pac.  554. 

8  See  ch.  XI. 

sValette  v.  Tedens,  122  111.  607; 
3  Am.  St.  Rep.  502;  14  N.  E.  52; 
Haight  V.  Pearson,  11  Utah  51;  39 
Pac.  479. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING,       999 

§663.     Conveyance  under  contract  to  reconvey  to  grantor. 

If  A  conveys  realty  to  B  in  reliance  on  B's  oral  promise *to 
reconvey,  B's  promise  is  within  this  clause  of  the  statute.^ 

This  rule  assumes  that  apart  from  the  contract,  the  convey- 
ance leaves  no  equitable  interest  of  any  kind  in  A.  If  A  then 
has  any  right  it  depends  solely  on  the  oral  contract,  and  this 
contract  cannot  be  enforced  under  the  statute  of  frauds.  Thus 
if  A  is  a  mortgagor  and  conveys  his  equity  to  B  on  B's  promise 
to  reconvey  on  payment  of  the  amount  of  the  debt  within  a 
given  time,  it  may  be  difficult  to  determine  whether  A's  con- 
veyance is  still  a  mortgage  or  an  absolute  deed.  If  the  latter, 
B's  promise  to  reconvey  is  unenforceable.^  An  exception  to 
this  rule  exists  in  some  jurisdictions  where  the  parties  to  the 
contract  are  in  confidential  relations.  A  breach  of  such  con- 
tract is  held  to  be  fraud  "  independent  of  any  element  of  actual 
fraud,"^  and  a  constructive  trust  arises.  The  statute  of  frauds 
does  not  apply  therefore.*  The  breach  of  such  contract  is  not 
fraud  and  does  not  create  a  constructive  trust  in  the  absence  of 
confidential  relations.^  A  delivery  of  a  deed  by  A  to  B  in 
escrow  for  C,  on  condition  that  C  will  deed  certain  property  to 
X  in  return  for  the  property  deeded  by  A  to  C,  has  been  held 
not  to  be  a  contract  within  this  clause  of  the  statute.^ 


iGoree  v.  Clements,  94  Ala.  337;  2  Goree  v.  Clements,  94  Ala.  337; 

1-J   So.   906;   Peagler  v.   Stabler,   91  10  So.  906. 

Ala.  308;  9  So.  157;  Brock  v.  Brock,  3  Brison  v.   Brison,   90   Cal.   323; 

90  Ala.  86;  9  L.  R.  A.  287;  8  So.  11;  27  Pac.  186. 

Ellis  V.  Hill,  162  111.  557;  44  N.  E.  4  Brison   v.   Brison,    75   Cal.   525; 

858;   Hurley  v.  Donovan,  182  Mass.  7  Am.  St.  Rep.  189;   17  Pac.  689. 

64 ;  64  N.  E.  685 ;  Rose  v.  Bank,  165  s  See  cases  cited  in  this  section. 

Mass.  273;   43  N.   E.  93;    Smith  v.  e  Simons  v.  Bedell,  122  Cal.  341; 

Marsh,  —  Mich.  — ;  93  N.  W.  1091;  68  Am.  St.  Rep.  35;   55  Pac.  3.     It 

Poppe  V.  Poppe,  114  Mich.  649;   68  does  not  appear  clearly  whether  the 

Am.  St.   Rep.   503 ;    72  N.   W.  612 ;  conveyance  by  C  to  X  was  a  condi- 

Veeder  v.   Trust  Co.,   61   Neb.   892 ;  tion  precedent  to  the  delivery  of  A's 

86  N.  W.  982 ;   Guntert  v.   Guntert  deed  by  B  to  C.     A's  death  was  one 

(Tenn.   Ch.   App.)  ,    37   S.   W.   890;  condition   on   which    such   deed   was 

Lancaster    v.    Richardson,    13    Tex.  to  be  delivered.     The   court  divided 

Civ.  App.  682 ;  35  S.  W.  749 ;  Caff ey  on    the   question   of   the    statute    of 

V.  Caffey,  12  Tex.  Civ,  App.  616;  35  frauds,  the  minority  holding  on  the 

S.  W.  738.  authority   of    Wittenbrock    v.    Cass, 


1000  PAGE    ON    CONTRACTS. 

§664.     Contract  to  pay  commission  to  agent  for  sale  of  realty. 

A  contract  to  pay  an  agent  a  commission  in  money  or  other 
personalty  for  finding  a  purchaser  for  realty  does  not  give  the 
agent  any  interest  in  realty  and  is  not  within  this  clause  of  the 
statute/  A  contract  to  pay  the  agent  in  money  if  the  considera- 
tion for  the  property  sold,  in  excess  of  the  money  thereon,  was 
paid  in  money,  and  if  the  consideration  therefor  was  other 
realty,  a  proportional  share  thereof  is  a  contract  for  the  con- 
veyance of  an  interest  in  realty  and  within  this  clause  of  the 
statute.^  By  special  statute  in  some  jurisdictions  contracts  to 
pay  a  broker  a  commission  for  procuring  a  purchaser  for  realty 
is  within  the  statute  of  frauds.^  Such  a  statute  has  no  applica- 
tion where  the  agent  has  performed  the  contract  on  his  part, 
the  realty  has  been  conveyed  and  the  agent  seeks  to  recover 
his  commissions  ;*  nor  does  it  include  a  contract  to  pay  an 
agent  for  examining  realty  and  advising  his  principal  whether 
to  buy  it  or  not;^  nor  does  it  include  a  contract  between  two 
brokers  to  co-operate  in  making  a  sale  and  to  divide  their  com- 
missions.^ 

110   Cal.   1;   42   Pac.   300,   that  the  2  Rvissell  v.  Briggs,  165  N.  Y,  500; 

contract  was  within  the  statute.  53  L.  R.  A.  556;  59  N.  E.  303. 

1  Hannan   v.   Prentiss,    124   Mich.  3  King  v.  Benson,   22  Mont.  256; 

417;  83  N.  W.  102;  Carr  v.  Leavitt,  .56  Pac.  280.     By  special  statute  in 

54  Mich.  540;  20N.  W.  576;  Vaughn  California  an  "agreement  authoriz- 

V.  McCarthy,  59  Minn.   199 ;   60  N.  ing  or  employing  an  agent  or  broker 

W.    1075;    Snyder    v.    Wolford,    33  to  purchase  or  sell   real  estate,  for 

Minn.  175;   53  Am.  Rep.  22;  22  N.  compensation  or  commission"  is  in- 

W.    254;    Rice-Dwyer,    etc.,    Co.    v.  valid  unless  in  writing,  and  this  in- 

Ruhhnan,   68    Mo.   App.   503;    Grif-  eludes   an   oral   contract  to   pay  an 

fith  V.  Woolworth,  28  Neb.  715;  44  agent   for   services   in   procuring  an 

N.  W.  1137;  Spengeman  v.  Building  exchange  of  land.     Shanklin  v.  Hall, 

Association,  60  N.  J.  L.  357;  37  Atl.  100  Cal.  26;  34  Pac.  636. 

723;  Lamb  v,  Baxter,  130  N.  C.  67;  *  Griffith   v.    Woolworth,    28   Neb. 

40   S.  E.  850;  Abbott  v.  Hunt,  129  715;  44  N.  W.  1137. 

N.  C.  403;  40  S.  E.  119;  McLaugh-  5  Wilson  v.  Morton.  85  Cal.  598; 

lin  v.  Wheeler,  1  S.  D.  497;  47  N.  24  Pac.  784. 

W.  Sre.  sGorham  v.  Hieman,  90  Cal.  346; 

27  Pac.  289. 


CONTEACTS    WHICH    MUST    BE    PKOVED    BY    WRITING.    1001 

§665.     Public  extra-judicial  and  judicial  sales. 

A  sale  of  realty  at  public  auction  is  within  the  statute  as  long 
as  the  sale  is  extra-judicial.^  Thus  a  sale  at  public  auction 
under  a  power  of  sale  in  a  mortgage  is  within  the  statute  of 
frauds.^  An  executor's  sale  under  a  power  given  by  a  will  is 
not  within  the  statute.^  Hence,  while  the  auctioneer  may  make 
the  memorandum  required  by  the  statute  as  the  agent  of  both 
parties*  he  must  do  so  at  the  time  that  the  sale  is  made.  If 
he  makes  it  afterwards,^  or  not  at  all,"  or  if  he  makes  an  oral 
contract  with  a  prospective  bidder  with  reference  to  the  sale 
of  the  realty^  the  statute  applies. 

A  judicial  sale,  made  by  order  of  the  court  and  under  its 
supervision  is  provided  for  by  statute  and  is  a  matter  of  record. 
The  statute  of  frauds  •  is  therefore  held  not  to  apply  to  such 
sales.® 

However,  a  sale  made  in  pursuance  of  an  order  of  a  court, 
and  made  by  an  officer  of  the  court,  may  still  be  an  extra 
judicial  sale  if  it  is  not  made  under  the  direction  and  super- 
vision of  the  court."  The  test  for  determining  whether  a  sale 
of  this  sort  is  a  judicial  sale  or  an  extra-judicial  sale,  seems 
to  be  whether  the  proceedings  of  the  officer  under  the  order  of 

1  Seymour  v.  Loan  Association,  Civ.  App.  531 ;  28  S.  W.  726. 
116  Ga.  285;   94  Am.  St.  Rep.  131;  7  Boyd  v.  Greene,  162  Mass.  566; 

42  S.  E.  518;   O'Donnell  v.  Leeman,  39  N.  E.  277. 

43  Me.  158;  69  Am.  Dec.  54;  Boyd  8  Halleck  v.  Guy,  9  Cal.  181;  70 
V.  Greene,  162  Mass.  566;  39  N,  E.  Am.  Dec.  643;  Chandler  v.  Morey, 
277;  Lobit  v.  McClave,  8  Tex.  Civ.  195  111.  596;  63  N.  E.  512  (by  spe- 
App.  531;  28  S.  W.  726;  Ralphsny-  cial  statute)  ;  Watson  v.  Violett,  2 
der  V.  Shaw,  45  W.  Va.  680;  31  S.  Duv.  (Ky.)  332;  Warehime  v.  Graf, 
E.  953;  Crowley  v.  Hicks,  98  Wis.  83  Md.  98;  34  Atl.  364;  Armstrong 
566;  74  N.  W.  348.  v.  Vroman,  11  Minn.  142;  Emley  v. 

2  Seymour  v.  Loan  Association,  Drumm,  36  Pa.  St.  123;  Cash  v. 
116  Ga.  285;  94  Am.  St.  Rep.  131;  Tozer,  1  Watts  &  S.  (Pa.)  519; 
42  S.  E.  518.  Robertson    v.    Smith,    94    Va.    250; 

3  Warehime  v.   Graf,   83   Md.   98;  64  Am.  St.  Rep.  723;  26  S.  E.  579. 
34  Atl.  364.  9  Carroll  v.   Powell,  48  Ala.  298; 

4  See  §  692.  Bozzaz  v.  Rowe,  30  111.  198;  83  Am. 

5  Ralphsnyder  v.  Shaw,  45  W.  Va.  Dec.  184 ;  Ruckle  v.  Barbour,  48  Ind. 
680;  31  S.  E.  953;  Crowley  v.  Hicks,  274;  Wolfe  v.  Sharp.  10  Rich.  L.  (S. 
98  Wis.  566;  74  N.  W.  348.  C.)    60;   Dawson  v.  Miller,  20   Tex. 

6  Lobit      V.      McClave,      8      Tex.  171 ;  70  Am.  Dee.  380. 


1002  PAGE    ON    CONTKACTS. 

sale  are  to  be  submitted  to  the  court  for  confirmation  or  not. 
Accordingly  a  sale  by  a  commissioner  of  a  court  of  chancery/" 
or  by  a  sheriff  on  execution/^  or  by  an  executor  or  administrator 
under  order  of  a  court  of  probate  powers/^  have  all  been  held 
to  be  judicial  sales  where  such  sales  must  be  reported  to  the 
court  for  confirmation,  and  hence  not  within  the  statute.  On 
the  other  hand  where  confirmation  was  not  required  by  the  local 
procedure,  a  sale  by  an  administrator  under  order  of  the  probate 
court,^^  or  a  sale  on  execution,^*  have  been  held  to  be  within  the 
statute  of  frauds,  on  the  theory  that  although  a  license  had  to 
be  obtained  from  the  court  in  the  first  instance,  the  sale  was  not 
within  the  control  of  the  court  as  to  any  subsequent  steps,  and 
hence  was  not  a  judicial  sale. 

§666.     Effect  of  variation  in  statute. 

The  scope  of  this  clause  of  course  depends  on  the  wording 
thereof  in  the  particular  statute  under  discussion.  Accord- 
ingly, under  a  statute  which  omits  the  words  "  any  interest  in 
or  concerning  "  lands,  an  oral  agreement  to  create  an  easement,* 
and  an  oral  agreement  to  create  a  mortgage,*  are  not  within  such 
statute,  as  they  are  not  contracts  for  the  sale  of  lands,  although 
they  create  some  interest  therein. 


10  Watson  V.  Violett,  2  Duv.  (Ky.)  Tex.  171;  70  Am.  Dec.  380.  (This 
332;  Robertson  v.  Smith,  94  Va.  doctrine  was  invoked  in  order  to 
250;  64  Am.  St.  Rep.  723;  26  S.  E.  demonstrate  that  the  auctioneer  was 
579.  the  agent  of  both  vendor  and  ven- 

11  Armstrong  v.  Vroman,  11  Minn.  dee.) 

142;  Emley  v.  Drum,  36  Pa.  St.  123;  "  Remington    v.     Linthicum,     14 

Cash  V.  Tozer,  1  Watts   &  S.    (Pa.)  Pet.    (U.    S.)    84;    Ridgway   v.    In- 

519.  gram,  50  Ind.  145;  19  Am.  Rep.  706; 

i2Halleck  v.  Guy,  9  Cal.  181;   70  Barney  v.  Patterson,   6  Harr.  &   J. 

Am.  Dec.  643;   Howard  v.  Howard,  (Md.)   182;  Tombs  v.  Basye,  65  Mo. 

96  Ky.  445;   29  S.  W.  285;   Fulton  App.  30. 

v.  Moore,  25  Pa.   St.  468;   King  v.  i  Warner  v.   Ry.,    164   U.   S.   418. 

Gunnison,  4  Pa.  St.  171.  (Decided  under  the  Texas  statute.) 

isBozza  V.  Rowe,  30  111.  198;  83  2  Long  Mfg.  Co.  v.  Gray,  13  Tex. 

Am.  Dee.  184;  Dawson  v.  Miller,  20  Civ.  App.  172;  35  S.  W.  32. 


CONTBACTS    WniCII    MUST    BE    PROVED    BY    WRITING.    1003 

VI.     Contracts  Not  to  be  Performed  within  the  Space 
OF  ONE  Year  from  the  Making  Thereof. 

§667.     Subject-matter  included. 

This  clause  of  the  statute  classifies  contracts  according  to  the 
time  of  performance.  By  the  weight  of  authority  contracts 
of  every  kind  of  subject-matter  may  be  included  within  its 
terms. 

In  some  jurisdictions,  however,  contracts  concerning  certain 
classes  of  subject-matter  are  not  looked  upon  as  being  within 
this  clause.  Since  contracts  for  the  sale  of  an  interest  in 
realty  are  provided  for  in  another  section  of  this  statute,  the 
question  has  arisen  whether  they  may  also  fall  within  the  section 
affecting  contracts  not  to  be  performed  within  the  year,  or 
whether  the  clause  affecting  contracts  concerning  realt}^  is 
exclusive.  The  weight  of  authority  is  that  such  contracts  may 
fall  within  the  clause  affecting  contracts  not  to  be  performed 
within  the  year.^"  In  'New  York  a  statute  authorizing  oral 
leases  for  a  year,  is  held  to  take  contracts  for  realty  out  of  the 
operation  of  the  clause  affecting  contracts  not  to  be  performed 
within  the  year.^  Under  substantially  similar  statutes  other 
courts  have  reached  an  opposite  conclusion.^ 

In  some  jurisdictions   a  contract   to  marry   is  held  not  to 


1  Bain  V.  McDonald,  111  Ala.  269;  251;    Whiting  v.   Opera   House   Co., 

20  So.  77;  Wickson  v.  Mfg.  Co.,  128  88  Pa.  St.  100. 

Cal.  156 ;  79  Am.  St.  Rep.  36 ;  49  L.  2  Ward   v.  Hasbrouck,    169   N.   Y. 

R.  A.  141 ;  60  Pae.  764 ;  Comstock  v.  407 ;  62  N.  E.  434 ;   Becar  v.  Flues, 

Ward,  22   111.  248;   Cooney  v.  Mur-  64  N.  Y.  518;  Young  v.  Dake,  5  N. 

ray,    45    111.    App.    463;     Wolf    v.  Y.  463;    55  Am.  Dec.  356.     A  sim- 

Dozer,  22  Kan.  436 ;  Delano  v.  Mon-  ilar   view   seems   to   be   held   in   In- 

tague,  4  Cush.    (Mass.)    42;   Engler  diana.     Huffman  v.  Starks,  31  Ind. 

v.   Schneider,   66  Minn.   388;    69  N.  474;    and   in   Michigan,   Whiting  v. 

W.    139;    Johnson   v.   Albertson,   51  Ohlerf,  52  Mich.  462;   50  Am.  Rep, 

Minn.  333;  53  N.  W.  642;  Jellett  v.  265;    18   N.   W.    219;    and   in   New 

Rhode,   43   Minn.    166;    7   L.   R.   A.  Mexico,  Childers  v.  Talbott,  4  N.  M. 

671;  45  N.  W.  13;  McCroy  v.  Toney,  330;  16  Pac.  275. 

66  Miss.  233;  2  L.  R.  A.  847;  5  So.  3  Bain  v,  McDonald,  111  Ala.  269; 

392;    White  v.   Holland,   17   Or.   3;  20  So.  77;  Wickson  v.  Mfg.  Co.,  128 

3  Pac.   573;   Pulse  v.  Hamer,  8  Or.  Cal.  156;  79  Am.  St.  Rep.  36;  49  L. 

R.  A.  141;  60  Pac.  764. 


1004 


PAGE    ON    CONTRACTS. 


be  within  the  statute,*  but  the  weight  of  authority  is  opposed 
to  this  view.^ 


§668.     General  scope  of  clause. 

This  clause  of  the  statute  includes  contracts  which  by  their 
terms  cannot  be  performed  within  one  year  from  the  date  on 
which  they  are  made.^  Applying  this  rule  to  the  adjudicated 
cases  we  find  that  this  clause  of  the  statute  has  received  a  very 
narrow  construction,  the  courts  almost  without  exception  aiming 
to  exclude  from  its  application  as  many  classes  of  cases  as 
possible.  To  have  this  clause  of  the  statute  apply  the  contract 
must  be  one  that  "  by  its  very  terms  shows  that  it  was  not  to  be 
completed  within  the  year.""  The  restriction  imposed  by  the 
more  conservative  courts  is  that  the  contract  must  by  its  terms 
when  "  fairly  and  reasonably  interpreted  "  admit  of  perform- 
ance within  the  year  to  fall  without  the  statute.^  If  the  con- 
tract is  one  which  by  its  terms  may  be  performed  within  the 
year  or  may  be  performed  after  the  year,  according  to  circum- 
stances, it  is  not  within  this  clause  of  the  statute,*  even  if  its 


4  Blackburn  v.  Mann,  85  111.  222 ; 
Lewis  V.  Tapman,  90  Md.  29i;  47  L. 
R.  A.  385;  45  Atl.  459  (citing  Har- 
rison V.  Cage,  1  Ld.  Raym.  38G; 
Philpot  V.  Wallet,  3  Lev.  65;  Cook 
V.  Baker,  1  Strange  34;  Ogden  v. 
Ogden,  1  Bland,  284)  ;  Brick  v.  Gan- 
nar,  36  Hun  52. 

sUllman  v.  Meyer,  10  Fed.  241; 
Xichols  V,  Weaver,  7  Kan.  373;  Has- 
1am  V.  Barge,  —  Xeb.  — ;  96  X.  W. 
245;  Derby  v.  Phelps,  2  N.  H.  515. 

1  Haynes  v.  Mason,  30  111.  App. 
85;  Miller  v.  Banking  Co.,  53  Mo. 
App.  430 ;  Sehultz  v.  Tatum,  35  Mo. 
App.  130;  Reynolds  v.  Bank.  02 
Xeb.  747;  87  X.  W.  912;  Lockwood 
V.  Barnes,  3  Hill  (X.  Y.)  128;  38 
Am.  Dee.  620;  Foote  v.  Emerson,  10 
Vt.  338;  33  Am.  Dee.  205;  Parkers- 
burg  Mill  Co.  V.  R.  R.  Co.,  50  W. 
Va,  94;  40  S.  E.  328. 

2Kiene  v.   Shaeffing,   33   Xeb.   21, 


23;  49  X.  W.  773.  To  the  same  ef- 
fect see  Walker  v.  Johnson,  96  U.  S. 
424;  Bank  v.  Finnell,  133  Cal.  475; 
65  Pac.  976;  Hinkle  v.  Fisher,  104 
Ind.  84;  3  X.  E.  624;  Saunders  v. 
Kastenbine,  6  B.  Mon.  (Ky.)  17; 
Farwell  v.  Tillson,  76  Me.  227 ;  Som- 
erby  v.  Bunting,  118  Mass.  279;  19 
Am.  Rep.  459;  Warren,  etc.,  Co.  v. 
Holbrook,  118  X.  Y.  586;  16  Am.  St. 
Rep.  788;  23  X.  E.  908;  Kimmins 
V.  Oldham,  27  W.  Va.  258. 

3  Warren,  etc.,  Co.  v.  Holbrook, 
118  X.  Y.  586;  16  Am.  St.  Rep.  788; 
23  X.  E.  908. 

iBank  v.  Finnell,  133  Cal.  475; 
65  Pac.  976;  Durham  v.  Hiatt,  127 
Ind.  514;  26  X.  E.  401;  Houghton 
V.  Houghton,  14  Ind.  505;  77  Am. 
Dec.  69;  Doyle  v.  Dixon,  97  Mass, 
208;  93  Am.  Dec.  80;  Lapham  v. 
Whipple.  8  Met.  (Mass.)  59;  41  Am. 
Dec.  487;  Barton  v.  Gray,  57  Mich. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WiUTING.     1005 

performance  within  the  year  is  not  expected  or  even  probable.' 
Thus  an  indefinite  term  of  emj>loyment  which  lasts  three  and  a 
half  years,  is  not  within  the  statute  f  nor  is  a  contract  for  one 
year's  employment  brought  with  the  statute  by  a  vague  promise 
to  pay  a  better  salary  for  the  ensuing  year  if  possible/  So  a 
contract  is  not  within  the  statute  if  by  its  terms  the  parties  con- 
template performance  within  the  year,  but  add  extra  time  for 
emergencies,  and  so  exceed  the  year.^ 

§669.     Contracts  to  be  performed  on  one  side  within  the  year. 

In  most  jurisdictions  it  is  held  that  the  statute  has  no  applica- 
tion to  a  contract  which  is  to  be  performed  on  one  side  within 
the  year  and  on  fhe  other  side  not  within  the  year.^     Some  juris- 


622;  24  N,  W.  638;  Warren,  etc., 
Co.  v.Holbrook,  118  N.  Y.  586;  16 
Am.  St.  Rep.  788;  23  N.  E.  908; 
Moore  v.  Fox,  10  Johns.  (N.  Y.) 
244;  6  Am.  Dec.  338;  Walker  v. 
R.  R.,  26  S.  C.  80;  1  S.  E.  366;  Long 
Mfg.  Co.  V.  Gray,  13  Tex.  Civ.  App. 
172;  35  S.  W.  32.  "In  order  to 
bring  a  case  within  the  operation  of 
the  statute  of  frauds,  there  must  be 
an  express  and  specific  stijiulation  in 
the  contract  that  it  is  not  to  be  per- 
formed within  the  year,  or  it  must 
appear  therefrom  that  it  was  not  the 
intention  of  the  parties  that  the 
agreement  should  be  performed 
within  that  period."  Powder  River 
Livestock  Co,  v.  Lamb,  38  Neb.  339, 
348;  56  N.  W.  1019. 

sWoodall  V.  Mfg.  Co.,  9  Colo. 
App.  198;  48  Pae.  670;  Russell  v. 
Slade,  12  Conn.  455;  Wiggins  v. 
Keizer,  6  Tnd.  252;  Aiken  v.  Nogle, 
47  Kan.  96;  27  Pac.  825;  Cole  v. 
Singerly.  60  Md.  348;  Reynolds  v. 
Bank,  62  Neb.  747;  87  N.  W.  912; 
Powder  River  Livestock  Co.  v.  Lamb, 
38  Neb.  339;  56  N.  W.  1019;  War- 
ren, etc.,  Co.  V.  Holbrook,  118  N.  Y. 
586;   10  Am.  St.  Rep.  788;  23  N.  E. 


908;    Kent  v.  Kent,  62  N.  Y.  560; 
20  Am.  Rep.  502. 

6Kiene  v.  Shaeffing,  33  Neb.  21; 
49  N.  W.  773. 

7  Woodall  V.  Mfg.  Co.,  9  Colo.  App. 
198;  48  Pac.  670. 

8  Jones  V.  Pouch,  41  O.  S.  146. 

1  Miles  V.  New  Zealand,  etc.,  Co., 
32  Ch.  Div.  266;  Donellan  v.  Read, 
3  Barn.  &  Adol.  899;  Trimble  v. 
Lanktree,  25  Ont.  109;  McDonald  v. 
Crosby,  192  111.  283;  61  N.  E.  505; 
Lowman  v.  Sheets,  124  Ind.  416;  7 
L.  R.  A.  784;  24  N.  E.  351;  Hough- 
ton V.  Houghton,  14  Ind.  505;  77 
Am.  Dec.  69;  Smalley  v.  Greene,  52 
la.  241;  35  Am.  Rep.  267;  3  N,  W. 
78 ;  Mackey  v.  Thisler,  7  Kan.  App. 
276;  53  Pac.  767;  McDowell  v.  Mil- 
ler, 1  Kan.  App.  660;  42  Pac.  402; 
Dant  V.  Head,  90  Ky.  255;  29  Am. 
St.  Rep.  369;  13  S.  W.  1073;  Bot- 
kin  V.  Land  Co.  (Ky.),  66  S.  W. 
747;  Langan  v.  Iverson,  78  Minn. 
299;  80  N.  W.  1051;  Blanding  v. 
Sargent,  33  N.  H.  239 ;  66  Am.  Dec. 
720;  Durfee  v.  O'Brien,  16  R.  I. 
213;  14  Atl.  857  ;  Sheehy  v.  Adarene, 
41  Vt.  541;  98  Am  Dec.  623;  Grace 
V.   Lynch,   80   Wis.    166;    49   N.   W. 


1006 


PAGE    ON    CONTBACTS. 


dictions  hold  that  such  contracts  are  within  the  statute  of 
frauds."  Their  view  seems  to  be  correct  on  sound  principle, 
though  overborne  bj  weight  of  authority.  The  courts  that  hold 
such  contracts  are  not  within  the  statute  seem  to  have  confused 
the  right  to  recover  property  parted  with  under  an  unenforce- 
able contract  with  the  right  to  enforce  the  contract.^ 

x\mong  the  cases  held  not  to  be  within  the  statute  because 
performance  on  one  side  is  to  be  made  within  the  year,  are  the 
following:  A  contract  whereby  A  delivers  to  B  a  certain 
number  of  sheep,  and  B  agrees  to  deliver  back  double  the 
number  at  a  time  longer  than  one  year  from  the  making 
of  the  contract  ;^  a  contract  whereby  A  conveys  a  lease  and 
a  trade-mark  to  B,  and  B  agrees  to  pay  one  hundred  dollars  a 
year  for  eight  years  in  consideration  of  the  trade-mark,^  a 
contract  whereby  a  grantee  assumes  and  agrees  to  pay  a  debt 
of  grantor  not  due  for  more  than  a  year;  an  oral  promise  to 
indemnify  against  liability  on  a  bond  which  is  to  take  effect  in 
the  future  and  continue  in  force  a  year;''  a  contract  to  repay, 


751;  Washburn  v.  Dosch,  68  Wis. 
436;  60  Am.  Rep.  873;  32  N.  W. 
551;  Treat  v.  Hiles,  68  Wis.  344; 
60  Am.  Rep.  858;  32  N.  W.  517; 
McClelland  v.  Sanford,  26  Wis.  595. 
This  rule  was  laid  down  in  England 
in  Donellan  v.  Read,  3  B.  &  A.  899, 
was  doubted  in  Sduch  v.  Straw- 
bridge,  2  M.  G.  &  S.  808,  was  never- 
theless followed  in  Cherry  v.  Hem- 
ing,  4  Exch.  631,  and  was  criticised 
but  held  to  be  too  firmly  settled  to 
be  overthrown  in  Miles  v.  New  Zea- 
land, etc.,  Co.,  32  L.  R.  Ch.  D.  266. 
See  the  historical  discussion  of  the 
doctrine  in  Kendall  v.  Garneau,  in 
which  after  summing  up  the  history 
of  the  doctrine  in  England  and 
America  the  court  held  that  the 
Nebraska  legislature,  in  adopting 
the  statute,  adopted  the  English  rule 
as  a  settled  principle  of  construc- 
tion, saying:  "We  here  adopt  the 
English  rule,  not  as  being  a  correct 


construction  of  their  statvite,  but 
because  we  are  convinced  that  in  the 
light  of  history  it  is  the  construc- 
tion which  our  legislature  intended 
should  be  adopted."  Kendall  v. 
Garneau,  55  Neb.  403,  408;  75  N. 
W.  852. 

2Marcy  v.  Marcy,  9  All.  (Mass.) 
8 ;  Pierce  v.  Pierce,  28  Vt.  34. 

3  See  §  749  et  seq. 

4  Trimble  v.  Lanktree,  25  Ont. 
109;  Contra,  Dietrich  v.  Hoefel- 
meier,  128  Mich.  145;  87  N.  W   111. 

sDant  V.  Head,  90  Ky.  255;  29 
Am.  St.  Rep.  369;  13  S.  W.  1073. 

6  Reynolds  v.  Bank,  62  Neb.  747 ; 
87  N.  W.  912;  Langdan  v.  Iverson, 
78  Minn.  299;  80  N.  W.  1051;  Ken- 
dall V.  Garneau,  55  Neb.  403 ;  75  N. 
W.  852.  But  an  agreement  to  pay 
"  at  its  maturity "  a  note  due  in 
more  than  one  year  is  within  the 
statute,  even  if  the  maker  or  guaran- 
tor might  by  exercising  an  option  to 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1007 

at  an  interval  of  time  greater  than  a  year,  money  already 
borrowed/  and  a  contract  of  subscription  to  corporate  stock 
which  passes  title  at  once,  though  payment  is  not  to  be  completed 
or  the  certificate  to  issue  for  more  than  one  year.^ 

A  contract  to  execute  an  instrument  within  the  year,  which 
will,  when  executed,  affect  the  rights  of  the  parties  for  a  period 
longer  than  a  year,  has  been  held  not  within  this  clause  of  the 
statute;  such  as  an  oral  agreement  to  execute  a  written  lease 
for  the  term  of  three  years,  within- seven  months,®  or  to  dismiss 
a  suit  and  execute  a  new  contract  extending  payment  for  five 
years/" 

§670.     Contracts  to  last  a  year  from  a  future  date. 

A  contract  which  is  to  last  for  a  year  from  the  time  that 
performance  begins,  and  the  performance  of  which  is  to  begin 
at  a  day  subsequent  to  the  day  on  which  it  is  made,  is  not  a 
contract  which  can  be  performed  within  a  year  from  the  date  of 
the  making  thereof,  and  accordingly  is  within  this  clause  of 
the  statute.^  Thus  a  contract  of  employment  for  a  year  to 
begin  in  the  future,"  an  oral  agreement  to  lease  property  for 

pay   before   maturity   pay   the   note  156;   79  Am.  St.  Rep.  36;  49  L.  R. 

within  the  year.     McKeany  v.  Black,  A.  141 ;  60  Pac.  764;  Cooney  v.  Mur- 

117  Cal.  587;  49  Pac.  710.  ray,  45  111.  App.  463;   Holloway  v. 

7  Fernald  V.  Oilman,  123  Fed.  797 ;  Hampton,  4  B.  Mon.  (Ky.)  415; 
McDonald  v.  Crosby,  192  111.  283;  Frary  v.  Sterling,  99  Mass.  461; 
61  N.  E.  505.  Reynolds  v.  Bank,  62  Xeb.  747;   87 

8  Reed  v.  Gold,  —  Va.  — ;  45  S.  N.  W.  912. 

E.  868.  2  Strong    v.    Bent,    31    X.    S.    1; 

9  Eaton  V.  Whitaker,  18  Conn.  Meyer  v.  Roberts,  46  Ark.  80;  55 
222;  44  Am.  Dec.  586.  (The  court  Am.  Rep.  567;  Fish  v.  Glass,  54  111. 
suggested  that  a  contract  to  convey  App.  655;  Caldwell  v.  Huntington, 
the  fee  in  seven  months  was  capable  132  Ind.  92;  31  X.  E.  566;  Shumate 
of  performance  in  less  than  a  year,  v.  Farlow,  125  Ind.  359;  9  L.  R.  A. 
hence  a  contract  to  lease  for  three  657;  25  X.  E.  432;  Clark  Covmty  v. 
years  must  be.)  Howell,  21  Ind.  App.  495;  52  X.  E. 

10  Julian  v.  Bauer,  82  111.  App.  769 ;  Kleeman  v.  Collins,  9  Bush. 
157  (citing  Peter  v.  Compton,  (Ky.)  460;  Davis  v.  Ins.  Co..  127 
Skinner  353;  1  Smith.  Lead.  Cas.  Mich.  559;  86  X.  W.  1021;  Lally  v. 
351  [marginal  paging];  Walker  v.  Lumber  Co.,  85  Minn.  257 ;  88  X.  W. 
Johnson.  96  U.  S.  424).  846:   Kansas  City,  etc.,  Ry.  v.  Con- 

iWiekson  v.   Mfg.    Co.,    128   Cal.      lee,   43   Xeb.    121 ;    61    X.   W.    Ill; 


1008 


PAGE    ON    CONTRACTS. 


a  year,  to  begin  in  the  future/  or  a  promise  to  abstain  from  a 
certain  business  for  a  year,  to  begin  in  the  future,*  are  all 
Avithin  this  clause  of  the  statute.  If  the  statute  specifically 
authorizes  an  oral  lease  for  a  term  not  longer  than  one  year, 
an  oral  lease  for  one  year,  to  begin  in  the  future,  is  valid.^ 
However,  an  oral  agreement  made  in  March,  to  leave  ice  in  an 
ice-house  on  the  expiration  of  the  renewed  lease  thereof,  a 
year  from  the  first  of  April  thereafter,  has  been  held  not  within 
the  statute,  since  the  ice  must  be  put  in  during  the  season  for 
ice-cutting,  which  ends  within  a  year  from  the  time  of  making 
the  contract.^ 

§671.     Computation  of  the  year. 

If  any  appreciable  interval  of  time  is  to  intervene  between 
the  making  of  the  contract  and  the  time  of  performance,  no 
matter  how  slight,  and  the  contract  is  by  its  terms  not  to  be 
performed  until  at  least  a  year  from  the  time  that  performance 


Jellett  V.  Rhode,  43  Minn.  166;  7  L. 
R.  A.  671;  45  N.  W.  13;  Sutcliffe  v. 
Atlantic  Mills,  13  R.  I.  480;  43  Am. 
Rep.  39;  Hillhouse  v.  Jennings,  60 
S.  C.  373;  38  S.  E.  599;  Mendelsohn 
V.  Banov,  57  S.  C.  147;  35  S.  E. 
499 ;  Duckett  v.  Pool,  33  S.  C.  238 ; 
11  S.  E.  689;  Moody  v.  Jones  (Tex. 
Civ.  App.),  37  S.  W.  379;  Lee  v. 
Hill,  87  Va.  497;  24  Am.  St.  Rep. 
666;  12  S.  E.  1052;  Draheim  v.  Evi- 
son,  112  Wis.  27;  87  N.  W.  795. 
The  view  taken  in  the  above  cases, 
holding  that  a  contract  of  employ- 
ment may  be  within  the  statute  of 
frauds,  seems  inconsistent  with  that 
taken  by  the  cases  cited  elsewhere 
(see  §  676)  that  such  contracts  are 
not  within  the  statute  since  they  are 
discharged  by  the  death  of  either 
party. 

3  Bain  v.  McDonald.  Ill  Ala.  269; 
20  So.  77;  Wickson  v.  Mfg.  Co.,  128 
Cal.  156;  79  Am.  St.  Rep.  36;  49  L. 


R.  A.  141;  60  Pac.  764;  Comstock  v. 
Ward,  22  111.  248;  Thomas  v.  Mc- 
manus  (Ky.),  64  S.  W.  446;  Hitt 
V.  Greeser,  71  Mo.  App.  206; 
White  V.  Holland,  17  Or.  3;  3  Pac. 
373.  Contra,  Higgins  v.  Gager,  65 
Ark.  604;  47  S.  W.  848;  Whiting  v. 
Ohlert,  52  Mich.  462;  50  Am.  Rep. 
265;  18  N.  W.  219;  McCroy  v, 
Toney,  66  Miss.  233 ;  2  L.  R.  A.  847 ; 
5  So.  392. 

4  Higgins  V.  Gager,  65  Ark.  604; 
47  S.  W.  848. 

5  Hayes  v.  Arrington,  108  Tenn. 
494;  68  S.  W.  44. 

6  Brown  v.  Throop,  59  Conn.  596 ; 
13  L.  R.  A.  646;  22  Atl.  436. 
(While  this  was  probably  the  per- 
foi'mance  intended,  it  was  not  that 
contracted  for.  It  made  no  differ- 
ence where  the  ice  came  from  if  it 
was  left  in  the  ice  house  when  the 
lease  expired.  The  court  upheld  the- 
contract  by  a  strained  construction.) 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1009 

begins,  the  statute  applies/  Thus  in  a  contract  to  last  for  a 
year  from  the  time  that  performance  begins  an  interval  of  two,^ 
three/  seven*  or  twelve^  days,  or  of  one,*'  two,'  or  three^  months, 
brings  the  contract  within  this  clause  of  the  statute."  A  con- 
tract to  last  a  year,  commencing  with  the  date  of  the  contract, 
is  not  within  this  clause  of  the  statute.  A  contract  to  last  a 
year  beginning  on  the  day  after  the  making  of  the  contract 
is  not  within  the  statute,  since  by  the  rules  controlling  compu- 
tation of  time,  the  day  on  which  the  contract  is  made  must  be 
excluded  in  computing  the  year.^°  In  order  to  come  within 
the  statute,  the  contracts  must  by  its  terms  definitely  postpone 
performance  to  a  future  date.  If  performance  may  or  may  not 
begin  at  once,  or  if  by  subsequent  agreement  jierformance  is 
postponed,  but  the  original  contract  contemplated  that  perform- 
ance would  begin  at  once,  the  contract  is  not  within  the  statute.^^ 
A  contract  to  keep  books  for  a  year,  and  to  work  for  one  month 
to  see  if  both  parties  will  be  satisfied,  is  a  contract  the  perform- 
ance of  which  may  begin  on  the  date  of  the  contract  and  last 
for  one  year,  and  is  not,  therefore,  within  the  statute. ^^  A  con- 
tract by  A  to  work  for  B  for  one  year,  to  begin  as  soon  as  A 
is  released  by  his  present  employer,  is  one  of  which  the  per- 
formance may  begin  at  once,  and  is  not,  therefore,  within  the 
statute,   though  six  days   elapsed  in  fact  before  performance 

iWickson  v.   Mfg.   Co.,    128   Cal.  St.     Rep.     666;     12     S.     E.     1052. 

156;   79  Am.  St.  Rep.  36;   49  L.  R.  8  Mendelsohn  v.   Banov,   57    S.   C. 

A.  141 ;  60  Pac.  764 ;  Mendelsohn  v.  147 ;  35  S.  E.  499. 

Banov,  57  S.  C.  147 ;  35  S.  E.  499.  9  Aiken  v.  Nogle,  47  Kan.  96 ;  27 

2  Reynolds  v.  Bank,  62  Neb.  747;  Pac.   825;    Sanborn   v.   Ins.   Co.,    16 

87  N.  W.  912.  Gray     (Mass.)     448;     77    Am.    Dec. 

3Wickson   v.    Mfg.   Co.,    128    Cal.  419. 

156;   79  Am.  St.  Rep.  36;   49  L.  R.  lo  Britain    v.    Rossiter,    11    Q.    B. 

A.  141;  60  Pac.  764.  Div.    123;    Dickson    v.    Frisbee,    52 

4  Davis  V.  Ins.  Co.,  127  Mich.  559;  Ala.   165;   23  Am.  Rep.  565;   citing 

86  N.  W.  1021;  Sutcliffe  V.  Atlantic  and  following,  Cawthorne  v.  Cor- 
Mills.  13  R.  I.  480;  43  Am.  Rep.  drey.  13  C.  B.  X.  S.  406.  Contra, 
39.  ]\IcElroy   v.   Ludlum,    32   N.  J.   Eq. 

5  Kansas   City,  etc.,   Ry.   v.    Con-  828. 

lee,  43  Neb.  121;  61  N.  W.  111.  n  Baltimore  Breweries  Co.  v.  Cal- 

eDraheim  v.  Evison,  112  Wis.  27;  lahan,  82  Md.  106;  33  Atl.  460. 

87  N.  W.  795.  12  A.   B.   Smith   Co.  v.   Jones,   75 
7  Lee  V.  Hill,  87  Va.  497;  24  Am.  Miss.  325;  22  So,  802. 

64 


1010  PAGE    ON    CONTRACTS. 

began,''^  So,  if  the  original  contract  requires  performanCO 
within  the  year,  a  subsequent  oral  modification  extending  the 
time  of  performance  more  than  a  year  from  the  date  of  the 
original  contract,  but  less  than  a  year  from  the  date  of  the  oral 
modification,  does  not  bring  the  contract  within  the  statute/* 
The  "  making  thereof "  from  which  time  the  year  is  to  be 
computed  is  the  moment  when  the  contract  comes  into  existence, 
and  not  the  time  fixed  for  performance  to  begin  on  the  one 
hand,^^  nor  the  time  at  which  the  first  offer  was  made  on  the 
other/''  Thus  where  certain  promoters  of  a  corporation  as- 
sumed to  make  a  contract  on  its  behalf  before  it  was  formed, 
and  the  corporation  adopted  the  contract  after  it  was  formed, 
the  date  of  the  adoption  of  the  contract  is  the  date  from  which 
the  year  is  to  be  computed/^  A  contract  for  a  year's  employ- 
ment, to  begin  in  the  future,  is  within  the  statute,  although 
payment  therefor  is  to  be  made  in  monthly  installments/^ 

§672.     Contracts  which  cannot  he  performed  within  the  year. 

A  contract  which  for  its  performance  requires  payment  of 
money  or  delivery  of  property  at  intervals  extending  over  a  year 
from  the  date  of  making  the  contract  is  within  the  statute.*" 
Thus  a  promise  to  pay  money  in  thirteen"  or  in  fourteen' 
months ;  to  pay  one  hundred  dollars  a  year  for  four  years  ;*  to 
pay  money  annually  during  the  life  of  a  contract  for  ten  years  ;* 
to  repay  the  money  paid  for  a  patent-right  in  three  years,  if  the 
profits  during  that  time  do  not  equal  the  purchase  price;®  to 

13  Baltimore  Breweries  Co.  v.  Cal-  is  Kansas  City,  etc.,  Ry.  v.  Conlee, 
lahan,  82  Md.  106;  33  Atl.  460.      (In      43  Neb.  121;  61  N.  W.  111. 

this  case  the  writing  was  held  suf-  i  Jackson  Iron  Co.  v.  Concentrat- 

fieient  to  satisfy  the  statute.)  ing  Co.,  65  Fed.  298;    12   C.  C.  A. 

14  Ward  V.  Matthews,  73  Cal.  13;  636;  De  Montague  v.  Bacharach, 
14  Pac.  604.  181  Mass.  256;  63  N.  E.  435. 

15  Blake  v.  Voigt,  134  N.  Y.  69 ;  2  Cowles  v.  Warner,  22  Minn.  449. 
30  Am.  St.  Rep.  622;  31  N.  E.  256.  3  Tierman  v.  Granger,  65  111,  351. 

16  McArthur  v.  Printing  Co.,  48  4  Parks  v.  Francis,  50  Vt,  626 ;  28 
Minn.  319;  31  'Am.  St.  Rep.  653;  51  Am.  Rep.  517. 

N.  W.  216.  5  Jackson  Iron  Co.  v.  Concentrat- 

17  McArthur  v.  Printing  Co..  48  ing  Co.,  65  Fed.  298;  12  C.  C.  A.  636. 
Minn.  319;  31  Am.  St  Rep.  653;  c  Lapham  v.  Whipple.  8  Met. 
51  N.  W,  216.  (Mass.)   59;  41  Am.  Dec.  487. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1011 

extend  a  note  for  five  years ;''  to  deliver  personal  property  during 
two  years/  or  at  the  end  of  four  years  ;^  or  to  make  exclusive 
use  of  a  patent-right  for  seventeen  years  ;^"  to  give  an  exclusive 
right  to  carry  passengers  from  a  certain  wharf  for  three  years  f^ 
a  contract  between  the  holder  of  certain  overdue  notes  and  the 
guarantor  thereof  that  if  the  holder  will  foreclose  the  mortgage 
securing  the  notes  and  buy  in  the  property,  the  guarantor  will 
pay  the  amount  due  on  the  notes  and  the  cost  of  foreclosure, 
if  by  the  end  of  the  period  allowed  for  redemption  after  the 
sale,  the  debt  is  not  paid  and  the  property  redeemed,  where  the 
redemption  period  is  such  as  to  postpone  performance  beyond 
the  year  f^  a  contract  of  employment  for  five  years  f^  and  a  con- 
tract to  operate  a  telephone  line  for  twenty  years  ;^^  are  all  con- 
tracts which  fall  within  this  clause  of  the  statute.  So  a  contract 
to  advance  money  and  supplies  necessary  to  produce  successive 
crops  will,. in  the  course  of  nature,  extend  over  more  than  one 
year  and  is  within  the  statute.^^ 

§673.     Contracts  to  be  performed  within  a  given  time. 

A  contract  by  its  terms  to  be  performed  "  inside  of  a  year  " 
is  clearly  not  within  the  statute.^  If  the  time  within  which 
joerformance  may  be  made  is  longer  than  one  year,  the  principles 
applied  to  this  subject  by  most  courts  would  exclude  such  a 
contract  from  the  statute,  since  by  its  terms  it  may  be  performed 
within  the  year.     Some  courts  so  hold,"  though  some  courts  take 

7  Morgan    v.    Wickliffe,    110    Ky.  loBulil  v.  Stevens,  84  Fed.  922. 

215;  61  S.  W,  13;  rehearing  denied,  n  Green  v.  Steel  Co.,  75  Md.  109; 

61  S.  W.  1017.  23  Atl.  139. 

sKelley  v.   Thompson,   175  Mass.  izVeazie  v,  Morse,  67  Minn.  100; 

427;  56  N.  K  713.      (A  promise  to  69  N.  W.  637. 

deliver  milk  at  a  reduced  price,  to  is  Peck   v.   Machine   Co.,    196    111. 
apply  on  a  note   due  in  two  years,  295;  63  X.  E.  731;  Hanson  v.  Gun- 
application  to  be  made  when  note  is  derson,  95  Wis.  613;  70  X.  W.  827. 
due.)  14  Bastin    Telephone    Co.   v.   Tele- 

9  Dietrich      v.      Hoefelmeir,      128  phone  Co.,  —  Ky.  — ;  77  S.  W.  702. 

Mich,  145;  87  N.  W.  111.      (A  prom-  is  Eikelman   v.   Perdew,    140    Cal. 

ise  by  A  to   deliver  to  B  a  certain  687:   74  Pac.  291. 

number   of  sheep,   and  by  B   to   re-  i  Denn  v.   Peters.  36  Or.  486 ;   59 

deliver  to  A  twice  that  number   in  Pac.  1109. 

four  years.)  2  Lewis  v.   Tapman,   90   Md.  294; 


1012  '  PAGE    ON    CONTKACTS. 

the  opposite  view.^  A  contract  made  on  !N"ovember  fourteenth 
to  charter  a  tug  for  the  ensuing  season  was  held  not  within  the 
statute,  where  the  season  began  April  first  and  ended  December 
fifth.'' 

§674.     Time  of  performance  indefinite  —  may  occur  within  the 
year. 

Contracts  for  the  jierformance  of  which  no  time  is  fixed,  and 
which  from  their  subject-matter  admit  of  performance  within 
the  year,  are  not  within  this  clause  of  the  statute,^  even  if  it  is 
probable  that  the  contract  will  be  performed  after  the  year." 
Thus  a  contract  to  furnish  goods  to  a  new  corporation  ex- 
clusively, no  time  being  specified,^  or  a  contract  to  marry  in  the 
future,  no  time  being  fixed,'*  even  if  the  parties  may  not  antici- 
pate marriage  within  the  year,^  as  where  the  marriage  is  to 
take  place  when  promisor  recovers  his  health,^  are  not  within 
the  statute.  So  a  contract  in  the  fall  of  one  year  to  raise  and 
divide  a  crop  of  tobacco  during  the  season  of  the  following 
year;'^  a  contract  made  on  June  5,  1883,  to  furnish  material 
for  four  buildings,  three  of  them  to  be  erected  in  the  season  of 
1883  and  the  fourth  in  the  season  of  1884  f  and  a  contract  made 


47  L.  R.  A.    385;   45  Atl.  459    (a  210;      Hintze     v.     Krabbenschmidt 

contract    to    many    "within    three  (Tex.    Civ.    App.),    44    S.    W.    38. 

years");    Kent    v.    Kent,    18    Pick.  sMcConahey    v.    Griffey,    82    la. 

(Mass.)    569.  564;    48    N.    W.   983;    MacElree   v. 

3  Mills  V.   O'Daniel    (Ky.),   62   S.  Wolfersberger,     59     Kan.     105;     52 

W.    1123.    (A   contract  to   accept   a  Pac.     69;     Durgin    v.     Smith,     115 

certain  sum  in  full  if  paid  "within  Mich.  239;  73  N.  W.  361. 

two  years  "  held  within  the  statute.)  3  Durgin  v.  Smith,  115  Mich.  239; 

4De  Land  v.  Hall,  —  Mich.  — ;  73  N.  W.  361. 

96  X.  W.  449.  4  Clark  v.  Reese,  26  Tex.  Civ.  App. 

iDevalinger  v.   Maxwell,   —  Del.  610;  64  S.  W.  783. 

— ;    54   Atl.   684;    Vocke  v.   Peters,  5  MacElree    v.    Wolfersberger,    59 

58  111.  App.   338;    Sprague  v.  Ben-  Kan.  105;  52  Pac.  69. 

son,  101  la.  678 ;  70  N.  W.  731 ;  Fain  e  McConahey    v.    Griffey,    82    la. 

V.   Turner,   96    Ky.   634;    29   S.   W.  564;  48  N.  W.  983. 

628;  Neal  v.  Parker,  —  Md.  — ;  57  7  Burden  v.  Lucas    (Ky.),  44   S. 

Atl.    213;    Durgin    v.    Smith,     115  W.  86. 

Mich.  239;   73  N.  W.  361;  Gault  v.  s  Sarles  v.   Sharlow,  5  Dak.   100; 

Brown,  48  N.  H.  183;   2   Am.  Rep.  37  N.  W.  748. 


CONTRACTS    WHICH    MUST    BE    PEOVED    BY    WRITING.    1013 

in  October,  1886,  for  the  delivery  of  a  quantity  of  corn,  at  a 
price  to  be  fixed  as  the  market  price  of  corn  in  that  county  at 
any  date  that  vendor  chooses  between  the  date  of  delivery  and 
May,  1888,''  are  all  contracts  which  may  be  performed  within 
a  year  from  the  date  of  making.  So  a  contract  to  construct  a 
street  if  the  adversary  party  buy  a  lot  and  build  on  it,  is  not 
within  the  statute,  as  it  may  be  performed  within  the  year." 

§675.     Performance  on  happening  of  uncertain  event  which  may 
occur  within  the  year. 

If  the  contract  provides  for  performance  upon  the  happening 
of  some  event  which  may  or  may  not  take  place  within  the  year, 
such  contract  is  not  within  the  statute.  Thus  a  contract  to  be 
performed  on  the  sale  of  certain  property,  such  as  paying  com- 
missions,^ or  to  divide  profits,^  as  on  the  winding-up  of  a 
business,^  or  a  contract  to  construct  a  railroad,'*  or  to  hold 
property  until  reimbursed  out  of  the  profits  for  certain 
improvements,^  or  to  continue  "  until  I  have  made  the  net 
profit  of  $.50,000,"®  are  none  of  them  within  the  statute  of 
frauds.  So  a  contract  of  employment  to  last  as  long  as  the 
employee   does  faithful  and  honest  work,'^  or  as  long  as  his 

9  Powder  River  Livestock  Co.  v.  Gregor  v,  McGregor,  21  Q.  B.  Div. 
Lamb,  38  Neb.  .3.39;  56  N.  W.  1019.      424.)      Jackson  v.  Higgins,  70  N.  H. 

10  Drew    v.    Wiswall,     183    Mass.      637;  49  Atl.  574. 

554;  67  N.  E.  666.  2  Durham  v.  Hiatt,  127  Ind.  514; 

.  1  Bartlett    v.    Mystic    River    Cor-  26  N.  E.  401 ;  Jordan  v.  Miller,  75 

poration,    151   Mass.  433;   24  N.  E.  Va.  442.     So  of   a   contract  to  buy 

780;     Scribner    v.    Mfg.     Co.,     175  and  operate  a  quarry  and  divide  the 

Mass.  536;    56  N.  E.  603.      (Citing  profits.     Treat  v.  Hiles,  68  Wis.  344 ; 

Peters   v.   Inhabitants   of  Westboro.  60  Am.  Rep.  858;  32  N.  W.  517. 
19    Pick.    364;    Lyon    v.    King,    11  3  Qsment    v.    McElrath,    68    Cal. 

Mete.  411;  45  Am.  Dec.  219;  Doyle  466;  58  Am.  Rep.  17;  9  Pae.  731. 
V.    Dixon,    97    Mass.    208 ;    93    Am.  *  Burns  v.  Chisholm,  32  N.  B.  588. 

Dec.    80;    Somerby   v.    Buntin.    118  s  Dailey  v.  Cain   (Ky.),  13  S.  W. 

Mass.  279;  19  Am.  Rep.  459;  Bart-  424. 

lett  V.  River  Corp.,  151  Mass.  433;  6  Hodges  v.  Mfg.  Co..  9  R.  I.  482. 

24  N.  E.  780;   Carnig  v.  Carr,  167  7  Louisville,  etc.,  R.  R.  v.  Offutt, 

Mass.  544;  57  Am.  St.  Rep.  488;  35  99  Ky.  427;   59  Am.   St.  Rep.  467; 

L.  R.  A.  512;   46  N.  E.   117;   Mc-  36  S.  W.  181. 


1014 


PAGE    ON    CONTRACTS. 


services  are  satisfactory/  or  as  long  as  both  parties  are  "  mu- 
tually satisfied/"*  or  as  long  as  the  employee  wishes  to  work/" 
or  as  long  as  the  employer  continues  in  business/^  is  not  within 
the  statute.  So  a  contract  to  occupy  land  until  the  lessor  should 
demand  possession^"  or  should  get  another  tenant/^  or  a  contract 
to  marry  when  promisor  regains  his  health/*  or  to  buy  a  note, 
j)ayable  in  five  years,  from  the  payee  if  she  should  marry  and 
need  the  money  before  it  came  due,^^  are  none  of  them  within 
this  clanse  of  the  statute.  So  a  contract  to  be  performed  when 
certain  stock  is  issued  by  a  corporation  is  not  within  the  stat- 
ute.^*' 

§676.     Contracts  to  be  performed  during  life. 

Human  life  is  uncertain  and  any  person  alive  at  a  given  time 
may  die  within  a  year  from  that  time.  On  this  principle  a 
contract  which  by  its  terms  is  not  to  be  performed  for  a  longer 
period  than  during  the  life  of  a  given  person  is  held  not  to  be 
within  this  clause  of  the  statute.^  Thus  a  contract  to  support 
one  for  life,^  or  to  perform  services  for  the  life,  either  of  the 


8  Sax  V.  R.  R.,  125  Mich.  252;  84 
Am.  St.  Rep.  572;  84  N.  W.  314; 
Harrington  v.  Ry.,  60  Mo.  App.  223. 

9  Greene  v.  Harris,  9  R.  I.  401. 

10  Carter  White  Lead  Co.  v.  Kin- 
lin,  47  Neb.  409 ;  66  N.  W.  536 ;  East 
Line,  etc.,  R.  R.  v.  Scott,  72  Tex.  70; 
13  Am.  St.  Rep.  758;  10  S.  W.  99. 

11  Yellow  Poplar  Lumber  Co.  v. 
Rule,  106  Ky.  455;  50  S.  W.  685; 
Carter  ^^^^ite  Lead  Co.  v.  Kinlin,  47 
^"eb.  409 ;  66  N.  W.  536. 

12  Hintze  v.  Krabbensehmidt  ( Tex. 
Civ.  App.),  44  S.  W.  38. 

13  Drew  V.  Billings-Drew  Co.,  — 
Mich.  — ;  92  N.  W.  774. 

i4McConahey  v.  Griffey,  82  la. 
564;  48  N.  W.  983. 

15  Hughes  V.  Frum,  41  W.  Va. 
445;  23  S.  E.  604. 

16  Gadsden  v.  Lance,  1  McMul- 
lan's  Eq.  (S.  C.)  87;  37  Am.  Dec. 
548. 


1  Wooldridge  v.  Stern,  42  Fed.  311 ; 
9  L.  R.  A.  129;  Haussman  v.  Burn- 
ham,  59  Conn.  117;  21  Am.  St.  Rep. 
74;  22  Atl.  1065;  Atchison,  etc.,  R. 
R.  V.  English,  38  Kan.  110;  16  Pae. 
82;  Carr  v.  McCarthy,  70  Mich.  258; 
38  N.  W.  241;  Weatherford,  etc., 
Ry.  V.  Wood,  88  Tex.  191;  28  L.  R. 

A.  526;  30  S.  W.  859;  Thomas  v. 
Armstrong.  86  Va.  323;  5  L.  R.  A. 
529;   10  S.E.  6. 

-  Harper  v.  Harper,  57  Ind.  547 ; 
Bull  V.  McCrea,  8  B.  Mon.  (Ky.) 
422;  Stowers  v.  Hollis,  83  Ky.  544; 
Eiseman  v.  Schneider,  60  N.  J.  L. 
291;  37  Atl.  623.  (Citing  Peter  v. 
Compton,  Skinner  353 ;  1  Smith 
Lead.   Cas.   351 ;   Kind  v.  Hanna,   9 

B.  Mon.  369;  Sword  v.  Keith.  31 
Mich.  247;  McConahey  v.  Griffey,  82 
Iowa  564:  48  N.  W.  983;  Hutchin- 
son V.  Hutchinson,  46  Me.  154; 
Blanchard   v.   Weeks,    34    Vt.    589; 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WKITING.    1015 

person  rendering  them^  or  of  the  person  for  whose  benefit  they 
are  to  be  rendered/  is  not  within  this  clause  of  the  statute. 
Accordingly  a  contract  for  permanent  employment  is  not  within 
this  clause  of  the  statute.^  So  a  contract  to  furnish  free  trans- 
portation to  one  and  his  family  for  his  life  is  not  within  the 
statute.®  A  contract  to  make  a  will  is  not  within  this  clause 
of  the  statute,  since  it  may  be  performed  at  once  and  must  be 
performed,  if  at  all,  during  the  life  of  the  promisor.'^  So  a 
contract  to  pay  money  during  the  life  of  a  given  person  is  not 
within  the  statute.®  So  a  contract  to  pay  money  at  the  death 
of  a  certain  person  is  not  within  this  clause  of  the  statute,^ 
even  if  the  promisor  is  the  person  at  whose  death  the  money  is 
payable,  and  the  law  for  the  administration  of  estates  will  give 
his  administrator  more  than  a  year  in  which  to  pay  the  money.^" 
So  a  contract  not  to  compete  in  business,^^  or  in  the  practice 
of  a  profession,^^  can  be  performed  within  the  life  of  the  prom- 
isor and  is,  therefore,  not  within  the  statute.  If  the  contract, 
by  its  terms,  is  to  last  for  more  than  a  year  it  is  within  the 


Burney  v.  Ball,  24  Ga.  505;  Hough- 
ton V.  Houghton,  14  Ind.  505;  77 
Am.  Dec.  69;  Bull  v.  McCrea,  8  B. 
Mon.  (Ky.)  422;  Howard  v.  Burgen, 
4  Dana   (Ky.)   137.) 

3  Boggs  V.  Laundry  Co.,  86  Mo. 
App.  616. 

4  Thomas  v.  Feese  (Ky.),  51  S. 
W.  150;  Smalley  v.  Mitchell,  110 
Mich.  650;  68  N.  W.  978;  Updike  v. 
Ten  Broeck,  32  N.  J.  L.  105;  Kent 
V.  Kent,  62  N.  Y.  560;  20  Am.  Rep. 
502. 

5  Carnig  v.  Carr,  167  Mass.  544; 
57  Am.  St.  Rep.  488;  35  L.  R.  A. 
512;  46  N.  E.  117. 

6  Park  V.  Turnpike  Co.  (Ky.),  1 
L.  R.  A.  198. 

7  Bell  V.  Hewitt,  24  Ind.  280; 
Story  V.  Story  (Ky.),  61  S.  W. 
279;  rehearing  denied,  62  S.  W. 
865;  Thomas  v.  Feese  (Ky.),  51 
S.  W.  150;  Krell  v.  Codman,  154 
Mass.  454;  26  Am.  St.  Rep.  260;  14 


L.  R.  A.  860;  28  N.  E.  578;  Jilson  v. 
Gilbert,  26  Wis.  637;  7  Am.  Rep. 
100.  If  realty  is  to  pass  by  the 
will  such  contracts  may  come  under 
another  clause  of  the  statute. 
See  §  658. 

8  Wiggins  V.  Keizer,  6  Ind.  252; 
Hutchinson  v.  Hutchinson,  46  Me. 
154. 

9  Kent  V.  Kent,  62  N.  Y.  560;  20 
Am.  Rep.  502;  Westropp  v.  West- 
ropp,  13  Ohio  C.  C.  244;  7  Ohio  C. 
D.  14. 

10  Westropp  v.  Westropp,  13  Ohio 
C.  C.  244;  7  Ohio  C.  D.  14. 

11  Dickey  v.  Dickinson,  105  Ky. 
748;  88  Am.  St.  Rep.  337;  49  S.  W. 
761;  Lyon  v.  King,  11  Met.  (Mass.) 
411;  45 "Am.  Dec.  219;  Zanturjian  v. 
Boormazian,  —  R.  I.  — ;  55  Atl. 
199. 

i2Blanchard  v.  Weeks,  34  Vt. 
589. 


1016  PAGE    ON    CONTRACTS. 

statute,  even  though  the  death  of  one  party  will  operate  a*  a 
diseharge.^^  So  it  has  been  held  that  a  contract  of  employment, 
if  by  its  terms  to  last  for  more  than  a  year,  is  within  the  statute 
even  if  subject  to  be  discharged  by  the  death  of  either  party 
within  the  year.^*  Thus  an  oral  agreement  by  employee  not 
to  leave  his  employer's  service  for  two  years,^^  or  an  oral  agree- 
ment that  each  of  two  partners  shall  pay  half  the  wages  of  the 
employee  for  five  years,^^  or  a  contract  of  apprenticeship,^^ 
which  by  their  terms  are  for  so  long  a  period  as  to  last  more 
than  a  year  from  the  date  of  the  making  thereof,  are  within  this 
clause  of  the  statute,  even  though  the  death  of  either  party 
would  discharge  the  contract.  So  a  contract  not  to  engage  in 
business  for  a  period  of  time  greater  than  a  year  from  the 
time  of  making  the  contract  has  been  held  to  be  within  the 
statute.^^  There  is,  however,  a  divergence  of  authority  upon 
this  last  proposition.  The  principle  that  a  contract  which  must 
be  performed  during  the  life  of  a  person  in  being  is  not  within 
this  clause  of  the  statute,  has  been  carried  so  far  that  many 
courts  have  held  that  a  contract  which  by  its  terms  was  to  last 
for  a  period  of  time  gi'eater  than  the  year  was  nevertheless  not 
within  this  clause  of  the  statute,  if  it  was  of  such  character 
that  the  death  of  one  or  both  of  the  parties  thereto  would  dis- 
charge liability  thereunder.^®  Thus  a  contract  for  personal 
services,   which   is   discharged  by  the   death   of   either   party 

13"  If  the  death  of  the  promisor  derson,  95  Wis.  613;  70  N.  W.  827. 

within  the  year  would  merely  pre-  is  Bernier  v.  Mfg.  Co.,  71  Me.  506; 

vent  full  performance  of  the  agree-  36  Am.  Rep.  343. 

ment,  it  is  within  the  statute;   but  is  Hanson  v.   Gunderson,   95   Wis. 

if  his  death  would  leave  the  agree-  613;  70  N.  W.  827. 

ment  fully  performed,  and  its  pur-  i7  Barrett  v.  .Riley,   42   111.  App. 

pose   fully   carried   out,   it   is   not."  258;    Baker   v.  Lauterback,   68   Md. 

Doyle  V.  Dixon,  97  Mass.  208,  212;  64;  11  Atl.  703. 

93  Am.  Dec.  80.  is  Self    v.    Cordell,    45    Mo.    345; 

"Bernier    v,    Mfg.    Co.,    71    Me.  Gottschalk  v.  Witter,  25  O.  S.  76. 

506;  36  Am.  Rep.  343;  Hill  v.  Hoop-  i9  Carnig  v.  Carr,  167  Mass.  544; 

er,  1  Gray   (Mass.)    131;  Wilkinson  57  Am.  St.  Rep.  488;   35  L.   R.   A. 

V.    Heavenrich,    58    Mich.    574;     55  512;    46   N.    E.    117;    Weatherford, 

Am.  Rep.  708;  26  X.  W.  139;  Milan  etc.,  Ry.  v.  Wood.  88  Tex.  191;   28 

V.  Ry.    (Tex.  Civ.  App.),  37   S.  W.  L.  R.  A.  526;  30  S.  W.  859;  Thomas 

165;   Miller  v.  Wisener,  45  W.  Va.  v.  Armstrong.  86  Va.  323;  5  L.  R.  A. 

59;   30  S.   E.  237;   Hanson  v.  Gun-  529;  10  S.  E.  6. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1017 

thereto,""  or  a  contract  to  support  and  educate  a  minor  until 
lie  comes  of  age,"^  or  until  his  apprenticeship  is  ended,"  or  a 
contract  not  to  engage  in  a  certain  business,  whether  for  a 
definite  term  of  years'^  or  for  such  period  as  the  vendee  of  the 
business  shall  continue  it,^*  or  for  an  indefinite  period,"®  or  a 
contract  to  give  annual  passes  to  A  and  his  family  for  ten 
years,  and  to  stop  trains  at  his  house  for  that  period,^"  or  a  con- 
tract to  keep  a  horse  for  a  year  from  a  future  date,  for  the  use 
of  it,^^  or  a  contract  to  support  a  child  till  it  reached  a  certain 
age,  which  event  would  occur  more  than  a  year  after  the  contract 
was  made,^^  are  none  of  them  within  this  clause  of  the  statute. 

§677.    Contract  for  fixed  period  greater  than  the  year,  but  termin- 
able within  the  year. 

If  a  contract,  by  its  terms,  is  to  continue  beyond  the  year 
from  the  date  of  the  making  thereof,  but  by  a  further  provision 
may  be  discharged  or  performed  by  the  happening  of  some 


20  Hill  V.  Jamieson,  16  Ind.  125; 
79  Am.  Dec.  414;  Pennsylvania  Co. 
V.  Dolan,  6  Ind.  App.  109;  51  Am. 
St.  Rep.  289;  32  N.  E.  802;  Sax  v. 
E.  R.,  125  Mich.  252;  84  Am.  St. 
Rep.  572;  84  N.  W.  314;  Smalley  v. 
Mitchell,  110  Mich.  650;  68  N.  W. 
978.  It  is  said  that  this  principle 
applies  whether  the  term  of  service 
is  definite  or  indefinite.  Hill  v. 
Jamieson,  16  Ind.  125;  79  Am.  Dec. 
414;  Pennsylvania  Co.  v.  Dolan,  6 
Ind.  App.  109;  51  Am.  St.  Rep.  289; 
32  N.  E.  802;  Sax  v.  Ry.,  125  Mich. 
252;  84  Am.  St.  Rep.  572;  84  N.  W. 
314. 

2iWooldridge  v.  Stern,  42  Fed. 
311;  9  L.  R.  A.  129;  Peters  v.  West- 
borough,  19  Pick.  (Mass.)  364;  31 
Am.  Dec.  142. 

22  Myers  v.  Korb  (Ky.),  50  S. 
W.  1108. 

23  Doyle  V.  Dixon.  97  Mass.  208; 
93  Am.  Dec.  80;  Erwin  v.  Hayden 
(Tex.    Civ.    App.),    43    S.    W.    610. 


Contra,   Higgins   v.    Gager,  65   Ark. 
604;  47  S.  W.  848. 

24  Cotton  V.  Crawford  (Ky.),  44 
S.  W.  954. 

25  Hall  V.  Solomon,  61  Conn.  476; 
29  Am.  St.  Rep.  218;  23  Atl.  876; 
Dickey  v.  Dickinson,  105  Ky.  748; 
88  Am.  St.  Rep.  337;  49  S.  W.  761; 
Carnig  v.  Carr,  167  Mass.  544;  57 
Am.  St.  Rep.  488;  35  L.  R.  A.  512; 
46  N.  E.  117;  Lyon  v.  King,  11  Met. 
(Mass.)  411;  45  Am.  Dec.  219; 
Worthy  v.  Jones,  11  Gray  (Mass.) 
168;  71  Am.  Dec.  696;  Blanchard  v. 
Weeks,  34  Vt.  589. 

26  Weatherford,  etc.,  Ry.  v.  Wood, 
88  Tex.  191;  28  L.  R.  A.  526;  30  S. 
W.  859;  affirming,  29  S.  W.  411. 

27  Martin  v.  Batchelder,  69  N.  H. 
360;  41  Atl.  83  (since  the  horse 
may  die  within  the  year  from  the 
date  of  making  the  contract) . 

28Wilhelm  v.  Hardman,  13  Md. 
140;  Peters  ^  V.  Westborongh,  19 
Pick.  (Mass.)  364;  31  Am.  Dec.  142. 


1018  PAGE    ON    CONTRACTS. 

event  before  the  end  of  tlie  year,  the  weight  of  authority  is  that 
such  contract  is  not  within  the  statute  of  frauds,  even  if  such 
contingency  is  not  probable/  Thus  a  contract  to  last  one  year 
from  a  future  date,  but  subject  to  be  terminated  at  the  option 
of  either  party  within  a  year  from  the  date  of  making  such 
contract,"  or  one  to  last  ninety-nine  years,  subject  to  be  term- 
inated at  any  time  on  three  months'  notice  if  the  business  should 
prove  unprofitable  f  or  one  to  last  "  five  years,  or  so  long  as  A 
shall  continue  to  be  agent  of  "  a  given  corporation  ;*  or  one  to 
last  "  five  years,  or  as  long  as  A  should  continue  in  business,"^ 
are  none  of  them  within  this  clause  of  the  statute.  Such  con- 
tracts are  held  by  some  courts  to  be  within  this  clause  of  the 
statute.^ 

§678.    Performance  on  happening  of  uncertain  event  which  can- 
not reasonably  happen  within  the  year. 

If  the  time  of  performance  is  fixed  only  by  reference  to  the 
happening  of  a  future  event  which,  in  the  ordinary  course  of 
nature,  cannot  happen  inside  of  a  year,  the  contract  is  within 
the  statute.  Thus  a  contract  in  the  spring  of  one  year  to  raise 
potatoes  during  the  following  year,  and  to  deliver  them  f-  or  a 
contract  to  buy  a  colt  when  it  is  four^  or  five^  months  old,  the 
contract  being  made  when  the  period  of  gestation  begins,  and 
such  period  being  so  long  that  in  the  natural  course  of  events 

1  Johnston  v.  Bowersock,  62  Kan.  Am.  St.  Rep.  622;  31  X.  E.  256. 
148;  61  Pac.  740;  Standard  Oil  Co.  3  Johnston  v.  Bowersock,  62  Kan. 

V.    Denton     (Ky.),    70    S.    W.    282;  148;  61  Pac.  740. 
Linscott  V.   Mclntire,    15   Me.   201;  4  Roberts    v.    Rockbottom    Co.,    7 

33  Am.  Dec.  602;  Lyon  v.  King,  11  Met.   (Mass.)  46. 
Met.  (Mass.)  411;  45  Am.  Dec.  219;  s  Standard     Oil     Co.     v.     Denton 

Peters    v.     Westborough,     19     Pick.  (Ky.) ,  70  S.  W.  282. 
(Mass.)     364;     31    Am.    Dec.    142;  c  Meyer   v.   Roberts,   46   Ark.   80; 

Blanding  v.  Sargent,  33  N.  H.  239 ;  55  Am.  Rep.  567. 
66   Am.   Dec.   720;    Blake  v.   Voigt,  i  Pitkin  v.  Noyes,  48  N.  H.  294; 

134  N.  Y.  69;  30  Am.  St.  Rep.  622;  97  Am.  Dec.  615;   citing   Emery  v. 

31  N.  E.  256;  Lockwood  v.  Barnes,  Smith,  46  N.  H.  151. 
3  Hill    (N.  Y.)    128;    38   Am.   Dec.  2  Butler   v.   Shehan,    61    111.   App. 

620.  561. 

2Estey  V.  Aldrich,  46  N.  H.   127;  3  Groves  v.  Cook,  88  Ind.  169;  45 

Blake   v.   Voigt,    134   N.   Y.   60;    30  Am.  Rep.  462. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.     1019 

the  addition  of  four  or  five  months  thereto  would  carry  it  be- 
yond the  year  are  all  held  to  be  within  this  clause  of  the 
statute.  Contracts  which  are  intended  by  the  parties  as  per- 
manent arrangements,  but  which  may  be  discharged  within 
the  year  by  some  change  of  circumstances,  are  held  by  many 
courts  not  to  be  within  this  clause  of  the  statute.  Thus  a 
contract  by  a  railway  company  to  keep  up  a  switch  for  one 
as  long  as  he  needs  it  ;*  or  to  keep  up  cattle-guards  on  A's  land 
as  long  as  the  railroad  is  operated  over  such  land  f  or  to  pay 
half  the  expenses  of  erecting  gates  and  maintaining  a  watch- 
man at  the  intersection  of  a  steam  railwa}^  and  an  electric 
railway,^  have  none  of  them  been  held  to  be  within  this  clause 
of  the  statute.  The  theory  on  which  they  are  decided  is  that 
within  the  year  the  railway  may  change  its  location,  go  out 
of  business,  and  the  like,  and  thus  discharge  the  contract. 
This  reasoning  is  not  followed  by  all  the  courts,  however.  Thus 
an  oral  agreement  to  stop  cars  permanently  at  a  given  point 
was  held  to  be  within  the  statute.^  A  contract  of  insurance  is 
generally  held  not  to  be  within  this  clause  of  the  statute  of 
frauds,^  even  if  by  its  terms  the  insurance  is  to  be  in  force 
for  more  than  one  year,  as  for  three^  or  five^"  years.  This 
rule  rests  on  the  theory  that  a  loss  may  happen  within  the  year, 
discharging  the  contract.  If  the  contract  of  insurance  is  to  be 
in  force  a  year,^^  or  is  to  be  renewed  from  year  to  year,^"  the 

4  Warner  v.  Ry.,  164  U.  S.  418;  508;  52  Am.  St.  Rep.  902;  21  S.  E. 
reversing,    54    Fed.    922;     Sweet    v.      854. 

Lumber  Co.,  56  Ark.  629;  20  S.  W.  9  Sanford  v.   Ins.   Co.,    174  Mass. 

514.  416;   75  Am.  St.  Rep.  358;  54  N.  E. 

5  Arkansas,  etc.,  Ry.  v.   Whitley,      883. 

54  Ark.  199;  11  L.  R.   .\.  621;  15  S.  loWiebeler  v.  Ins.  Co.,   30  Minn. 

W.  465.  464;  16  N.  W.  363. 

6  Richmond,  etc.,  Ry.  v.  R.  R.,  n  Howard  Ins.  Co.  v.  Owen,  94 
96  Va.  670;  32  S.  E.  787.  Ky.  197;  21  S.  W.  1037;  Sanborn  v. 

7  Pitkin  v.'R.  R.,  2  Barb.  Ch.  (N.  Ins.  Co.,  16  Gray  (Mass.)  448;  77 
Y.)   221;  47  Am.  Dec.  320.  Am.  Dec.  419. 

8  Franklin  v.  Ins.  Co.,  20  Wall.  12  Phoenix  Ins.  Co.  v.  Ireland.  9 
(U.  S.)  560;  Commercial  Fire  Ins.  Kan.  App.  644;  58  Pac.  1024;  First 
Co.  V.  Morris,  105  Ala.  498;  18  So.  Baptist  Church  v.  Ins.  Co.,  19  N. 
34;    Emery  v.    Ins.   Co.,    138   Mass.  Y.  305;  s.  c,  28  N.  Y.  153. 

398;    Croft  v.   Ins.   Co..   40   W.  Va. 


1020  PAGE    ON    CONTRACTS. 

statute  clearly  lias  no  application.  The  courts  are  not  unani^ 
mous  on  the  foregoing  propositions,  however.  The  Massachu- 
setts, courts  distinguish  between  contracts  in  which  the  happen- 
ing of  the  event  within  the  year  prevents  full  performance  and 
those  in  which  it  leaves  the  contract  fully  perfornied.^^  Other 
authorities  seem  to  make  the  same  distinction,  holding  that 
discharge  within  the  year,  as  distinguished  from  performance, 
does  not  keep  the  statute  from  applying  to  contracts  whose  per- 
formance is  to  be  postponed  beyond  the  year,^* 

VII.  The  Seventeenth  Section  of  the  Statute  of 

Peauds. 

§679.     The  seventeenth  section. 

The  seventeenth  section  of  the  original  statute  of  frauds 
provided :  "  And  bee  it  further  enacted  by  the  authority  afore- 
said that  from  and  after  the  said  fower  and  twentieth  day  of 
June  noe  contract  for  the  sale  of  any  goods,  wares  or  merchan- 
dises for  the  price  of  ten  pounds  sterling  or  upwards,  shall  be 
allowed  to  be  good,  except  the  buyer  shall  accept  part  of  the 
goods  soe  sold  and  actually  receive  the  same  or  give  something 
in  earnest  to  bind  the  bargaine,  or  in  part  of  payment,  or  that 
some  note  or  memorandum  in  writing  of  the  said  bargaine  be 
made  and  signed  by  the  partyes  to  be  charged  by  such  contract 
or  their  agents  thereunto  lawfully  authorized."^  This  section 
has  been  substantially  re-enacted  in  many  of  the  states  of  the 
Union.  Its  effect  upon  contracts  must  therefore  be  considered 
in  connection  with  the  fourth  section. 

§680.    What  is  a  "  contract  for  sale." 

This   section   of  the   statute   includes   sale  proper,   that  is. 
transfer  of  the  title  to  personalty  in  consideration  of  a  price  in 

13  See  §676.  139;    22    Minn.    449;    Blanding    v. 

14  Packet  Co.  v.   Sickles,   5   Wall.      Sargent.  33  N.  H.  239. 

(U.  S.)   580;  Wilkinson  v.  Heaven-  i  English    Statutes.    Revised    Edi- 

rieh,    58   Mich.    574;    55    Am.    Rep.      tion.      (By  authority)   I,  777. 
708;    Cowles  v.   Warner,  26   N.   W. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1021 

monej.^  It  also  includes  barter,  or  conveyance  of  the  title  to 
personalty  in  consideration  of  a  conveyance,  in  return,  of  title  to 
other  personalty.^  A  contract  to  transfer  the  title  to  certain 
goods  in  payment  of  an  antecedent  debt  is  held  to  be  a  sale 
within  the  meaning  of  this  section.^  Other  contracts  for  pay- 
ing a  debt  by  transferring  personalty  have  been  held  not  to  be 
within  the  statute.  Thus  a  contract  of  employment  by  the 
terms  of  which  the  employee  was  to  be  paid  partly  in  cash  and 
partly  in  corporation  stock  is  not  a  sale  of  such  stock  within 
the  meaning  of  this  section.* 

A  contract  which  does  not  attempt  to  pass  title  to  a  chattel 
from  one  of  the  contracting  parties  to  the  other,  or  to  provide 
for  passing  such  title,  is  not  a  contract  of  sale.  Thus  a  contract 
between  a  debtor  and  his  attaching  creditor,  by  which  the 
creditor  agrees  to  account  to  the  debtor  for  the  cost  price  of  the 
goods  sold,  no  matter  what  the  selling  price  might  be,  and  to 
credit  him  with  all  sums  received  on  book  accounts;^  or  a 
contract  between  two  judgment-creditors  that  the  property 
should  be  sold  on  execution  issued  on  one  of  the  judgments,® 
are  none  of  them  within  the  statute. 

A  contract  to  give  a  chattel  mortgage  has  been  held  not  to 
be  within  the  statute.'^  So  a  contract  to  extend  the  time  of  pay- 
ing the  mortgage  debt,  even  after  foreclosure,  is  not  within 

1  Stewart  v.  Cook,  118  Ga.  541;  Pac.  914;  Norwegian  Plow  Co.  v. 
45  S.  E.  398.  Hawthorn,   71   Wis.  529;   37  N.  W. 

2  Raymond  v.  Colton,  104  Fed.  825.  Whether  the  agreement  to  ap- 
219;  43  C.  C.  A.  501;  Kuhns  v.  ply  the  price  of  the  goods  to  the 
Gates,  92  Ind.  66;  Dowling  v.  Mc-  debt  amounts  to  a  part  payment  or 
Kenney,  124  Mass.  478 ;  Gorman  v.  not  is  another  question.  See  §  706. 
Brossard,  120  Mich.  611;  79  X.  W.  *  Spinney  v.  Hill,  81  Minn.  316; 
903;    Harris    Photographic    Supply  84  N.  W.  116. 

Co.  V.  Fisher,  81  Mich.  136;  45  K  5  Jacobs  Sultan  Co.  v.  Mercantile 

W.  661;   Ash  v.  Aldrich,  67  N.  H.  Co.,  17  Mont.  61;  42  Pac.  109; 

581;  39  Atl.  442.  6  Mygatt  v.  Tarbell,  78  Wis.  351; 

3  Norton  v.  Davison    (1899),  1  Q.  47   N.  W.  618. 

B.  401 ;  Galbraith  v.  Holmes,  15  Ind.  7  Bates  v.  Wiggin,  37  Kan.  44 ;   1 

App.  34;   43  N.  E.  575;   Gorman  v.  Am.    St.    Rep.    234;    14    Pac.    442; 

Brossard,  120  Mich.  611;  79  N.  W.  Sparks  v.  Wilson,  22  Neb.  112;  34= 

903;  Brabin  v.  Hyde,  32  N.  Y.  519;  N.  W.  111. 
Milos  V.  Covacevich,  40  Or.  239;  66 


1022  PAGE    ON    CONTEACTS. 

the  statute.^  A  clause  in  the  original  contract  of  sale  provid- 
ing for  a  rescission  of  the  contract  npon  the  happening  of  some 
event,  the  original  vendor  agreeing  to  take  back  the  goods  and 
refund  the  purchase-money,  is  not  a  sale  within  this  section." 
A  subsequent  rescission  of  an  executed  contract  of  sale  has  been 
held  not  to  be  a  sale.  Thus  where  A  sold  and  delivered  1x)  a 
firm  of  which  he  was  a  member,  goods  for  which  he  was  not 
paid,  a  subsequent  oral  contract  of  rescission  as  part  of  the 
contract  of  dissolution  was  held  not  within  the  statute.^"  If, 
instead  of  a  contract  for  rescission,  the  agreement  is  one  for 
a  re-sale-  it  is  of  course  within  the  statute.^^ 

Executory  contracts  of  sale,  in  which  the  title  is  not  to  pass 
till  some  future  time,  were  held  by  the  early  English  authori- 
ties not  to  be  within  the  statute.^"  This  view  has  been  aban- 
doned in  England^^  and  has  never  been  entertained  in  the 
United  States.  The  statute  is  held  here  to  include  executory 
contracts  of  sale  as  well  as  executed  contracts.^* 

§681,     Contract  for  work  and  labor. 

If  the  contract  is  essentially  one  for  work  and  labor,  and 
the  title  to  personalty  is  not  to  pass  as  a  result  thereof,  it  is  not 
within  the  statute.  Thus  a  contract  for  publishing  an  ad- 
vertisement,^ or  a  contract  to  pay  a  commission  to  an  agent  for 
selling  personal  property,  the  amount  to  depend  upon  the  price 
obtained,^  are  not  within  the  statute.     This  principle  applies 

8  Phelps  V.  Hendrick,  105  Mass.  sary  in  deciding  these  cases,  since 
106.  they   may  be   as   well  explained  by 

9  Williams  v.  Burgess,  10  Ad.  &  E.  treating  them  as  contracts  for  work 
499;   Hilliard  v.  Weeks,    173  Mass.  and  labor.     See  §  681. 

304;    53    N.    E.    818;    Johnston    v.  i3  Rondeau  v.  Wyatt,  2  H.  Bl.  63. 

Trask,   116   N.  Y.   136;    15  Am.  St.  i*  Weeks  v.  Crie,  94  Me.  458;   80 

Rep.  394;  5  L.  R.  A.  630;  22  N.  E.  Am.  St.  Rep.  410;  48  Atl.  107;  Gil- 

377;  Fay  v.  Wheeler,  44  Vt.  292.  man  v.  Hill,  36  N.  H.  311;  Carman 

10  Dickinson  V.  Dickinson,  29  Conn.  v.  Smick,  15  N.  J.  L.  252;  Ide  v. 
600.  Stanton.   15  Vt.   685;   40   Am.  Dec. 

11  Boardman  v.  Cutter,  128  Mass.  698. 

388.  iGoodland  v.   Le   Clair,    78   Wis. 

12  Alexander  v.  Comber,  1  H.  Bl.      176;  47  N.  W.  268. 

20;    Clayton    v.    Andrews,    4    Burr.  2  Hamilton    v.     Frothingham,     59 

2101.     This  principle  was  not  neces-      Mich.  253;  26  N".  W.  486. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.   1023 

where  A  agrees  with  B  to  buy  goods  from  X  and  to  divide  them 
with  B  on  being  compensated  therefor;  but  the  courts  are  not 
harmonious  in  the  results  reached.  If  the  contract  is  held  to 
be  essentially  one  of  agency,  in  which  A  acts  as  B's  agent,  it  is 
not  within  the  statute,^  but  if  it  is  in  effect  a  contract  by 
A  to  buy  and  resell  to  B,  it  is  within  the  statute.* 

§682.     Contract  of  sale  distinguished  from  contract  for  work  and 
labor. 

It  is  often  difficult  to  determine  whether  a  contract  is  one 
for  the  sale  of  a  chattel  and  so  within  the  statute  of  frauds, 
or  for  work  and  labor,  and  so  not  within  the  statute.  The  courts 
do  not  agree  as  to  the  test  for  distinguishing  these  two  classes 
of  contracts.  The  following  tests,  different  in  form  though 
not  always  differing  in  practical  results,  are  the  chief  of  those 
adopted  by  the  courts:  (1)  According  to  some  authorities  if 
the  goods  to  be  delivered  are  not  in  existence,  but  are  to  be  man- 
ufactured thereafter,  the  contract  is  not  within  the  statute.^ 
(2)  In  some  states  it  is  held  that  if  any  work  must  be  performed 
upon  the  chattel  sold  before  delivery,  to  put  it  in  a  condition 
different  from  what  it  was  when  the  contract  of  sale  was  made, 
the  contract  is  not  a  contract  of  sale.^  So  a  contract  to  cut 
lumber  and  to  deliver  it,  is  not  within  the  statute  under  this 
theory.^  By  statute  in  some  states,  if  "  labor,  skill  or  money, 
are  necessarily  to  be  expended  in  producing  or  procuring  "  the 
chattel  to  be  delivered,  the  contract  is  not  one  of  sale.  As 
construed,  this  statute  applies  only  where  special  skill  or  labor 
is  necessary.     Hence  a  sale  of  growing  grain,  to  be  harvested 


3  Hatch  V.  McBrien,  83  Mich.  159;  lard,  65  N.  Y.  352;   Crookshank  v. 
47  N.  W.  214.  Burrell,    18   Johns.    (N.   Y.)    58;    9 

4  Mace  V.  Heath,  30  Neb.  620;  46  Am.  Dec.  187. 

N.  W.  918.  sRentch    v.    Long,    27    :\Id.    188; 

1  Warren    Chemical,    etc.,    Co.    v.  Eichelberger  v.  McCaiiley,  5  Harr.  & 

Holbrook,  118  N.  Y.  586;  16  Am.  St.  J.   (Md.)  213;  9  Am.  Dec.  514. 
Rep.  788 ;  23  N.  E.  908 ;  Higgins  v.  3  Bagby  v.  Walker,  78  Md.  239 ;  27 

Murray,  73  N.  Y.  252;  Cooke  v.  Mil-  Atl.  1033. 


1024 


PAGE    ON    CONTRACTS. 


and  threshed  by  vendor/  or  a  sale  of  corn,  to  be  shelled  and 
corn  unfit  for  shelling  to  be  thrown  out/  or  a  sale  of  corn  to 
be  sorted  and  put  in  bags/  are  all  sales  of  chattels  within  such 
statute.  (3)  Another  test  applied  by  some  courts  is  this:  if, 
by  the  contract  the  vendor  is  to  perform  certain  work  person- 
ally, the  contract  is  not  one  of  sale,^  but  if  he  can  perform 
the  contract  by  procuring  the  property  to  be  delivered  by  him 
from  such  source  as  he  pleases,  the  contract  is  one  of  sale.' 
(4)  A  still  different  test  is  the  following:  if  the  goods  are  to 
be  manufactured  upon  a  special  order  and  of  a  particular  de- 
sign, the  contract  is  not  one  of  sale/  while,  if  the  goods  to  be 
manufactured  are  such  as  are  manufactured  in  the  ordinary 
course  of  the  manufacturer's  business,  and  are  marketable,  the 
contract  is  one  of  sale.^"  A  contract  to  manufacture  an  article 
"  to  order  and  as  a  thing  distinguished  from  the  general  busi- 
ness of  the  maker  "  is  said  not  to  be  a  sale.^^  Thus  a  contract 
o  manufacture  iron-work  for  a  building,^"  or  stone-work,^^  or 


■*Mighell  V.  Dougherty,  86  la. 
«be;  41  Am.  St.  Rep.  511;  17  L.  R. 
A.  755;  53  N.  W.  402. 

5  Lewis  V.  Evans,  108  la.  296;  79 
N.  W.  81.  (Citing  Downs  v.  Ross, 
23  W.md.  (N.  Y.)  270;  Hardell  v. 
McClu^e,  1  Chand.  (Wis.)  271; 
Brown  v.  Sanborn,  21  Minn.  402.) 

6  Dieri^on  v.  Petersmeyer,  109  la. 
233;  80  N.  W.  389. 

7  A  co.ntraet  for  the  sale  of  pota- 
toes to  be  raised  in  the  future.  Pit- 
kin V.  Noyes,  48  N.  H.  294;  2  Am. 
Rep.  218;  97  Am.  Dec.  615.  Contra, 
Forsyth  v.  Mann,  68  Vt.  116;  32  L. 
R.  A.  788;  34  Atl.  481. 

sPrescott  v.  Locke,  51  N.  H.  94; 
12  Am.  Rep.  55. 

9  Goddard  v.  Binney,  115  Mass. 
450;  15  Am.  Rep.  112;  Brown,  etc., 
Co,  V.  Wunder,  64  Minn.  450;  32  L. 
R.  A.  593;  67  X.  W.  357;  Hientz  v. 
Burkhard,  29  Or.  55;  55  Am.  St. 
Rep.  777;  31  L.  R.  A.  508;  43  Pac. 
866;  Puget  Sound  Machinery  Depot 
V.  Rigby,  13  Wash.  264;  43  Pac.  39; 


Goss  V.  Heekert,  —  Wis.  — ;  97  N. 
W.  952. 

10  Pratt  V.  Miller,  109  Mo.  78;  .32 
Am.  St.  Rep.  656;  18  S.  W.  965; 
Williams-Hayward  Shoe  Co.  v. 
Brooks,  9  Wyom.  424;  64  Pac.  342. 
See  for  other  cases  recognizing  this 
test  Flynn  v.  Dougherty.  91  Cal. 
669;  14  L.  R.  A.  230;  27  Pac.  1080; 
Atwater  v.  Hough,  29  Conn.  508;  79 
Am.  Dec.  229;  Lewis  v.  Evans,  108 
la.  296;  79  N.  W.  81;  Abbott  v. 
Gilchrist,  38  Me.  260 ;  Mixer  v.  How- 
arth,  2fl  Pick.  (Mass.)  205;  32  Am, 
Dec.  256;   Lamb  v.  Crafts,   12  Met. 

(Mass.)  353;  Gardner  v.  Joy,  9  Met. 

(Mass.)  177;  Meincke  v.  Talk,  55 
Wis.  427;  42  Am.  Rep.  722;  13 
N.  W.  545. 

11  Finney  v.  Apgar,  31  N.  J.  L. 
266.   270. 

12  Hientz  v.  Burkhard,  29  Or.  55; 
54  Am.  St.  Rep.  777;  31  L.  R.  A. 
508;    43   Pac.   866. 

"Flynn  v.  Dougherty,  91  Cal. 
669;  14  L.  R.  A.  230;  27  Pac.  1080. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITIN^G.    1025 

a  contract  to  manufacture  and  erect  a  monument/*  or  to  manu- 
facture lumber  of  special  sizes,  as  for  a  narrow-gauge  railroad,^^ 
or  to  manufacture  hoe-shanks  according  to  a  pattern  to  be  fur- 
nished by  the  party  ordering  them,^''  or  to  furnish  and  erect 
certain  "  patent  portable  houses,"^^  are  each  held  not  to  be 
contracts  for  the  sale  of  goods  with  the  statute  of  frauds.  On 
the  other  hand,  a  contract  to  deliver  shoes  to  be  made  to  order, 
but  of  a  kind  suitable  for  the  general  trade,^^  is  a  sale  within 
the  meaning  of  the  statute.  Where  this  distinction  obtains 
a  contract  for  an  article  to  be  made  on  special  order,  which 
will  not  be  marketable  when  made,  is  not  a  sale  of  goods,  though 
the  manufacturer  purchases  most  of  the  different  parts  of  the 
article  and  puts  them  together.^*  Where  A  agrees  with  B  to 
order  certain  goods  from  X,  to  be  made  to  order  by  him  and 
delivered  to  A,  who  is  to  deliver  them  to  B,  some  courts  hold 
that  the  contract  between  A  and  B  is  a  sale,""  while  others 
hold  that  it  is  not."  (5)  The  test  finally  adopted  in  England 
is  that  the  intention  of  the  parties  controls,  and  if  they  intend 
the  contract  primarily  to  result  in  transferring  the  title  of  a 
chattel  from  one  person  to  another,  the  contract  is  one  of  sale, 
no  matter  by  whom  or  how  the  chattel  is  to  be  produced.  Thus 
in  the  leading  case  adopting  this  test,^^  A  made  to  order  for 
B,  two  sets  of  false  teeth  to  fit  B's  mouth.  The  contract  was 
held  to  be  a  sale,  though  clearly  the  teeth  were  not  marketable. 


14  Forsyth  v.  Mann,  68  Vt.  116;  v.  Rigby,  13  Wash.  2G4;  43  Pac.  39. 
82  L.  R.  A.  788;  34  Atl.  481;  Fox  20  Smalley  v.  Hamblin,  170  Mass. 
V.  Utter,  6  Wash.  299;   33  Pac.  354.  380;  49  K  E.  626.     This  view  was 

15  Orman  v.  Hager,  3  N.  M.  568 ;  taken  on  the  principle  of  Pitkin  v. 
9  Pac.  363.  Noyes,  48  N,   H.  294;   2   Am.  Rep. 

16  Eight  V.  Ripley,  19  Me.  137.  218;  97  Am.  Dec.  615,  that  the  per- 

17  Phipps  V.  McFarlane,  3  Minn.  sonal  services  of  the  adversary  party 
109 ;  74  Am,  Dec.  743.  were  not  contracted  for ;  but  on  the 

18  Pratt  V.  Miller,  109  Mo.  78;  32  contrary,  the  work  could  be  done  by 
Am.   St.   Rep.   656;    18   S.   W.   965;  another. 

Williams  -  Hayward     Shoe     Co.     v.  21  Bird  v.  Muhlinbrink,  1  Rich.  L. 

Brooks,  9  Wyom.  424;  64  Pac.  342.  (S.  C.)   199;  44  Am.  Dec.  247. 

19  Puget  Sound  Machinery  Depot  22  Lee  v.  Griffin,  1  B.  &  S.  272. 


65 


1026  PAGE    ON    CONTKACTS. 

g683.     Contract  to  improve  realty. 

A  contract  to  attach  property  to  realty  and  to  furnish  laLor 
for  so  doing  is  held  not  a  contract  for  the  sale  of  goods.  Thus, 
contracts  to  erect  a  building/  a  monument,^  a  bridge/  or  attach- 
ing stoking  apparatus  to  boiler/  or  setting  up  a  steam-heating 
apparatus  in  a  factory/  are  none  of  them  contracts  of  sale. 
This  rule  may  be  referred  to  the  principle  already  given/ 
that  if  an  article  is  to  be  made  upon  a  special  order  and  of  a  par- 
ticular design,  the  contract  is  not  within  the  statute. 

§684.     Meaning   of   "goods,    wares    and   merchandise." — Incor- 
poreal personalty. 

Whether  the  term  "  goods,  wares  and  merchandise  "  includes 
incorporeal  personalty  which  passes  by  assignment  or  by  deliv- 
ery of  a  written  evidence  thereof,  such  as  notes,  drafts,  checks, 
bonds,  stocks  and  the  like,  is  a  question  on  which  there  has 
always  been  a  conflict.  The  English  courts  finally  held  that 
such  forms  of  property  were  incapable  of  delivery  and  hence 
not  within  this  section  of  the  statute,^  and  this  view  has  been  fol- 
lowed in  some  jurisdictions  in  the  United  States.  Thus  sub- 
scriptions to  stock  in  a  corporation,^  or  a  sale  of  an  interest  in  a 
partnership,^  or  a  contract  to  sell  a  promissory  note,*  are  none  of 
them  within  the  statute.  In  other  jurisdictions  incorporeal 
personalty  is  classed  with   "  goods,  wares  and  merchandise." 

1  Flynn  V.  Dougherty,  91  Cal.  669 ;  25  R.  I.  548;  56  Atl.  1033. 
14    L.    R.    A.    230;    27    Pac.    1080;  6  See  §  682, 

Brown,  etc.,  Co.  v.  Wiinder,  64  Minn.  i  Humble  v.  Mitchell,  11  Ad.  &  E. 

4.50;    32    L.   R.   A.    593;    67    N.    W.  205.- 

357 ;  Scales  v.  Wiley,  68  Vt.  39 ;  33  2  Rogers   v.    Burr,    105    Ga.    432 ; 

Atl.  771.  70  Am.  St.  Rep.  50;   31  S.  E.  438; 

2  Forsyth  v.  Mann,  68  Vt.  116;  Des  Moines  Savings  Bank  v.  Hotel 
32  L.  R.  A.  788;  34  Atl.  481;  Fox  Co.,  88  la.  4;  55  N.  W.  67;  Webb 
V.  Utter,  6  Wash.  299;  33  Pac.  v.  Ry.,  77  Md.  92;  39  Am.  St.  Rep. 
3.54.  396;  26  Atl.  113. 

3  McDonald  V.  Webster's  Estate,  71  3  Sherley  v.  Sherley,  97  Ky.  512; 
Vt.  392;  45  Atl.  89.5.  31    S.    W.    275;    Vincent  v.   Vieths, 

4  Underfeed  Stoker  Co.  v.  Salt  Co.  60  Mo.  App.  9. 

—  Mich.—  ;  97  N.  W.  950.  4  Vawter  v.  Griffin,  40  Ind.  593. 

5  Putnam,    etc.,    Co.    v.    Canfield, 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1027 

Thus  a  contract  to  sell  a  bond  and  mortgage,^  promissory  notes,® 
or  stock/  or  a  chose  in  action  which  the  assignor  is  to  put  in 
judgment/  are  each  within  the  statute.  A  contract  to  resign 
an  office  is  not  a  contract  for  the  sale  of  goods,  wares  and  mer- 
chandise.^ If  the  statute  of  frauds  specifically  includes  "  things 
in  action  "  incorporeal  personalty  is  thereby  included.  Thus 
ah  option  to  buy  another  option  for  the  purchase  of  stock,^*'  or  a 
contract  to  sell  stock,^^  or  land  scrip/-  are  each  within  the 
statute.  Even  where  contracts  for  the  sale  of  incorporeal  per- 
sonal property  in  general  is  held  to  be  within  the  statute,  a  con- 
tract for  the  transfer  of  an  interest  in  a  patent-right  is  not 
within  the  statute,^''  nor  is  a  contract  to  share  the  profits  and 
losses  arising  out  of  the  sale  of  stock  theretofore  owned  by  one 
of  the  parties.^* 

VIII.     Methods  of  Satisfying  the  Fourth  Section  of  the 
Statute  of  Frauds. 

§685.     When  memorandum  must  be  made. 

The  fourth  section  of  the  statute  of  frauds  provides  that  no 
action  shall  be  brought  upon  contracts  of  the  classes  therein 
enumerated  unless  the  agreement  or  some  note  or  memorandum 
thereof  shall  be  in  writing  and  signed  by  the  party  to  be  charged 
therewith  or  by  some  other  person  thereunto  by  him  lawfully 
authorized.  The  seventeenth  section  has  a  similar  provision, 
coupled  with  alternative  provisions  to  be  discussed  hereafter.^ 
We  will  first  consider  the  form  and  nature  of  the  memorandum 


5  Greenwood  v.  Law,  55  N.  J.  L.  lo  Walker  v.  Bamberger,   17  Utah 
168;  19  L.  R.  A.  688;  26  Atl.  134.  2.39;  54  Pac.  108. 

6  Gooch   V.   Holmes,   41    Me.   523 ;  n  Tompkins  v.  Sheehan,  158  N.  Y. 
Baldwin  V.  Williams,  3  Met.  (Mass.)  617;   53  N.  E.  502. 

365.  12  Smith  v.  Bouck,  33  Wis.   19. 

7  North  V.  Forest,   15  Conn.  400;  is  Cook  v.   Electric  Co.,   118   Fed. 
Mann  V.  Bishop.  136  Mass.  495.  45;    Somerby  v.   Buntin,    118   Mass. 

s  French  v.  Schoonmaker.  69  N.  J.  279 ;    19    Am.   Rep.   459. 

L.  6;  54  Atl.  225.  i*  Bnllard    v.    Smith,    139    Mass. 

sColton    V.    Raymond,    114    Fed.  492:  2  N.  E.  86. 

863 ;  52  C.  C.  A.  382.  i  See  §  705  et  seq. 


1028 


PAGE    ON    CONTKACTS. 


required  by  the  fourth  and  the  seventeenth  sections.  It  is  clear 
that  the  statute  does  not  require  the  contract  to  be  in  writing. 
It  is  sufficient  if  any  note  or  memorandum  thereof  is  in  writing 
in  the  form  specified."  The  note  or  memorandum  need  not  be 
made  at  the  time  that  the  oral  contract  is  entered  into.  It  may 
be  made  before  the  contract  is  entered  into.  Thus  a  written 
offer  signed  by  the  party  to  be  charged,  setting  out  the  terms  of 
the  contract  and  subsequently  accepted  orally  by  the  adversary 
party  is  a  sufficient  memorandum.^ 

It  may  be  made  subsequently  up  to  the  time  that  the  action  is 
brought.*  Thus  letters  written  after  the  contract  is  made,^ 
even  though  at  a  long  interval  of  time,"  or  even  after  the  breach 


2  Ingrahara  v.  Strong,  41  111.  App. 
46.  "  The  memorandum  and  the  con- 
tract or  agreement  are  not  to  be 
confounded  as  one  and  the  same 
thing.  The  memorandum  is  under- 
stood to  be  a  note  or  minute,  in- 
formally made,  of  the  agreement 
which  may  have  but  a  verbal  exist- 
ence expressing  briefly  the  essential 
terms  and  never  intended  to  stand 
as  and  for  the  agreement  itself." 
Catterlin  v.  Bush,  39  Or.  496,  501 ; 
65  Pac.  1064;  59  Pac.  706. 

3  Bibb  V.  Allen,  149  U.  S.  481; 
Brewer  v.  Horst-Lachmund  Co.,  127 
Cal.  643;  50  L.  R.  A.  240;  60  Pac. 
418;  Western  Union  Telegraph  Co. 
v.  R.  R.,  86  111.  246;  29  Am.  Rep. 
28;  Austin  v.  Davis,  128  Ind.  472; 
25  Am.  St.  Rep.  456;  12  L.  R.  A. 
120;  26  N.  E.  890;  Williams  v. 
Smith,  161  Mass.  248;  37  N.  E. 
455;  Sanborn  v.  Flagler,  9  All. 
(Mass.)  474;  Hiekey  v.  Dole,  66 
N.  H.  336;  49  Am.  St.  Rep.  614;  29 
Atl.  792;  Thayer  v.  Luce,  22  0.  S. 
62. 

*  Dominick  v.  Randolph,  124  Ala. 
557;  27  So.  481;  Lamkin  v.  Mfg. 
Co.,  72  Conn.  57;  44  L.  R.  A.  786; 
43  Atl.  593,  1042;  Whiton  v.  Whit- 
on,  179  111.  32;  53  X.  E.  722;  affirm- 


ing 76  111.  App.  553;  Miller  v.  R.  R., 
58  Kan.  189;  48  Pac.  853;  Tyler  v. 
Onzts,  93  Ky.  331;  20  S.  W.  256; 
Bird  v.  Munroe,  66  Me.  337;  22 
Am.  Rep.  571;  McManus  v.  Boston, 
171  Mass.  152;  50  N.  E.  607;  Mer- 
son  V.  Merson,  101  Mich.  55;  59  N. 
W.  441;  Sheehy  v.  Fulton,  38  Neb. 
691;  41  Am.  St.  Rep.  767;  57  N.  W. 
395 ;  Gardels  v.  Kloke,  36  Neb.  493 ; 
54  N.  W.  834 ;  Curtis  v.  Portsmouth, 
67  N.  H.  506;  39  Atl.  439;  Argus 
Co.  V.  Albany,  55  N.  Y.  495;  14 
Am.  Rep.  296;  Townsend  v.  Ken- 
nedy, 6  S.  D.  47;  60  N.  W.  164;  Ide 
V.  Stanton,  15  Vt.  685;  40  Am.  Dec. 
698;  Newport  News,  etc.,  Co.  v.  Ry. 
Co.,  97  Va.  19;  32  S.  E.  789;  Prig- 
non  V.  Daussat,  4  Wash.  199;  31 
Am.  St.  Rep.  914;  29  Pac.  1046. 

5  Bayne  v.  Wiggins,  139  U.  S. 
210;  Pitcher  v.  Lowe,  95  Ga.  423; 
22  S.  E.  678;  Lyons  v.  Wait,  51  N. 
J.  Eq.  60 ;  sub  nom.,  Lyons  v.  Pyatt, 
26  Atl.  334;  Townsend  v.  Kennedy, 
6  S.  D.  47;  60  N.  W.  164;  Ide  v. 
Stanton,  15  Vt.  685;  40  Am.  Dec. 
698. 

6  Lee  v.  Butler,  167  Mass.  426; 
57  Am.  St.  Rep.  466;  46  N.  E.  52  j 
Newkirk  v.  Place,  47  N.  J.  Eq.  477  j 
21  Atl.  124. 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1029 

of  the  contract  if  before  suit  thereon/  may  be  such  memoranda 
as  will  satisfy  the  statute.  A  memorandum  is  said,  however, 
not  to  have  a  retroactive  effect  as  far  as  the  rights  of  third  per- 
sons are  concerned.^  A  subsequent  reduction  to  writing  of  an 
oral  contract  in  consideration  of  marriage  has  been  held  invalid.' 

A  written  contract  executed  after  the  verbal  contract  is  a  suf- 
ficient compliance  with  the  statute,  even  though  there  is  no  new 
consideration  for  the  written  contract.^** 

It  has  been  said  that  the  memorandum  must  at  least  be  made 
before  action  is  brought  upon  the  contract  and  cannot  be  made 
afterwards."  The  correctness  of  this  view  may  be  doubted 
both  on  principle  and  on  authority.  If  the  statute  of  frauds  is 
a  rule  of  evidence  there  seems  no  good  reason  why  the  evidence 
should  be  limited  to  that  in  existence  at  the  time  of  commencing 
the  action.  Written  declarations  against  the  interest  of  the 
party  making  them  may  be  admitted  in  proper  cases,  even 
though  made  after  the  action  has  begun^  and  there  seems  to  be 
no  good  reason  why  a  different  rule  should  obtain  in  cases  con- 
trolled by  the  statute.  Accordingly  memoranda  made  after  the 
action  has  begun  have  been  held  sufficient  in  some  jurisdictions 
to  satisfy  the  statute.^^  Thus  a  sheriff's  return  made  after  the 
jury  was  impanelled  was  held  sufficient.^^  So  where  the  ven- 
dor files  an  answer  admitting  the  oral  contract  and  stating  that 
he  is  willing  to  perform  it,  such  answer  is  a  sufficient  memo- 
randum.^* However,  a  pleading  which  sets  up  an  oral  contract 
but  seeks  to  avoid  it  because  it  is  oral,  is  not  a  memorandum 
within  the  meaning  of  the  statute.^^ 

7  Bird    V.    Munroe,    66    Me.    337;  n  Gaines  v.  McAdam,  79  111.  App. 

22  Am.  Eep.  571.  201. 

sFelthouse  v.   Bindley,    11    C.   B.  12  Walker  v.  Walker   (Ky.),  55  S. 

(N.  S.)  869;  Bird  v.  Munroe,  66  Me.  W.  726. 

337;    22   Am.   Rep.   571;    Emery   v.  i3  Remington     v.     Linthicum,     14 

Terminal    Co.,    178    Mass.    172;    86  Pet.  (U.S.)   84. 

Am.  St.  Rep.  473;  59  N.  E.  763.  i*  Walker  v.  Walker   (Ky.),  55  S. 

9  McAnnulty    v.    McAnnulty.    120  W.  726 ;   and  see  Sanders  v.  Bryer, 

111.  26;  60  Am.  Rep.  552;   11  N.  E.  152  Mass.  141;  9  L.  R.  A.  255;   25 

397.  N.  E.  86. 

loSheehy  v.  Fulton,  38  Neb.  691;  is  Davis     v.      Ross      (Tenn.      Ch. 

41  Am.  St.  Rep.  767;   57  N.  W.  395.  App.).  50  S.  W.  650. 


1030 


PAGE    ON    CONTRACTS. 


§686.     "Undelivered  instrument  as  memorandum. 

If  A  and  B  enter  into  an  oral  contract  within  the  statute  of 
frauds,  and  A  subsequently  makes  and  signs  a  written  mem- 
orandum of  such  contract,  which  memorandum  is  not  delivered 
but  is  retained  by  him  in  his  own  custody,  the  weight  of  author- 
ity holds  that  such  memorandum  is  not  a  compliance  with  the 
statute.^  Some  of  the  courts  have  been  very  positive  in  stating 
the  uniform  application  of  this  rule."  Thus  a  deed  not  deliv- 
ered,^ or  delivered  only  in  escrow,*  or  a  deed  repudiated  by  the 
vendee  and  destroyed  by  his  consent,^  or  a  mortgage,"  or  lease,'^ 
not  delivered,  are  none  of  them  sufficient  memoranda. 

In  other  jurisdictions  a  Avritten  undelivered  memorandum  has 
been  held  sufficient.®     In  such  jurisdictions  a  deed,  though  de- 


iDay  V.  Lacasse,  85  Me.  242;  27 
Atl.  124;  Merriam  v,  Leonard,  6 
Cush.  (Mass.)  151;  Sanborn  v.  San- 
born, 7  Gray  (Mass.)  142;  Grant  v. 
Levan,  4  Pa.  St.  393 ;  Nichols  v.  Op- 
perman,  6  Wash.  618;  34  Pac.  162. 

2  "  We  have  been  able  to  find  no 
case  in  which  a  writing  signed  by 
a  party  and  kept  in  his  possession 
without  a  delivery  has  been  held 
to  be  a  compliance  with  the  stat- 
ute." Johnson  v.  Brook,  31  Miss. 
17;  66  Am.  Dec.  547;  quoted  in  Steel 
V.  Fife,  48  la.  99;  30  Am.  Rep.  388. 
"We  have  made  a  pretty  thorough 
search  but  have  been  unable  to  find 
any  case  which  sustains  the  position 
that  an  undelivered  deed  may  be 
treated  as  a  memorandum  in  writ- 
ing." Wier  V.  Batdorf,  24  Neb.  83, 
89;  38  N.  W.  22.  "To  make  it 
operative  it  must  have  been  exe- 
cuted and  delivered  to  the  plaintiff's, 
or  to  some  one  in  their  behalf." 
Parker  v.  Parker,  1  Gray  (Mass.) 
409,  411.  "  It  is  essential  that  the 
writing  required  by  the  statute  be 
delivered."  Nichols  v.  Opperman.  6 
Wash.  618;  34  Pac.  162. 


3  Lodgsdon  v.  Newton,  54  la.  448 ; 
6  N.  W.  740;  Morrow  v.  Moore,  98 
Me.  373;  57  Atl.  81;  Parker  v. 
Parker,  1  Gray  (Mass.)  409;  Comer 
V.  Baldwin,  16  Minn.  172;  Schneider 
V.  Vogler  (Neb.),  97  N.  W.  1018; 
Wier  V.  Batdorf,  24  Neb.  83;  38  N. 
W.  22;  Brown  v.  Brown,  33  N.  J. 
Eq.  650;  Wilson  v.  Winters,  108 
Tenn.  398;  67  S.  W.  800. 

4Kopp  V.  Reiter,  146  111.  437; 
37  Am.  St.  Rep.  156;  22  L.  R.  A. 
273;  34  N.  E.  942;  Day  v.  Lacasse, 
85  Me.  242;  27  Atl.  124;  Cogger  v. 
Lansing,  43  N.  Y.  550;  Nichols  v. 
Opperman,  6  Wash.  618;  34  Pac. 
162;  Popp  V.  Swanke,  68  Wis.  364; 
31  N.  W.  916. 

5  Sullivan  v.  O'Neal,  66  Tex.  433 ; 
1  S.  W.  185. 

6  Merriam  v.  Leonard,  6  Cush. 
(Mass.)     151. 

7  Chesebrough  v.  Pingree,  72  Mich. 
438 ;  1  L.  R.  A.  529 ;  40  N.  W.  747. 

8  Johnson  v.  Dodgson,  2  Mees.  & 
W.  653;  Drury  v.  Young.  58  Md. 
546;  42  Am.  Rep.  343;  Hovekamp 
V.  Elshoff,  3  Ohio  N.  P.  158. 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1031 

livered  in  escrow,"  or  though  not  delivered  at  all/°  is  a  sufficient 
memorandum.  An  undelivered  deed  has  been  treated  as  at 
least  an  admission  of  some  contract  to  convey.^^  In  some  of  the 
cases  often  cited  on  this  point,  the  court  either  expressly  avoids 
deciding  the  question,^"  or  decides  it  in  obiter."  If  the  parties 
have  entered  into  a  contract  a  memorandum  of  which  has  been 
delivered,  an  undelivered  deed  may  be  read  in  connection  with 
such  memorandum  to  show  the  terms  of  the  contract.^* 

Several  questions,  involved  in  these  cases,  are  not  always  sep- 
arated in  discussion.  First  is  the  question  whether  the  deed  is 
so  delivered  as  to  constitute  full  performance  on  the  part  of  the 
vendor.^^  If  full  performance  is  had,  it  makes  no  difference 
whether  the  deed  is  a  sufficient  memorandum  or  not.^®  If  the 
deed  is  not  delivered  so  as  to  constitute  full  performance,  the 
question  of  its  sufficiency  as  a  memorandum  becomes  important. 
Such  a  deed  may  not  be  sufficient  as  a  memorandum  because  it 
is  not  delivered.  It  may  also  be  insufficient  because  it  does  not 
set  forth  the  terms  of  the  contract.^^  Both  these  objections  may 
exist  at  once,  as  where  the  deed  is  not  delivered  at  all,^^  or  is  de- 
livered in  escrow.^"  In  most  of  the  adjudicated  cases,  however, 
holding  that  the  deed  is  not  a  sufficient  memorandum  the  court 
has  discussed  one  or  the  other  of  these  objections  exclusively. 

9  Grid  V.  Lomax,  89  Ala.  420;  6  of  the  existence  of  the  memorandum 
So.   741.  delivered. 

10  Jenkins    v.    Harrison,    66    Ala.  is  See  §  714  e*  seg. 
345;  Work  v.  Cowhick,  81  111.  317;  le  See  §  713  e*  seq. 

Bowles  V.  Woodson,  6  Gratt.    (Va.)  i?  Swain  v.  Burnette,  89  Cal,  564; 

78.  26   Pac.   1093;   Kopp  v.  Reiter,   146 

"Hart  V.  Carroll,  85  Pa.  St.  508;  HI.  437;   37  Am.   St.  Rep.   156;   22 

McGibbony  v.  Burmaster,  53  Pa.  •St.  L.  R,  A.  273 ;   34  N.  E.  942 ;   Over- 

332.  man  v.  Kerr,  17  la.  485;   Parker  v. 

12  Steel  V.  Fife,  48  la.  99;  30  Am.  Parker,  1  Gray  (Mass.)  409;  Ducett 
Rep.   388.  X.   Wolf,   81    Mich.   311;    45   N.   W. 

13  Remington  v.  Linthicum,  14  829;  Cagger  v.  Lansing,  43  N.  Y. 
Pet.  (U.  S.)  84;  Harman  v.  Har-  550;  Campbell  v.  Thomas,  42  Wis. 
man,  70  Fed.  894;  17  C.  C.  A.  479.  437;  24  Am.  Rep.  427. 

14  Thayer  v.  Luce,  22  0.  S.  62;  ap-  is  Swain  v.  Burnette,  89  Cal.  564; 
proved  but  distinguished  in  Wier  v.  26  Pac.   1093. 

Batdorf,  24  Neb.  83;   38  N.  W.  22;  i9  Kopp   v.    Reiter,    146    111.   437; 

and  Nichols  v.  Opperman,  6  Wash.      37  Am.   St.  Rep.   156;   22  L.  R.  A. 
618;    34   Pac.    162;    on    the    ground      273;   34  N.  E.  942. 


1032  PAGE    ON    CONTKACTS. 

A  will  lias  been  held  to  be  a  sufficient  memorandum,  though,  of 
course,  ^not  delivered.^**  Where  such  an  instrument  contem- 
plates immediate  possession  of  certain  realty  bv  the  promisee 
and  his  support  of  testatrix  for  her  life,  the  contract  is  valid  as  a 
memorandum,  though  the  propriety  of  calling  it  a  will  may  be 
doubted."^  If  a  will  is  not  held  to  be  a  sufficient  memorandum, 
it  is  so  held  because  it  does  not  express  the  terms  of  the  con- 
tracts^ IvTo  objection  seems  to  be  made  to  corporate  records  as 
memoranda,  on  the  ground  that  they  are  not  delivered.^' 
Where  insufficient  as  memoranda  it  is  generally  because  they  do 
not  disclose  a  contract,  but  merely  an  intention  to  make  one  in 
the  future.  So  a  resolution  to  sell  its  property,  adopted  by  a 
corporation,  is  insufficient  as  a  memorandum  of  a  contract  of 
sale  made  in  pursuance  of  such  resolution."* 

§687.     Form  of  memoranduin. 

If  the  memorandum  sets  forth  the  requisite  facts,  and  is  in 
writing  and  duly  signed,  its  form  is  immaterial,^  A  memoran- 
dum showing  all  the  terms  of  the  contract  is  sufficient,  although 
the  parties  intended  to  execute  a  formally  drafted  contract  there- 
after.- If  the  terms  of  the  contract  under  which  they  are  exe- 
cuted are  sufficiently  set  forth  therein,  a  deed,^  a  will,*  a  re- 


20Whiton  V.  Whiton,  179  111.  32;  65  Am.  Dec.  661;  Hurley  v.  Brown, 

53  X.  E.  722;  affirming  76  111.  App.  98    Mass.    545;    96    Am.    Dec.    671; 

553.      (An  obiter,  as  the  contract  to  Singleton   v.   Hill,    91    Wis.   51;    51 

bequeath   personalty  solely.)      Brin-  Am.  St.  Rep.  868;  64  X.  W.  588. 

ker  V.  Brinker,  7  Pa.  St.  53.  2  Gray  v.  Smith,  L.  R.  43  Ch.  D. 

21  Smith  V.  Tuit,  127  Pa.  St.  341 ;  208. 

14  Am.  St.  Rep.  851;  17  Atl.  995.  3  Folmar  v.  Carlisle,  117  Ala.  449; 

22Champlin  v.  Champlin,  136  111.  23  So.  551.      (In  this  case  the  deed 

309;  29  Am.  St.  Rep.  323;  26  X.  E.  and  note   given  therefor   were   read 

526;   Hale  v.  Hale,  90  Va.  728;    19  together.)      Johnston    v.    Jones,    85 

S.  E.  739.  Ala.    286;    4    So.    748;    Prignon    v. 

23  See  §  687.  Da^ussat,   4  Wash.   199 ;   31   Am.  St. 

24  Cumberland,    etc.,    Ry.    v.    Ry.  Rep.  914;  29  Pac.  1046.      (The  deed 
—  Ky. — ;  77  S.  W.  690.  recited  that  it  was  given  in  consid- 

1  California  Canneries  Co.  v.  Sea-  eration  of  the  promise  of  the  grantee 

tena,    117    Cal.    447;    49    Pac.    462;  to  marry  the  grantor.) 

McConnell  v.  Brillhart,  17  111.  354;  4  Shroyer   v.    Smith,    204    Pa.    St. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1033 

ceipt,^  an  assignment,*'  or  a  note/  as  a  bought  and  sold  note/  or 
a  draft/  or  a  sheriff's  return,"  is  a  sufficient  memorandum. 
A  letter,^^  or  a  telegram,^^  addressed  to  the  adversary  party ;  or 
a  letter  written  and  signed  by  the  party  to  the  contract  to  be 
charged  therewith,  addressed  not  to  the  adversary  party  to  the 
contract,  but  to  another  person,  may  be  a  sufficient  memoran- 
dum.^^ The  records  of  a  corporation  if  signed  properly  by  an 
agent  of  the  corporation  and  setting  forth  the  terms  of  a  con- 
tract sufficiently  may  be  a  sufficient  memorandum.^*  Exam- 
ples of  this  principle  are  found  in  the  records  of  a  council  of  a 
public  corporation,^^  in  the  resolutions  of  a  bridge  committee," 
or  the  records  of  the  board  of  directors  of  a  private  corporation, 
duly  signed  by  the  proper  officers,^^  as  by  the  president  and  the 


310;  54  Atl.  24.  (Devising  realty 
to  the  same  person  to  whom  it  had 
already  been  conveyed  by  parol.) 

5  Tyler  v.  Onzts,  93  Ky.  331;  20 
S.  W.  256;  Merson  v.  Merson,  101 
Mich.  55;  59  N.  W.  441;  Gardels  v. 
Kloke,  36  Neb.  493 ;  54  N.  VV.  834. 

eMcClintock  v.  Oil  Co.,  146  Pa. 
St.  144;  23  Atl.  211. 

7  Reynolds  v.  Kirk,  105  Ala.  446; 
17  So.  95. 

8  Bibb  V;  Allen,  149  U.  S.  481. 
sNeaves  v.  Mining  Co.,  90  N.  C. 

412;  47  Am.  Rep.  529. 

10  Remington  v.  Linthiciim,  14 
Pet.  (U.  S.)  84;  Elfe  v.  Gadsden,  2 
Rich.  Law.  (S.  C.)  373. 

11  Mizell  v.  Bennett,  4  Jones  L. 
(N.  C.)  249;  69  Am.  Dec.  744;  Gulf, 

etc.,  Ry.  V.  Settegast,  79  Tex.  256; 
15  S.  W.  228. 

12  North  V.  Mendel,  73  Ga.  400;  54 
Am.  Rep.  879. 

13  Miller  v.  R.  R.,  58.  Kan.  189; 
48  Pae.  853;  Cunningham  v.  Wil- 
liams, 43  Mo.  App.  629;  Peay  v. 
Seigler,  48  S.  C.  496;  59  Am.  St. 
Rep.  731;   26   S.  E.  885;   Singleton 


v.   Hill,    91    Wis.    51;    51    Am.    St. 
Rep.  868;   64  N.  W.  588. 

14  Greenville  v.  Waterworks  Co., 
125  Ala.  625;  27  So.  764;  Lamkin 
V.  Mfg.  Co.,  72  Conn.  57;  44  L.  R. 
A.  786;  43  Atl.  593,  1042;  Grimes 
V.  Hamilton  Co.,  37  la.  290;  Mc- 
Manus  v.  Boston,  171  Mass.  152;  50 
N.  E.  607 ;  Argus  Co.  v,  Albany,  55 
N.  Y.  495;  14  Am.  Rep.  296;  Mar- 
den  V.  Champlin,  17  R.  I.  423;  22 
Atl.  938. 

15  Greenville  v.  Waterworks  Co., 
125  Ala.  625;  27  So.  764;  Chase  v. 
Lowell,  7  Gray  (Mass.)  33;  Curtis 
V.  Portsmouth,  67  N.  H.  506;  39 
Atl.  439;  Argus  Co.  v.  Albany,  55 
N.  Y.  495 ;  14  Am.  Rep.  296 ;  Mar- 
den  V.  Champlin,  17  R.  I.  423;  22 
Atl.  938. 

!<■>  Rollins  Investment  Co.  v. 
George.  48  Fed.  776. 

17  Jones  V.  Victoria,  etc.,  Co.,  L. 
R.  2  Q.  B.  D.  314;  Lamkin  v.  Mfg. 
Co.,  72  Conn.  57;  44  L.  R.  A.  786; 
43  Atl.  593,  1042;  Tufts  v.  Ply- 
mouth, etc.,  Co.,  14  All.  (Mass.) 
407. 


1034 


PAGE    ON    CONTKACTS. 


secretary.^®  A  pleading  of  fact,  such  as  a  bill  in  equity/^  or  an 
answer,""  may  set  np  the  contract  so  as  to  constitute  a  suf- 
ficient memorandum  thereof.  A  deposition  which  one  party  to 
an  action  on  an  oral  contract  is  comj>elled  to  give  at  the  instance 
of  the  adversary  party  is  not  a  memorandum  of  the  contract 
though  in  writing  and  signed  by  such  jDarty."^ 

§688.     Memorandum  consisting  of  several  writings. 

The  written  contract  or  memorandum  required  by  the  statute 
does  not  necessarily  consist  of  one  writing  alone.  It  may  as 
well  consist  of  two  or  more  writings.^  If  the  offer  is  made  in  one 
instrument  and  accept-ance  is  made  in  another  the  two  instru- 
ments may  be  considered  together."  A  letter  written  by  one 
party  to  the  other  and  an  answer  thereto  by  such  other  may 
constitute  a  sufficient  memorandum,  if  signed  by  the  respective 
party,  and  showing  on  their  face  that  they  refer  to  the  same 
transaction,  the  terms  of  which  are  sufficiently  set  forth.^     Thus 


18  Newport  News,  etc.,  Co.  v.  Ey. 
Co.,  97  Va.  19;  32  S,  E.  789;  Cen- 
tral Land  Co.  v.  Johnston,  95  Va, 
223;  28  S.  E.  175. 

19  Sanders    v.    Bryer,    152    Mass. 
141;  9  L.  R.  A.  255;  25  N.  E.  86 
Peevey  v.  Haughton,  72  Miss.  9J8 
48  Am.   St.  Eep.   592;    18   So.   357 
17   So.   378.     Except   when  the   bill 
seeks  to  avoid  the   contract  on  the 
ground  of  the  statute  of  frauds.   Da- 
vis V.   Ross    (Tenn.    Ch.   App.),    50 
S.   W.  650. 

zoGough  V.  Williamson,  62  N.  J. 
Eq.  526;  50  Atl.  323;  Peay  v.  Seig- 
ler,  48  S.  C.  490;  59  Am.  St.  Rep. 
731;  26  S.  E.  885.  Provided  such 
answer  does  not  plead  the  statute 
as  a  defense. 

21  Cash  V.  Clark,  61  Mo.  App.  636. 

iStrouse  v.  Elting,  110  Ala.  132; 
20  So.  123;  Turner  v.  Lorillard  Co., 
100  Ga.  645;  62  Am.  St.  Rep.  345; 
28  S.  E.  383;  McBrayer  v.  Cohen, 
92  Ky.  479;  18  S.  \Y.  123;  Freeland 


v.  Ritz,  154  Mass.  257;  26  Am.  St. 
Rep.  244;  12  L.  R.  A.  561;  28  N.  E. 
226;  Olson  v.  Sharpless,  53  Minn. 
91;  55  N.  W.  125;  Atlantic  Phos- 
phate Co.  V.  Sullivan,  34  S.  C.  301; 
13  S.  E.  539;  Anderson  v.  Mfg.  Co., 
30  Wash.  147;   70  Pae.  247. 

2Gerli  v.  Mfg.  Co.,  57  N.  J.  L. 
432;  51  Am,  St.  Rep.  611;  30  L. 
R.  A.  61;   31  Atl.  401. 

3  Cooper  v.  Gas  Co.,  127  Fed.  482; 
Drovers'  National  Bank  v.  Baiolc,  44 
Fed.  183;  Alford  v.  Wilson,  20  F«d. 
06;  Thames  Loan  and  Trust  Co-  v. 
Beville,  100  Ind.  309 ;  Wills  v.  Ross. 
77  Ind.  1;  40  Am.  Rep.  279;  Austin 
v.  Davis,  128  Ind.  472;  25  Am.  St. 
Rep.  456;  12  L.  R.  A.  120;  20  N.  E. 
890:  Surface  v.  Leffingwell,  6  Kan. 
App.  319;  51  Pac.  73;  Williams  v. 
Smith,  161  Mass.  248;  37  N.  E.  455; 
Corning  v.  Loomis,  111  Mich.  23; 
69  N.  W.  85;  Fowler  Elevator  Co. 
v.  Cottrell,  38  Neb.  512;  57  N.  W. 
19;   Hickey  v.  Dole,  66  N.  H.  336  n 


CONTRACTS    WHICH    MUST    BE    TKOVED    BY    WEITING.     1035 

an  order  sent  by  A  on  a  blank  form  furnished  by  B,  showing 
in  detail  the  goods  ordered  by  A  from  B,  and  a  letter  from  B  to 
A  acknowledging  the  receipt  of  the  order  and  promising  to  ship 
at  once,  make  a  sufficient  memorandum.*  The  same  i-ule  ap- 
plies to  letters  and  telegrams/  or  to  telegrams  interchanged  be- 
tween the  parties,''  whereby  an  agreement  is  reached.  So  a  ref- 
erence in  a  memorandum  to  a  deed/  or  to  a  decree  of  a  court  and 
to  tax  deeds  and  receipts/  or  to  notes  executed  by  a  third  per- 
son/ may  be  sufficient  to  incorporate  such  document  in  the  mem-  • 
orandum  and  thereby  to  supply  deficiencies  in  the  latter.  Ex- 
press reference  from  one  instrument  to  another  is  not  necessary 
if  the  two  instruments  show  on  their  face  that  they  refer  to  the 
same  transaction.^"  So  a  memorandum  and  a  receipt/^  or  a 
power  of  attorney  and  a  contract  executed  thereunder/^  or  book 
entries  and  checks/^  or  letters  and  a  subsequent  deed/*  or  a 
written  lease  signed  by  lessor  and  a  subsequent  written  accejDt- 


49  Am.  St.  Rep.  614;  31  Atl,  900; 
Peay  v.  Seigler,  48  S.  C.  496;  59 
Am.  St.  Rep.  731;  26  S.  E.  885; 
Kearby  v.  Hopkins,  14  Tex.  Civ. 
App.  106;  36  S.  W.  506;  Shrews- 
bury V.  Tufts,  41  W.  Va.  212;  23 
S.  E.  692;  Singleton  v.  Hill,  91  Wis. 
61;  51  Am.  St.  Rep.  868;  64  N.  W. 
588. 

4  Wilkinson  v.  Mfg.  Co.,  67  Miss. 
231;  7  So.  356. 

5  Stevenson  v.  McLean,  L.  R.  5  Q. 
B.  Div.  346;  Bibb  v.  Allen,  149  U.  S. 
481 ;  Ryan  v.  United  States,  136  U. 
S.  68;  Kleinhans  v.  Jones,  68  Fed. 
742 ;  15  C.  C.  A.  644 ;  Elbert  v.  Gas 
Co.,  97  Cal.  244 ;  32  Pac.  9 ;  Crystal, 
etc.,  Co.  V.  Butterfield,  15  Colo.  App. 
246;  61  Pac.  479;  Smith  v.  Easton, 
54  Md.  138;  39  Am.  Rep.  355;  Swal- 
low V.  Strong,  83  Minn.  87;  85  N. 
W.  942;  Trevor  v.  Wood,  36  N.  Y. 
307;  93  Am.  Dec.  511;  Eckert  v. 
Schoch,  155  Pa.  St.  530;  26  Atl. 
654;  Watson  v.  Baker,  71  Tex.  739; 


9  S.  W.  867;  Underwood  v.  Stack, 
15  Wash.  497;  46  Pac.  1031. 

6  Utley  v.  Donaldson,  94  U.  S.  29 ; 
Brewer  v.  Horst-Lachmund  Co.,  127 
Cal.  643;  50  L.  R.  A.  240;  60  Pac. 
418;  Gaines  v.  McAdam,  79  111.  App. 
201.    ■ 

"  Hibbard  v.  Storage-Battery  Co., 
174  Mass.  296;  54  N.  E.  658. 

sEverman  v.  Herndon  (Miss.), 
11  So.  652. 

0  Rowell  v.  Dunwoodie,  69  Vt. 
Ill;  37  Atl.  227. 

10  White  V.  Breen,  106  Ala.  159; 
32  L.  R.  A.  127;  19  So.  59. 

11  Oliver  v.  Hunting,  L.  R.  44  Ch. 
D.  205;  Peay  v.  Seigler,  48  S.  C. 
496;  59  Am.  St.  Rep.  731;  26  S.  E. 
885. 

12  White  V.  Breen.  106  Ala.  159; 
32  L.  R.  A.  127;.  19  So.  59. 

13  Baldwin  v.  Trowbridge,  62  N.  J. 
Eq.  468;    50  Atl.  494. 

14  Leonard  v.  Woodruff,  23  Utah 
494;  65  Pac.  199. 


1036  PAGE    ON    CONTKACTS. 

ance  signed  by  the  lessee/^  or  a  letter,  a  telegram,  and  a  deed,^^ 
or  a  memorandum  and  a  pleading/^  may  show  on  their  face  that 
thej  refer  to  the  same  transaction,  and  hence  may  be  read  to- 
gether. So  a  petition  describing  the  route  of  a  sewer,  a  resolu- 
tion of  the  city  council,  and  a  bond,  may  show  that  they  refer  to 
a  common  subject  matter,  and  be  read  together/^  It  is  not 
necessary  that  all  the  writings  which  constitute  the  memoran- 
dum should  be  signed  by  the  party  to  be  charged  therewith.  If 
one  writing  signed  by  such  party  so  refers  to  another  writing, 
which  is  either  unsigned,  or  signed  by  some  other  party,  as  to 
connect  the  two,  they  may  be  read  as  one  memorandum.^®  Thus 
a  reference  in  a  signed  memorandum  to  an  unsigned  contract,"" 
or  to  a  lease  to  be  executed  thereafter,^^  or  a  reference  in  an 
order  of  the  court  binding  on  the  county  to  a  bid  made  by  a 
contractor  and  signed  by  him  alone,""  may  connect  such  other 
instrument  with  the  memorandum.  So  a  letter  signed  by  a 
vendee,  and  declining  to  perform  the  contract  set  forth  in  an 
unsigned  memorandum,  may  be  read  in  connection  with  such 
unsigned  memorandum  to  prove  such  contract.'^  Physical  con- 
nection of  the  signed  memorandum  with  the  instrument  to  which 
it  refers  may  establish  a  connection  in  meaning.  Thus  an  in- 
dorsement of  assignment  on  the  back  of  a  deed,^*  or  a  stock  cer- 
tificate,"^ may  be  sufficient  to  supplement  deficiencies  of  the 
assignment    in    description.     So  ^the    deficiencies    of    a    lease 

15  Woodruff  V.  Butler,  75  Conn.  20  Swallow  v.  Strong,  83  Minn. 
679;   55  Atl.   167.  87;  85  N.  W.  942. 

16  Underwood  v.  Stack,  15  Wash.  21  Freeland  v.  Ritz,  154  Mass.  257  ; 
497;   46  Pac.  1031.  26  Am.  St.  Rep.  244;    12  L.  R.  A. 

17  Sanders  v.  Bryer,  152  Mass.  561;  28  N.  E.  226.  (If  in  fact  ex- 
141;  9  L.  R.  A.  255;  25  N.  E.  86.  eeuted  before  the  action  is  brought.) 

18  Stevens  v.  Muskegon,  111  Mich.  22  Bryson  v.  Johnson  County.  100 
72;  36  L.  R.  A.  777:  67  N.  W.  227.  Mo.  76*;   13  S.  W.  2.39. 

19  See  the  cases  cited  §  1115.  Wil-  23  Louisville  Asphalt  Varnish  Co. 
kinson  v.  Mfg.  Co.,  67  Miss.  231 ;  7  v.  Lorick,  29  S.  C.  533 ;  2  L.  R.  A. 
So.  356;  Fowler  Elevator  Co.  v.  Cot-  212;   8  S.  E.  8. 

trell,    38   Neb.   512;    57   N.   W.    19;  24  Tunstall    v.    Cobb,    109    N.    C. 

Newton  v.  Bronson,   13  N.  Y.  587;       316;  14  S.  E.  28. 

67  Am.  Dee.  89.  25  Flowers    v.    Steiner,    108    Ala. 

440;  19  So.  321. 


CONTEACTS    WHICH    MUST    BE    PEOVED    BY    WEITING.    1037 

may  be  supplied  from  an  annexed  contract.^®  So  signing  a 
bond,  attached  to  the  contract  for  the  performance  of  which  it 
is  executed  may  be  equivalent  to  signing  the  contract."^  While 
physical  connection  is  helpful,  it  is  not  of  itself  sufficient  to  es- 
tablish connection  in  meaning.  Thus  a  receipt  for  part  pay- 
ment on  a  lot,  the  description  of  which  is  not  given,  is  insuf- 
ficient though  on  the  back  of  the  receipt  is  indorsed  "  The  lot 
No.  14  Eakin  avenue."^^  Since  the  memorandum  cannot  be  in 
part  oral,  however,  it  is  necessary  to  constitute  a  sufficient  mem- 
orandum that  the  several  writings  should,  either  by  express  ref- 
erence or  by  reference  to  the  same  subject  matter,  show  on  their 
face  their  connection  one  with  the  other.  If  oral  evidence  is 
necessary  to  connect  them,  they  cannot  be  read  together  as  one 
memorandum  or  contract  under  the  statute.'^  So  where  the 
reference  in  the  signed  memorandum  describes  an  instrument 
different  from  the  unsigned  instrument  offered  in  evidence  to 
supplement  the  signed  memorandum,  oral  evidence  is  inad- 
missible to  contradict  the  reference  and  to  show  that  the  un- 
signed instrument  offered  was  the  one  intended  by  the  parties. 
Thus  where  the  signed  memorandum  referred  to  specifications 
"  signed  by  the  parties,"  oral  evidence  could  not  be  received  to 
show  that  certain  unsigned  specifications  were  intended.^*' 

26  Thomas   v.    Drennen,    112    Ala.  835;   25  Pac.  570;   Kingsley  v.  Sie- 

670;  20  So.  848.      (In  this  case  the  brecht,  92  Me.  23;  69  Am.  St.  Rep. 

contract  was  written  on  one  side  of  486;    42   Atl.   249;    Third   National 

the  paper;   the  lease  on  the  other.)  Bank   v.    Stell,    129   Mich.   434;    88 

27Busch  V.  Hart,  62  Ark.  330;  35  N.  W.   1050;   Swallow  v.  Strong,  83 

S.  W.  534.  Minn.  87;  85  N.  W.  942;  Nibert  v. 

28Wilstach  V.  Heyd,  122  Ind.  574;  Baghurst,  47  N.  J.  Eq.  201;  20  Atl. 

23  N.   E.  963.  252;   Johnson  v.  Buck,  35  N.  J.  L. 

29  Coombs  V.  Wilkes  (1891),  3  Ch.  338;  Ward  v.  Hasbrouck,  169  N.  Y. 

77;   Potter  v.   Peters,   64   L.  J.  Ch.  407;   62  N.  E.  434;   Falls  of  Neuse 

N.  S.  357;  Strong  v.  Bent,  31  N.  S.  Mfg.    Co.   v.    Hendricks,    106   N.   C. 

1;    Duff   V.   Hopkins,    33   Fed.   599;  485;  11  S.  E.  568;  Moore  v.  Powell, 

Alba  V.  Strong,  94  Ala.  163;   10  So.  6  Tex.  Civ.  App.  43;  25  S.  W.  472; 

242;    Devine   v.    Warner,    76    Conn.  Darling  v.    Cuniming.   92   Va.    521; 

229;   56  Atl.  562;   Turner  v.  Loril-  23  S.  E.  880. 

lard  Co.,  100  Ga.  645;  62  Am.  St.  so  Donnelly    v.    Adams.    115    Cal. 

Rep.    345;    28    S.    E.    383;    Ross   v.  129;  46  Pac.  916. 
Allen,   45    Kan.   231;    10   L.   R.    A. 


1038  PAGE    ON    CONTRACTS. 

§689.     Necessity  and  form  of  signature. 

Under  the  statute  of  frauds  a  written  contract  or  a  note  or 
memorandum  thereof  is  of  no  validity  unless  it  is  signed  by  the 
party  to  be  charged  therewith  or  by  some  one  authorized  by 
him.^  Hence  a  memorandum  in  a  judgment  entry  showing  an 
oral  agreement  of  the  parties  in  open  court  for  the  sale  of  land 
is  insufficient."  So  if  the  statute  provides  that  a  lease  not 
signed  has  only  the  force  of  a  lease  at  will,  an  unsigned  lease, 
prepared  by  one  party  but  not  signed  by  him,  in  insufficient.^ 
The  fonn  of  the  signature  is  unimportant.  While  the  signature 
consists  in  most  cases  of  the  name  of  the  party  written  by  him- 
self, it  may  be  a  valid  signature  without  any  of  these  elements. 
It  may  consist  of  an  abbreviation,*  if  intended  as  a  means  of 
authenticating  the  instrument.  It  may  be  printed  instead  of 
written  if  intended  as  an  authentication.^  Thus  a  name  printed 
in  a  letter  head  under  which  a  contract  was  written  has  been  held 
to  be  a  sufficient  signature.^  So  is  a  name  printed  on  the  cover 
of  an  order  book  in  which  the  memorandum  is  w^ntten.^  Unless, 
however,  the  party  whose  name  is  printed  upon  the  contract 
writes  the  contract  upon  such  printed  paper  or  authorizes  it  to  be 
written,  intending  to  adopt  the  printing  as  his  signature  to  such 
contract,  the  signature  is  not  sufficient  under  the  statute.®  The 
name  of  the  vendor  stamped  on  the  luemorandum,  no  evidence 
being  offered  to  show  how  it  came  there,  will  not  be  assumed  to 

1  Robinson  v.  Driver,  132  Ala.  *  Such  as  initials.  Salmon  Falls 
169;  SI  So.  495;  Ross  v.  Allen,  45  Mfg.  Co.  v.  Goddard,  14  How.  (U. 
Kan.  231;   10  L.  R.  A.  835;  25  Pac.      S.)    446. 

570;  Hazard  V.  Day,  14  All.  (Mass.)  5  Name  printed   and   also  written 

487;   92  Am.  Dec.   790;   McElroy  v.  in    body    of    instrument.     Anderson 

Seery,    61    Md.    389;    48    Am.    Rep.  v.  Mfg.  Co.,  30  Wash.  147;   70  Pac. 

110;  Taft  V.  Dimond,  16  R.  I.  584;  247. 

18  Atl.  183.  eDrury   v.    Young,    58   Md.    546; 

2  Robinson  v.  Driver,  132  Ala.  42  Am.  Rep.  343.  So  with  a  name 
169;  31  So.  495.  Contra,  that  this  printed  on  a  bill-head.  Schneider  v. 
is  a  contract  of  record  to  which  the  Norris,  2  M.  &  S.  286. 

statute    of   frauds    does    not    apply.  ^  .Jones  v.  Joyner,  82  L.  T.  768. 

See  §  5.54.  8  Hucklesby  v.  Hook    (1900).   W. 

3  Charlton  v.  Real  Estate  Co.,  64  N.  45. 
N.  J.  Eq.  631 ;  54  Atl.  444. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1039 

be  his  signature.''     Under  special  circumstances  a  signature  by 
mark  has  been  held  to  be  insufficient.^" 


§690.     Place  pf  signature. 

The  original  statute  required  the  contract  note  or  memoran- 
dum to  be  "  signed."     Where  the  statute  is  so  worded,  the  name 
of  the  party  may  appear  at  any  part  of  the  instrument  if  placed 
there  with  the  intention  of  authenticating  it.^     Thus  it  may  ap- 
pear at  the  top,"  or  as  the  address  of  the  letter  constituting  the 
contract,  when  written  by  the  agent  of  the  addressee,^  or  in  the 
body  of  the  memorandum.*     A  signature  across  the  face  of  a 
written  memorandum  which  covers  one  whole  side  of  the  paper 
and  so  leaves  no  room  for  a  signature  at  the  bottom  has  been 
held  sufficient.^     The  name  of  a  party  in  the  body  of  a  mem- 
orandum in  which  there  are  no  apt  words  to  charge  him  is  not  a 
sufficient  signature  though  the  entire  contract  is  in  his  hand- 
writing.*'    If  the  statute  requires  the  memorandum  to  be  "  sub- 
scribed "  a  different  rule  obtains.     By  derivation  "  subscribe  " 
implies  "  writing  beneath  "  and  accordingly  the  signature  must 
be  substantially  at  the  end  of  the  memorandum.^     If  the  agree- 
ment or  memorandum  is  drawn  in  duplicate  and  each  of  the 

»  Boardman    v.    Spooner,    13    All.  4  Swim  v.  Amos,  33  N.  B.  49 ;  New 

(Mass.)   353;  90  Am,  Dec.  196.  England,   etc.,   Co.   v.   Worsted   Co., 

10  Hubert  v.  Moreau,  2  Car.  &  P.  165  Mass.  328;  52  Am.  St.  Rep.  516; 

528;    Carlisle   v.   Campbell,   76  Ala.  43  N.  E.  112;  Hawkins  v.  Chace,  19 

247.  Pick.    (Mass.)     502;    Coddington   v. 

1  Johnson  v.  Dodgson,  2  M.  &  W.  Goddard,  16  Gray(  Mass.)  436;  Mer- 
653;  New  England,  etc.,  Co.  V.  Wors-  ritt  v.  Clason,  12  Johns.  (N.  Y.) 
ted  Co.,  165  Mass.  328;  52  Am.  St.  102;  7  Am.  Dec.  286;  Clason  v. 
Rep.  516;  43  N.  E.  112;  Merritt  v.  Bailey,  14  Johns.  (N.  Y.)  484;  Ting- 
Clason,  12  Johns.  (N.  Y.)  102;  7  ley  v.  Boom  Co.,  5  Wash.  644;  32 
Am.  Dec.  286;  Tingley  v.  Boom  Co.,  Pac.  737;  33  Pac.  1055. 

5  Wash.  644 ;   32  Pac.  737 ;  33  Pac.  5  California  Canneries  Co.  v.  Sca- 

1055.  tena,  117  Cal.  447;  49  Pac.  462. 

2  Schneider  v.  Norris,  2  M.  &  S.  ^  Guthrie    v.    Anderson,    49    Kan. 
286;   Drury  v.  Young,  58  Md.  546;  416;    30   Pac.   459;    affirmed   on   re- 
42  Am.  Rep.  343 ;  Anderson  v.  Mfg.  hearing,  47  Kan.  383 ;  28  Pac.  164. 
Co.,  30  Wash.  147;  70  Pac.  247.                    7  James  v.  Patten,  6  N.  Y.  9;  55 

3  Evans    v.    Hoare    (1892),    1    Q.  Am.  Dec.  376. 
B.  593. 


1040 


PAGE    ON    CONTRACTS. 


parties  to  the  contract  signs  one  copy  and  delivers  it  to  the  other, 
the  contract  has  the  same  effect  as  if  both  had  signed  the  same 
copy.^ 

§691.    By  which  party  memorandum  must  he  signed. 

The  statute  does  not  require  the  contract,  note  or  memoran- 
dum to  be  signed  by  both  parties  but  only  by  the  party  to  be 
charged  therewith.  This  is  usually  the  defendant  in  an  actiou 
to  enforce  the  contract;  though  it  may  be  the  plaintiff  if  the 
defendant  sets  up  the  contract  either  as  a  defense  or  as  a  ground 
for  affirmative  relief.  Accordingly  a  contract,  note  or  memoran- 
dum is  sufficient  if  signed  by  the  party  to  be  charged  therewith 
though  not  signed  by  the  party  seeking  to  enforce  it.^  Thus  a 
memorandum  of  a  contract  to  convey  land,  sig-ned  by  the  vendor- 


8  Morris  v.  McKee,  96  Ga.  611;  24 
S.  E.  142;  Bray  v.  Irrigation  Co., 
4  Ida.  685;   44  Pac.  432. 

1  Bloom  V.  Hazzard,  104  Cal.  310; 
37  Pac.  1037;  Martin  v.  Ede,  103 
Cal.  157;  37  Pac.  199;  Cavanaugh  v. 
Casselman,  88  Cal.  543;  26  Pac. 
515;  Hodges  v.  Kowing,  58  Conn. 
12;  7  L.  R.  A.  87;  18  Atl.  979; 
Black  V.  Maddox,  104  Ga.  157;  30 
S.  E.  723;  Gradle  v.  Warner,  140 
111.  123;  29  N.  E.  1118;  Perkins 
V.  Hadsell,  50  111.  216;  Raphael  v. 
Hartman,  87  111.  App.  634;  Burke 
V.  Mead,  159  Ind.  252;  64  N.  E. 
880;  Lloyd  v.  O'Rear  (Ky.),  59  S. 
W.  483 ;  Broassard  v.  Verret,  43  La. 
Ann.  929;  9  So.  905;  Hunter  v.  Gid- 
dings,  97  Mass.  41;  93  Am.  Dec.  54; 
Old  Colony  R.  R.  v.  Evans,  6  Gray 
(Mass.)  25;  66  Am.  Dec.  394;  Bow- 
ers V.  Whitney,  88  Minn.  168;  92 
N.  W.  540;  Western  Land  Associa- 
tion V.  Banks,  80  Minn.  317;  83 
N.  W.  192;  Kessler  v.  Smith.  42 
Minn.  494;  44  N.  W.  794;  Atkinson 
V.  ^\^litney,  67  Miss.  655 ;  7  So.  644 ; 
Marqueze  v.  Caldwell,  48  Miss.  23; 


Mastin  v.  Grimes,  88  Mo.  478; 
Black  V.  Crowther,  74  Mo.  App. 
480;  Cunningham  v.  Williams,  43 
Mo.  App.  629;  Ballou  v.  Sherwood, 
32  Neb.  666 ;  49  N.  W.  790 ;  50  N.  W. 
1131;"  Gartrell  v.  Stafford,  12  Neb. 
545;  41  Am.  Rep.  767;  Sabre  v. 
Smith,  62  N.  H.  663;  Thayer  v.. 
Luce,  22  O.  S.  62;  Brodhead  v. 
Reinbold,  200  Pa.  St.  618;  86  Am. 
St.  Rep.  735;  50  Atl.  229;  Witman 
V.  Reading,  191  Pa.  St.  134;  43  Atl. 
140;  McPherson  v.  Fargo,  10  S.  D. 
611;  65  Am.  St.  Rep.  723;  74  N.  W. 
1057;  Merchants'  Coal  Co.  v.  Bill- 
meyer,  —  W.  Va.  — ;  46  S.  E.  121. 
2  Ross  V.  Parks,  93  Ala.  153; 
30  Am.  St.  Rep.  47;  11  L.  R.  A. 
148;  8  So.  368;  Black  v.  Maddox, 
104  Ga.  157;  30  S.  E.  723;  Western 
Land  Association  v.  Bank,  80  Minn. 
317;  83  N.  W.  192;  Gardels  v. 
Kloke,  36  Neb.  493;  54  N.  W.  834; 
Sylvester  v.  Born,  132  Pa.  St.  467; 
19  Atl.  337;  Monogah,  etc..  Co.  v. 
Fleming,  42  W.  Va.  538;  26  S.  E. 
201. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1041 

alone,  or  to  devise  realty,  signed  by  the  promisor,^  or  a 
lease,  signed  by  the  lessor  only  and  accepted  by  the  lessee,*  may 
be  enforced  by  the  promisee. 

On  the  other  hand,  a  memorandum  signed  by  a  lessee,^  or  by 
a  vendee,^  renders  the  contract  enforceable  against  the  party 
signing  it  at  the  instance  of  the  adversary  party  though  he  did 
not  sign  it.  So  a  contract  for  the  sale  of  chattels  within  the 
statute,  signed  by  the  buyer  alone,  who  is  sought  to  be  charged 
may  be  enforced  by  the  seller.'^  However,  there  must  be  evi- 
dence of  acceptance  by  the  party  who  does  not  sign.^  This  is 
merely  a  general  principle  of  contract  law.^ 

There  is  a  conflict  of  authority  on  this  point,  however,  and 
some  cases  hold  that  unless  both  sign,  neither  is  bound/"  This 
seems  to  be  adding  by  judicial  legislation  to  the  plain  require- 
ments of  the  statute.  It  is  a  view  most  commonly  expressed  by 
such  courts  of  equity  as  hold  that  in  order  to  have  specific  per- 
formance, there  must  be  mutuality  of  remedy  as  well  as  mutual- 
ity of  obligation."  Even  where  the  view  last  expressed  obtains, 
it  is  held  that  if  the  party  who  does  not  sign,  accepts  and  acts 
imder  the  written  memorandum,  tlio  party  who  signs  is  bound. ^^ 
This  view,  of  course,  prevails  where  it  is  held  that  only  the  party 
to  be  charged  need  sign.  There  are,  however,  jurisdictions 
where  it  is  held  that  an  oral  acceptance  is  insufficient  unless  the 


3  Howe  V.  Watson,  179  Mass.  30;  9  See  §  41. 

60  N.  E.  415.  loSykes   v.    Dixon,    9    Ad.   &    El. 

4  Carnegie  Natural  Gas  Co.  v.  693;  Krohn  v.  Bantz,  68  Ind.  277; 
Philadelphia  Co.,  158  Pa.  St.  317;  Wilkinson  v.  Heavenrich,  58  Mich. 
27  Atl.  951.  574;  55  Am.  Rep.  708;  26  N.  W.  139. 

5  Lagerfelt  v.  McKie,  100  Ala.  (A  case  which  observes  that  the  con- 
430;  14  So.  281  (a  lease  of  realty);  flict  of  authority  on  this  point  is 
Singer  Mfg.  Co.  v.  Converse,  23  Colo.  "  truly  bewildering.") 

247;  47  Pae.  264   (a  lease  of  a  sew-  n  See  §  1615  et  seq. 

ing  machine).  12  Ross  v.  Parks.  93  Ala.   153;   30 

6  Hodges  V.  Kowing,  58  Conn.  12;  Am.  St.  Rep.  47:  11  L.  R.  A.  148; 
7  L.  R.  A.  87;   18  Atl.  979.  8    So.    368;    Harriman    v.    Tyndale, 

7Kessler  v.  Smith,  42  Minn.  494;  184  Mass.  534;  69  N.  E.  353;   Mull 

44  N.  W.  794.  v.   Smith,  —  Mich.  — ;   94  N.   W. 

8  Castro   v.   Gaffey,   96   Cal.   421;  183. 
31  Pac.  363. 

66 


1042  PAGE    ON"    COIS'TRACTS. 

party  who  accepts  pays  money  or  otherwise  alters  his  position  in 
performance  of  such  contract.^" 

A  written  contract  or  memorandum  thereof  within  the  statute 
signed  by  one  party  only  cannot  be  enforced  against  the  adver- 
sary party/'*  So  a  contract  signed  by  one  co-tenant  cannot  be 
enforced  against  the  other/"  nor  can  a  contract  signed  by  a  part- 
nership in  the  firm  name  be  enforced  against  one  who  subse- 
quently becomes  a  member  of  such  partnership  and  accepts  such 
contract  orally/*^  It  has  been  held  that  a  contract  for  the  sale 
of  realty  cannot  be  enforced  against  a  vendee  who  has  not 
signed,  even  if  he  has  gone  into  possession  under  such  contract/^ 

Some  statutes  require  the  memorandum  to  be  signed  by  the 
party  by  whom  the  sale  is  made.  Under  such  statutes,  a  con- 
tract of  sale  sigiied  by  the  vendor  only  may  be  enforced  either 
against  him,^*  or  against  the  vendee/''  Some  statutes  specifically 
provide  that  both  parties  must  sign.  Under  such  a  statute  sig- 
natures of  a  written  contract  by  one  and  oral  acceptance  by  the 
other  is  insufficient.^*' 

§692.     Authority  of  agent  to  sign. —  Form  of  authority. 

The  statute  allows  the  signature  to  be  made  "  by  the  party  to 
be  charged  therewith  or  some  other  person  thereunto  by  him 
lawfully  authorized."  Under  this  wording,  the  contract,  note 
or    memorandum    may    be    signed    by    an    authorized    agent. ^ 

13  Warden  v.  Williams,  62  Mich.  is  Hughes  v.  Gross,  166  Mass.  61; 
50;  4  Am.  St.  Rep.  814;  28  N.  W.  55  Am.  St.  Rep.  375;  32  L.  R.  A. 
796.  620;  43  N.  E.  1031. 

14  Guthrie  v.  Anderson,  47  Kan.  i7  Love  v.  Atkinson,  131  N.  C. 
383;    28   Pac.    164;    Ross   v.    Allen,  544;  42  S.  E.  966. 

45  Kan.  231;   10  L.  R.  A.  835;   25  is  Wall  v.  Rv.,  86  Wis.  48;  56  N. 

Pac.    570;     Brown    v.    Snider,     126  W.   367. 

Mich.  198;  85  K  W.  570;  Yeager  is  Ide  v.  Leiser,  10  Mont.  5;  24 
V.  Kelsey,  46  Minn.  402;  49  N.  W.  Am.  St.  Rep.  17;  24  Pac.  695;  Gar- 
199;  Zanderson  V.  Sullivan,  91  Tex.  trell  v.  Stafford,  12  Neb.  545;  41 
499;  44  S.  W.  484;  affirming  (Tex.  Am.  Rep.  767;  11  N.  W.  732;  Hutch- 
Civ.  App.),  42  S.  W.  1027.  inson  v.  Ry.,  37  Wis.  582. 

15  Zanderson  v.  Sullivan.  91  Tex.  20  Spence  v.  Apley  (Neb.).  94  N. 
499:  44  S.  W.  484;   affirming    (Tex.  W.  109. 

Civ.  App.),   42   S.   W.   1027.  1  New  England,  etc.,  Co.  v.  Wors- 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1043 

Whether  the  authority  of  the  agent  who  signs  the  memorandum 
provided  for  by  statute  on  behalf  of  his  principal,  must  be  in 
writing  and  signed  hy  the  principal  in  order  to  bind  such  prin- 
cipal, is  a  question  which  turns  entirely  on  the  wording  of  the 
particular  statute.  If  the  statute  does  not  prescribe  what  form 
of  authority  is  necessary,  any  form  sufficient  at  common  law 
will  be  sufficient  under  the  statute.  Accordingly  if  the  statute 
provides  that  the  memorandum  is  to  be  signed  by  the  principal 
or  by  his  agent  thereunto  "  lawfully  authorized,"  such  authority 
need  not  be  in  writing,"  as  the  statute  Avhen  thus  worded  does 
not  attempt  to  prescribe  the  form  of  the  agent's  authority ;  Com- 
mon Law  rules  apply ;  and  any  form  of  parol  authority  is  suf- 
ficient in  the  execution  of  a  parol  instrument.  So  in  contracts 
for  the  sale  of  an  interest  in  realty,  oral  authority  of  an  agent 
is  sufficient.^  Thus  even  where  indorsing  a  note  in  blank  out  of 
the  chain  of  title  does  not  operate  in  law  as  a  guaranty,  it 
authorizes  the  holder  to  write  a  guaranty  over  such  blank  signa- 
ture to  conform  to  the  oral  contract.*  If  the  statute  provides 
that  such  memorandum  must  be  signed  by  the  principal  or  by 
his  agent  "  authorized  in  writing "  such  authority  must,  of 
course,  be  in  writing  in  the  form  prescribed  by  the  statute.^     So 

ted  Co.,  1G5  Mass.  328;  52  Am.  St.  s  Columbia,    etc.,    Co.    v.    Tinsley 

Eep.  516;   43  N.  E.  112;  Heffron  v.  (Ky.),    60    S.    W.    10;    Lindley    v. 

Armsby,   61   Mich.    505;    28   N.   W.  Keim,  54  N.  J.  Eq.  418;  sub  nom., 

672;  Gerli  v.  Mfg.  Co.,  57  N.  J.  L.  O'Reilly  v.  Keim,  34  Atl.  1073;   af- 

432;    51   Am.   St.   Rep.   611;    30  L.  firming   (N.  J.  Eq.)      30  Atl.  1063; 

R.  A.  61;   31  Atl.  401.  Kennedy  v.  Ehlen,  31  W.  Va.  540; 

2  John  Griffiths  Cycle  Corpora-  8  S.  E.  398. 
tion  V.  Humber  (1899),  2  Q.  B.  414;  4  Peterson  v.  Russell,  62  Minn. 
Rutenberg  v.  Main,  47  Cal.  213;  220;  .54  Am.  St.  Rep.  634;  29  L.  R. 
McConnell  v.  Brillhart,  17  111.  354;  A.  612;  64  N.  W.  555. 
65  Am.  Dec.  661;  Columbia,  etc.,  Co.  5  Thompson  v.  Coal  Co.,  135  Ala. 
V.  Tinsley  (Ky.)  ;  60  S.  W.  10;  Tal-  630;  93  Am.  St.  Rep.  49;  34  So. 
hot  V.  Bowen,  1  A.  K.  Mar.  (Ky.)  31;  Castner  v.  Richardson,  18  Colo. 
436;  10  Am.  Dec.  747;  Peterson  v.  496;  33  Pac.  163;  Albertson  v.  Ash- 
Russell,  62  Minn.  220;  54  Am.  St.  ton,  102  111.  50;  Sigmund' v.  News- 
Rep.  634;  29  L.  R.  A.  612;  64  N.  W.  paper  Co.,  82  111.  App.  178;  Sam- 
555;  Kennedy  v.  Ehlen,  31  W.  Va.  uels  v.  Greenspan,  9  Kan.  App.  140; 
540;  8  S.  E.  398;  Conaway  V.  Swee-  58  Pac.  482;  Dickson  v.  Luman, 
ney,  24  W.  Va.,  643;  Ober  v.  Ste-  93  Ky.  614;  20  S.  W.  1038;  Newlin 
phens,  —  W.  Va.,  — ;  46  S.  E.  195.  v.  Hoyt.  —  Minn.  — ;  98  N.  W.  323; 


1044 


PAGE    ON    CONTRACTS. 


in  contracts  for  the  sale  of  realty  under  such  a  statute,  oral 
authority  of  the  agent  is  not  sufficient.*^  Under  some  statutes, 
written  authority  of  an  agent  is  necessary  only  in  certain  classes 
of  these  contracts,  as  in  contracts  for  the  sale  of  some  interest 
in  realty,'  or  the  statute  may  require  written  authority  of  an 
agent  acting  for  the  vendor  or  lessor  of  realty,  but  not  of  an 
agent  acting  for  a  vendee,**  or  lessee.** 

Since  a  signature  by  an  agent  in  the  presence  of  his  principal 
is  in  law  the  immediate  signature  of  the  principal  himself  and 
not  that  of  the  principal  by  his  agent,^°  an  agent  who  without 
written  authority  signs  a  contract  under  the  statute  of  frauds  in 
the  presence  of  his  principal  binds  the  principal.^^  If  the  agent 
executes  a  conveyance,  and  not  merely  a  contract  for  a  convey- 
ance, in  the  presence  of  the  principal  and  at  his  express  request, 
the  same  rule  applies,  and  oral  authority  is  sufficient.^^ 


Pierce  v.  Clarke,  71  Minn.  114;  73 
N.  W.  522  (overruling  on  another 
point  Hagelin  v.  Wacks,  61  Minn. 
214;  G3  N.  W.  624). 

GBorderre  v.  Den,  106  Cal.  594; 
39  Pac.  946;  Meux  v.  Hogue,  91  Cal. 
442;  27  Pac.  744;  Castner  v.  Rich- 
ardson, 18  Colo.  496;  33  Pac.  163; 
Kozel  V.  Dearlove,  144  111.  23;  36 
Am.  St.  Rep.  416;  32  N.  E.  542; 
Baldwin  v.  Schiappacasse,  109  Mich. 
170;  66  N.  W.  1091;  O'Shea  v.  Rice, 
49  Neb.  893;  69  N.  W.  308;  Brand- 
rup  V.  Britten,  11  N,  D.  376;  92  N. 
W.  453;  Utah,  etc.,  Co.  v.  Garbutt, 
6  Utah  342;  23  Pac.  758.  In  Me- 
tosh  V.  Hodges,  110  Mich.  319;  68 
N.  W.  158,  in  deciding  a  case  which 
the  court  held  to  be  controlled  by 
Illinois  law,  it  was  held  that  such 
authority  need  not  under  the  Illinois 
statute  then  in  force,  be  in  writing; 
following  Lake  v.  Campbell,  18  111. 
106.  On  rehearing  the  court  held 
that  by  reason  of  a  change  in  the 
Illinois  statute  such  authority  had 
to  be  in  writing,  but  the  former 
judgment  was  adhered  to  on  another 


point.     See  110  Mich.  322;  70  N.  W. 
550,  for  opinion  on  rehearing. 

7  Dickson  v.  Luman,  93  Ky.  614; 
20  S.  W,  1038;  Pierce  v.  Clarke,  71 
Minn.  114;  73  N.  W.  522;  Cockrell 
V.  Mclntyre,  161  Mo.  59;  61  S.  W. 
648. 

8  Rice-Dwyer  Real  Estate  Co.  v. 
Ruhlman,  68  Mo.  App.  503. 

9  Ehrmantraut  v.  Robinson,  52 
Minn.  333;  54  N.  W.  188. 

10  See  §  574. 

11  Ball  V.  Dunsterville,  4  T.  R. 
313;  Morton  v.  Murray,  176  111.  54; 
43  L.  R.  A.  529;  51  N.  E.  767; 
Meyer  v.  King,  29  La.  Ann.  567; 
Bigler  v.  Baker,  40  Neb.  325 ;  24  L. 
R.  A.  255;  58  N.  W.  1026.  Contra, 
Bramel  v.  Byron  (Ky.),  43  S.  W, 
695. 

i2Videau  v.  Griffin,  21  Cal.  389; 
Bartlett  v.  Drake,  100  Mass.  174;  97 
Am.  Dec.  92;  1  Am.  Rep.  101; 
Gardner  v.  Gardner,  5  Cush.  (Mass.) 
483;  52  Am.  Rep.  740;  Bigler  v. 
Baker,  40  Neb.  325;  24  L.  R.  A. 
255;  58  N.  W.  1026;  McMurtry  v. 
Brown.  6  Neb.  368;   Mutual  Benefit 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1045 

The  writing  relied  on  as  authority  of  the  agent  must  show 
such  authority  on  its  face.  So  a  note  from  A  to  B  stating  that 
A  cannot  meet  B  on  account  of  ilhiess,  but  that  X  will  attend  to 
the  matter  for  A,  is  insufficient  authority  if  it  must  be  supple- 
mented by  evidence  of  prior  oral  negotiations  for  the  exchange 
of  land  for  mining  stock  to  show  what  authority  X  had.^^  Writ- 
ten authority  to  sell,  however,  shows  authority  to  execute  such 
memorandum  as  is  necessary  to  make  the  sale  binding."  Writ- 
ten authority  to  sell  need  not  fix  the  price  at  which  the  sale  is  to 
be  made.  Hence  if  the  price  is  fixed  in  writing,  a  subsequent 
oral  modification  of  such  authority  may  be  shown,  fixing  a  lower 
price.  ^^ 

§693.     Nature  of  authority. 

Since  the  statute  provides  for  a  signature  by  an  agent  "  law- 
fully authorized,"  a  signature  by  one  not  authorized  to  act  for 
another  cannot,  at  least  in  the  absence  of  ratification,  bind  such 
other.  ^  The  party  seeking  to  enforce  the  contract  is  bound  to 
show  that  the  person,  other  than  the  adversary  party,  who  signs 
the  memorandum,  is  the  agent  of  such  adversary  party."  An 
agent  may  bind  his  principal  by  a  written  memorandum, 
such  as  a  letter,  written  within  the  scope  of  his  authority,  recog- 
nizing an  unsigned  written  contract  made  by  his  principal, 
without  special  authority  from  his  principal  to  sign  such  mem- 
orandum, and  without  authority  to  make  such  contract  origin- 
ally.^ 

If  botJi  parties  to  the  contract  assent  thereto  the  same  person 
may  act  as  agent  for  both,  and  in  such  cases  the  signature  of 

Life  Ins.  Co.  v.  Brown,  30  N.  J.  Eq.      etc.,  Co.  v.  Barrett.  172  111.  610;  50 
193.  N.    E.   325,   but   without   discussion 

13  Cockrell  v.  Melntyre,   161   Mo.      of  this  point). 

59;    61   S.  W.  648.  2  Clark  County  v.  Howell,  21  Ind. 

14  Jones   V.  Wattles,  —  Neb.  — ;      App.  495;  52  N.  E.  769. 

92  N.  W.  765.  3  John    Griffiths    Cycle    Corpora- 
is  Rank  V.  Garvey,  —  Neb.  — ;  92  tion  v.  Humber  (1899).  2  Q.  B.  414: 
N.  W.  1025.  following  Jones  v.  Dock  Co.,  2  Q.  B. 
1  Wheeler,  etc.,  Co.  v.  Barrett,  70  Div.  314 :  explaining  Smith  v.  Web- 
Ill.  App.   222    (affirmed  in  Wheeler,  ster.  3  Ch.  Div.  49. 


1046  PAGE    ON    CONTRACTS. 

such  common  agent  to  a  note  or  memorandum  of  the  contrac* 
binds  both  parties  thereto.*  Thus  oral  authority  given  by  a 
stockholder  to  the  secretary  of  the  corporation  to  put  him  down 
for  a  certain  amount  of  new  stock  followed  by  the  secretary's 
making  such  written  subscription  is  a  subscription  in  writing 
by  the  stockholder.^  However,  a  request  by  A  to  B's  agent  X 
to  transmit  a  certain  offer  to  B  does  not  make  X  A's  agent  for 
the  purpose  of  binding  A  by  X's  signature  to  such  letter.* 
Still  less  can  the  agent  of  one  party  represent  the  other  without 
any  request  from  him.^  The  chief  application  of  the  rule  that 
the  same  person  may  be  the  agent  of  both  parties  is  found  in 
aution  sales.  The  auctioneer  is  the  agent  of  the  vendor  by  vir- 
tue of  his  appointment,  and  on  receiving  the  bid  he  becomes  the 
agent  of  the  vendee  for  the  purpose  of  closing  the  contract.  It 
is  on  implied  authority  from  the  vendee  that  the  auctioneer's 
power  to  represent  him  rests  and  not  on  any  peculiarity  of  auc- 
tion sales.  Hence  a  memorandum  made  and  signed  not  by  the 
auctioneer  but  by  the  vendor's  agent  is  not  sufficient  to  bind 
the  vendee.^  Accordingly  the  auctioneer's  signature  to  a  note 
or  memorandum  of  the  contract,  made  at  the  sale,  is  sufficient 
under  the  statute  of  frauds  to  bind  both  vendor  and  vendee.** 
If  he  delays  signing  until  after  the  sale,  the  validity  of  his  mem- 
orandum  depends   on   the   existence    of  his   authority.^*'     His 

4  Gill    V.    Hewitt,    7    Bush    (Ky.)  7  Moore    v.    Powell,    6    Tex.    Civ. 
10;    White   v.   Mfg.   Co.,    179   Mass.      App.  43;  25  S.  W.  472. 

427;  60  N.  E.  791;  Morton  v.  Dean,  s  Bamber  v.  Savage,  52  Wis.  110; 

13   Met.    (Mass.)    385;    Springer   v.  38  Am.  Rep.  723;  8  N.  W.  609. 
Kleinsorge,  83  Mo.   152;   Proctor  v.  » Bird   v.   Boulter,   4    B.   &   Adol. 

Finley,  119  N.  C.  536;  26  S.  E.  128;  443;  Burke  v.  Haley,  7  HI.  614;  Mc- 

Reid  V.  Packing  Association,  43  Or.  Brayer  v.  Cohen,  92  Ky.  479;   18  S. 

429;  73  Pac.  337;  Perkiomen  Brick  W.    123;    Gill    v.    Hewitt,    7    Bush. 

Co.   V.   Dyer,    187   Pa.   St.   470;    41  (Ky.)    10;  Morton  v.  Dean,  13  Met. 

Atl.    326;    Christie    v.    Simpson,    1  (Mass.)     385;    Gill    v.    Bicknell,    2 

Rich.  Law.  (S.  C.)  407.  Cush.    (Mass.)   358;  Proctor  v.  Fin- 

5  Perkiomen  Brick  Co.  v.  Dyer,  ley,  119  N.  C.  536;  26  S.  E.  128; 
187  Pa.  St.  470;  41  Atl.  326.  Johnson  v.   Buck,  35  N.  J.  L.  338; 

6  Soward  v.  Moss,  59  Neb.  71;  80  10  Am.  Rep.  243;  Pugh  v.  Chessel- 
N.  W.  268;  reversing  on  rehearing  dine,  11  Ohio  109;  37  Am.  Dec.  414; 
58  Neb.  119;  78  N.  W.  373;  Wilson  Meadows  v.  Meadows,  3  McCord  (S. 
V.  Mill  Co.,  150  N.  Y.  314;   55  Am.  C.)  4.58;  15  Am.  Dec.  645. 

St.  Rep.  680;  44  N.  E.  959.  lo  This  is  sometimes  treated  as  an 


CONTRACTS    WHICH    MUST    BK    PROVED    BY    WRITING.    1047 

authority  as  agent  of  the  vendee  terminates  with  the  sale.  A 
subsequent  memorandum  made  by  him  cannot  bind  the  ven- 
dee/^ especially  if  made  after  the  vendee  has  repudiated  the 
contract.^"  The  vendee  may  repudiate  his  bid  at  the  sale  if  be- 
fore the  auctioneer  has  made  a  proper  memorandum.^^  Thus 
Avhere  a  sheriff  was  acting  as  trustee  in  foreclosing  a  deed  of 
trust  and  the  vendee  withdrew  his  bid  two  hours  after  the  sale 
and  before  the  sheriff  had  made  a  memorandum  thereof,  the 
vendee  was  not  bound.  ^*  His  authority  as  agent  of  the  vendor 
may  exist  for  at  least  a  reasonable  time  after  the  sale  if  not  re- 
voked. A  memorandum  made  by  him  within  a  reasonable  time 
after  the  sale  may  accordingly  bind  the  vendor  ;^^  but  his  power 
to  bind  the  vendor  after  the  sale  ceases  if  the  vendor  has  re- 
voked his  authority  with  the  knowledge  of  the  vendee.^^ 

One  party  to  the  contract  cannot  act  as  agent  for  the  adver- 
sary party,^"  even  if  he  acts  as  auctioneer.  Hence  a  trustee  who 
acts  as  his  own  auctioneer  cannot  be  an  agent  for  the  vendee/* 
as  where  a  guardian  sells  his  ward's  property  at  auction.^^ 

§694.    Ratification  of  unauthorized  ag-ency. 

Whether  an  oral  ratification  of  an  unauthorized  signature  is 
sufficient  depends,  in  part,  upon  the  statutory  requirements  for 

exception   to   the   general   rule   that  233.      (The  sheriff  here  was  not  act- 

a  memorandum  made  after  the  con-  ing  officially.) 

tract  is   sufficient.     It  is  not  really  is  As  where  made  on  the   follow- 

an  exception,  however,  but  is  instead  ing   day.      White   v.   Mfg.   Co.,    179 

an  application  of  the  principle  that  Mass.  427;  60  N.  E.  791. 

a  signature  by  one  who  is  then  not  le  Schmidt   v.    Quinzel,    55    N.    J. 

a   duly   authorized   agent   is   not   of  Eq.  792 ;  38  Atl.  665. 

itself  sufficient.  n  Shorman  v.  Brandt,  L.  R.  6  Q. 

11  Bell  V.  Balls  (1897) ,  1  Ch.  663;  B.  720;  Dunham  v.  Hartman.  153 
Horton  v.  McCarty,  53  Me.  394;  Mo..  625;  77  Am.  St.  Rep.  741;  55 
Walker  v.  Herring,  21  Gratt.  (Va.)  S.  W.  233;  Smith  v.  Arnold,  5  Ma- 
678;  8  Am.  Rep.  616.  son   (U.  S.)   414;  Tull  v.  David,  45 

12  Bell  V.  Balls  (1897),  1  Ch.  663.  Mo.  444;  100  Am.  Dec.  385. 

13  Pike  V.  Balch,  38  Me.  302;  61  is  Dunham  v.  Hartman,  153  Mo. 
Am.  Dec.  248;  Gwathney  v.  Cason,  625;  77  Am.  St.  Rep.  741;  55  S. 
74  N.  C.  5;  21  Am.  Rep.  484.  W.  233;  Tull  v.  David,  45  Mo.  444; 

14  Dunham   v.   Hartman,    153   Mo.  100  Am.  Dee.  385. 

625;  77  Am.  St.  Rep.  741;  55  S.  W.  m  Bent  v.  Cobb.  9  Gray    (Mass.) 

397;  69  Am.  Dec.  295. 


1048  PAGE    ON    CONTEACTS. 

the  original  authority  of  the  agent.  Putting  aside  questions  of 
estoppel  and  performance,  ratification  requires  the  same  degree 
of  proof  as  original  authority.  Hence  if  the  statute  requires 
original  authority  to  be  proved  by  writing  an  oral  ratification 
by  the  principal  of  an  unauthorized  contract  for  the  sale  of  land 
made  by  his  agent/  is  within  the  statute ;  even  if  the  agent  had 
■written  authority  with  the  terms  of  which  he  did  not  comply.^ 
If  original  authority  may  be  conferred  orally,  an  oral  ratifica- 
tion is  sufficient  either  to  enable  the  ratifying  principal  to  hold 
the  adversary  party,^  or  to  enable  the  adversary  party  to  hold 
the  ratifying  principal.*  If,  however,  the  benefit  of  the  con- 
tract entered  into  by  the  authorized  agent  is  reserved  not  to  the 
principal  but  to  another,  it  has  been  held  that  an  attempted  oral 
ratification  is  in  effect  a  promise  to  pay  the  debt  of  another,  and 
hence  is  unenforceable  under  the  statute.^ 

§695.    Form  of  signature  by  agent. —  Adding  party  by  extrinsic 
evidence. 

In  written  contracts  except  those  which  like  negotiable  in- 
struments must  be  entirely  in  writing,^  it  is  always  possible  to 
show  that  a  written  contract  signed  by  X  was  signed  by  him  as 
agent  for  A  in  order  to  hold  A."  The  statute  of  frauds  has 
usually  no  specific  provisions  on  this  subject.  The  ordinary 
rules  of  the  Common  Law  are  therefore  in  force.  Hence  a 
contract  note  or  memorandum  under  the  statute  of  frauds, 
signed  by  X,  may  be  enforced  against  A  on  showing  that  X 
signed  as  the  authorized  agent  of  A.^     A  signature,  "  A,  agent 

1  Sigmund  v.   Newspaper   Co.,   82  s  Holmes  v.  McAllister,  123  Mich. 

111.  App.  178;  Roth  v.  Goerger,  118  493;    48   L.   E.   A.   396;    82    N.   W. 

Mo.  556;  24  S.  W.  176;  Hankins  v.  220. 

Baker,  46  N.  Y.  666.  ^  See  §  761. 

2Kozel  V.  Dearlove,   144   111.   23;  2  See   §   606.     X   cannot   use   such 

36  Am.  St.  Rep.  416;  32  N.  E.  542.  evidence  to  show  that  he  is  not  lia- 

3  Soames   v.    Spencer,    1   Dowl.   &  ble. 

E.   32.  3  Nevada   Bank  v.   Bank.   59   Fed. 

4  Maclean  v.  Dunn.  4  Bing.  722;  338;  Tobin  v.  Larkin.  183  Mass. 
Hammond  v.  Hannin,  21  Mich.  374;  389;  67  N.  E.  340;  White  v.  Mfg. 
4  Am.  Ren.  490.  Co.,  179  Mass.  427;  60  N.  E    791; 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1049 

for  B,"  whatever  the  prima  facie  liability/  may  be  shown  to  be 
intended  to  bind  B.^  On  the  other  hand,  a  signature  of  the 
principal's  name  by  the  agent,  without  any  words  to  show  that  it 
is  written  by  the  agent,  is  sufficient." 


^696.     Elements  of  memorandum  in  general.- 
randa. 


Incomplete  memo- 


If  the  outward  form  of  the  memorandum  is  in  compliance 
with  law,  its  sufficiency  then  depends  on  its  contents.  By  the 
provisions  of  the  statute,  the  contract  must  be  proved  by  writ- 
ing. No  provision  is  made  for  oral  evidence  as  proof  of  terms 
omitted  from  the  written  memorandum.  Accordingly  the  mem- 
orandum must,  in  general,  set  forth  with  sufficient  certainty  the 
essentials  of  the  agreement.  This  usually  includes  the  fact  that 
there  is  a  contract,  the  parties,  their  relation  to  the  contract,  the 
subject-matter,  the  terms  and,   sometimes,   the  consideration.^ 


Phillips  V.  Cornelias  (Miss.)  ,  28  So. 
871;  Haubelt  v.  Mill  Co.,  77  Mo. 
App.  672;  Wheeler  v.  Walden,  17 
Neb.  122;  22  N.  W.  346;  Dykers  v, 
Townsend,  24  N.  Y.  57 ;  J.  M.  Hayes 
Woolen  Co.  v.  McKinnon,  114  N.  C. 
061 ;  19  S.  K  761 ;  Hargrove  v.  Ad- 
cock,  111  N.  C.  166;  16  S.  E.  16; 
Brodhead  v,  Reinbold,  200  Pa.  St, 
618;  86  Am.  St.  Rep.  735;  50  Atl. 
229;  Hall  v.  W^hite,  123  Pa.  St.  95; 
16  Atl.  521;  Tynan  v.  Oullnig  (Tex. 
Civ.  App.)  ,  25  S.  W.  465,  818. 

4  See  §  1148. 

5  Salmon  Falls  Mfg.  Co.  v.  God- 
dard,  14  How.    (U.  S.)    446. 

G  Evans  v.  Hare  (1892),  1  Q.  B. 
593. 

1  Turner  v.  Prevost,  17  Can.  S.  C. 
283 ;  Grafton  v.  Cummings,  99  U.  S. 
100;  Williams  v.  Morris,  95  U.  S. 
444;  Littell  v.  Jones,  56  Ark.  139; 
19  S.  W.  497 ;  O'Donnell  v.  Leeman, 
43  Me.  158;  69  Am.  Dee.  54;  Elliot 
V.  Barrett,  144  Mass.  256;  10  N.  E. 
820;     Atwood    v.     Cobb,     16    Pick. 


(Mass.)  227;  26  Am.  Dec.  657; 
Gault  V.  Stormont,  51  Mich.  636;  17 
N.  W.  214;  Clampet  v.  Bells,  39 
Minn.  272;  39  N.  W.  495;  Sherburne 
V.  Shaw,  1  N.  H.  157;  8  Am.  Dec. 
47;  Mentz  v.  Newwitter,  122  N.  Y. 
491;  19  Am.  St.  Rep.  514;  11  L. 
R.  A.  97;  25  N.  E.  1044;  Drake  v. 
Seaman,  97  N.  Y.  230;  Davidson  v. 
Land  Co.,  126  N.  C.  704;  36  S.  E. 
162;  Hall  v.  Fisher,  126  N.  C. 
205;  35  S.  E.  425;  Corbitt  v.  Gas- 
light Co.,  6  Or.  405;  25  Am.  Rep. 
541;  Rineef  v.  Collins,  156  Pa.  St. 
342 ;  27  Atl.  28 ;  Masterson  v.  Little, 
75  Tex.  682;  13  S.  W.  154  "It 
must  contain  the  essential  terms  of 
the  contract  expressed  with  such  a 
degree  of  certainty  that  it  may  be 
understood  without  recourse  to  parol 
evidence  to  show  the  intention  of 
the  parties.  .  .  .  Accordingly,  it 
must  show  who  are  the  contracting 
parties,  intclligentlj^  identify  the 
subject-matter  involved,  express  the 
consideration,  be  signed  by  the  party 


1050 


PAGE    OJf    CO^STTKACTS. 


]f  it  contains  these  elements  it  is  sufficient ;'  but  if  any  of  them 
are  lacking  and  must  be  supplied  by  parol,  the  memorandum  is 
insufficient/  both  at  law/  and  in  equity.^  While  an  incom- 
plete memorandum  in  writing  of  a  contract  which  need  neither 
be  in  writing  nor  be  proved  by  writing  may  be  supplemented  by 
oral  evidence  to  show  what  the  real  contract  is/  no  such  supple- 
mental evidence  can  be  considered  in  case  of  a  contract  the  terms 
of  which  must  be  proved  by  writing.  So  a  written  offer  within 
the  statute  of  frauds  amended  by  telephone  and  accepted  as 
amended  is  insufficient/  It  may  be  here  observed  that  a  mem- 
orandum of  an  alleged  contract  under  the  statute  of  frauds  may 
be  defective  for  either  of  two  reasons :  the  alleged  contract  be- 
tween the  parties  may  be  lacking  in  some  essential  element  and 
this  deficiency  will,  of  course,  appear  on  the  memorandum  /  or 
the  oral  contract  may  be  complete  but  its  terms  may  not  be  car- 
ried into  the  memorandum  with  sufficient  certainty  to  comply 


to  be  charged  and  disclose  the  terms 
and  conditions  of  the  agreement." 
Catterlin  v.  Bush,  39  Or.  496,  501 ; 
65  Pac.  1064,  1065. 

2Homan  v.  Stewart,  103  Ala.  644; 
16  So.  35;  Newton  v.  Lyon,  62  Kan. 
306;  62  Pac.  1000;  affirmed  on  re- 
hearing, 62  Kan.  651;  64  Pac.  592; 
Alford  V.  Wilson,  95  Ky.  506;  26 
S.  W.  539 ;  ]\lcDonald  v.  Fernald,  68 
N.  H.  171;  38  Atl.  729;  Jones  v. 
Davis,  48  N.  J.  Eq.  493;  21  Atl. 
1035;  Peck  v.  Goflf,  18  R.  I.  94;  25 
Atl.  690;  Abba  v.  Smyth,  21  Utah 
109;  59  Pac.  756. 

3  Peoria  Grape  Sugar  Co.  v.  Bab- 
cock  Co.,  67  Fed.  892;  Jackson  v. 
Telephone  Exchange,  108  Ga.  646; 
34  S.  E.  207;  Xorth  v.  Mendel,  73 
Ga.  400;  54  Am.  Rep.  879;  Wright 
V.  Raftree,  181  111.  464;  54  X.  E. 
998;  Watt  v.  Cranberry  Co.,  63  la. 
730:  18  X.  W  898;  Proctor  v.  Plum- 
er,  112  Mich.  393;  70  X.  W.  1028; 
Renz  V.  Stoll,  94  Mich.  377 ;  34  Am. 
St.  Rep.  358;  .54  X.  W.  276;  Ship- 
man  V.   Campbell,  79  Mich.   82;    44 


X.  W.  171;  Messmore  v.  Cunning- 
ham, 78  Mich.  623;  44  X.  W.  145; 
McElroy  v.  Buck,  35  Mich.  434;  Pal- 
mer V.  Rolling  Mill  Co.,  32  Mich. 
274;  Brown  \.  Munger,  42  Minn. 
482;  44  N.  W.  519;  Ringer  v.  Hollz- 
claw,  112  Mo.  519;  20  S.  W.  800; 
Schenck  v.  Improvement  Co.,  47  N. 
J.  Eq.  44;  19  Atl.  881;  Mentz  v. 
Xewwitter,  122  X.  Y.  491;  19  Am. 
St.  Rep.  514;  11  L.  R.  A.  97;  25 
X.  E.   1044. 

4  Atwood  V.  Cobb,  16  Pick.  (Mass.) 
227;  26  Am.  Dec.  657;  Grafton  v. 
Cummings,  99  U.  S.  100;  Patmore  v. 
Haggard,  78  111.  607;  Reid  v.  Ken- 
worthy,  25  Kan.  701 ;  Riley  v. 
Farnsworth,  116  Mass.  223. 

sMinturn  v.  Baylis,  33  Cal.  129; 
Fiy  V.  Piatt,  32  Kan.  62;  3  Pac. 
781;  Holmes  v.  Evans,  48  Miss.  247; 
12  Am.  Rep.  372. 

6  See  §§  605,  1197.  1198. 

7  Wiessner  v.  Ayer,  176  Mass. 
425;  57  X.  E.  672. 

8  See  §§  27,  28,  45-47. 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1051 

■with  the  statute.  As  oral  evidence  is  inadmissible  to  supply 
defects  in  such  memoranda,  it  is  often  impossible  to  determine 
in  specific  cases  which  sort  of  defect  is  under  consideration. 
The  details  of  these  elements  must  be  discussed  hereafter. 

§697.     Memorandum  must  show  existence  of  contract. 

First,  the  memorandum  must  show  that  the  parties  intend 
thereby  to  enter  into  a  contract  or  that  they  have  already  en- 
tered into  a  contract.^ 

Among  the  illustrations  of  a  written  memorandum  defective 
as  not  showing  this  on  its  face  are  the  following:  A  memo- 
randum showing  that  the  signer  had  given  the  refusal  of  certain 
realty  to  another ;'  a  written  statement  that  the  signer  can 
"  spare  "  a  certain  amount  of  corn  f  a  promise  to  accept  a  writ- 
ten offer  when  corrected  by  describing  the  property  correctly;* 
the  expression  of  an  intention  to  settle  property  on  another  to 
take  effect  on  the  death  of  the  party  making  the  disposition;* 
and  an  expression  of  a  desire  to  adopt  a  given  person,  to  destroy 
old  wills  and  to  make  a  new  one  f  or  a  letter  containing  a  prop- 
osition and  a  reply  containing  an  invitation  to  "  talk  it  over."^ 
So  a  letter  which  recognizes  a  liability  for  services  and  offers  to 
convey  a  certain  lot  of  land  in  payment  thereof  is  not  a  suf- 
ficient memorandum  of  a  contract  under  which  such  services 
were  rendered  and  providing  for  payment  therefor  by  the  con- 

1  Salomon  v.  McRae,  9  Colo.  App.  *  Andrew    v.    Babcock,    63    Conn. 
23;  47  Pac.  409;  Andrew  v.  Babcock,       109;  26  Atl.  715. 

63  Conn.  109;  26  Atl.  715;  American  s  White    v.    Bigelow,     154    Mass. 

Oak   Leather  Co.   v.   Porter,   94   la.  593;   28  N.  E.  904. 

117;   62   N.  W.   658;   Leatherbee  v.  «  Wright's  Estate,  155  Pa.  St.  64; 

Bernier,    182   Mass.    507;    65   N.   E.  25    Atl.    877.     But    compare    North 

842 ;  Kling  v.  Bordner,  65  0.  S.  86 ;  Platte,  etc.,  Co.  v.  Price,  4  Wyom. 

61  N.  E.  148;  Wright's  Estate,  155  293;   33  Pac.  664,  Avhere  words  but 

Pa.  St.  64;   25  Atl.  877;  Masterson  slightly  more  definite  were  held  to 

V.   Little,    75   Tex.   682;    13    S.    W.  import  a  contract  to  convey  certain 

154 ;  Munk  v.  Weidner,  9  Tex.  Civ.  land  to  a  certain  woman  on  her  mar- 

App.  491 ;   29  S.  W.  409.  riage  with  promisor. 

2  Williams    v.    Smith,    161    Mass.  7  Mathes  v.  Bell,  121  la.  722;   96 
248;  37  N.  E.  455.  N.  W.  1093. 

3  Redus   v.   Holcomb    (Miss.),    27 
So.  524. 


1052 


PAGE    ON    CONTKACTS. 


veyance  of  such  realty.*  A  letter  admitting  legal  liability  as- 
sumed to  exist  independent  of  any  contract  is  not  evidence  of  a 
contract  creating  such  liability." 

A  written  communication  by  a  principal  to  his  agent  authoriz- 
ing him  to  make  a  given  contract  is  not  a  memorandum  showing 
such  contract.^"  If,  however,  the  written  memorandum  shows 
that  a  contract  has  been  entered  into  and  states  the  terms 
thereof,  it  may  be  the  means  of  charging  the  signer  with  liability 
thereon  even  though  it  is  written  to  repudiate  the  contract/^ 

§698.     Memorandum  must  show  parties  to  contract. 

Second,  the  memorandum  must  show  who  are  the  parties  to 
the  contract  and  their  relation  thereto ;  "  not  only  who  is  the 
promisor,  but  who  is  the  promisee  as  well.'^  Thus  a  memoran- 
dum which  does  not  in  some  way  indicate  the  vendor,  as  where 
only  the  auctioneer  is  indicated,^  or  the  agent  of  the  vendor,* 
is  insufficient.  So  a  memorandum  which  does  not  show  who 
the  vendee  is,  is  insufficient.*     So  a  deed  by  a  trustee  which 


8  Koch  V.  Williams,  82  Wis.  186; 
52  N.  W.  257. 

9  Russell  V.  Blair,  18  Wash.  339; 
51  Pac.  477. 

10  Kleinhans  v.  Jones,  68  Fed.  742 ; 
15  C.  C.  A.  644;  Carskaddon  v. 
South  Bend,  141  Ind.  596,  601;  39 
N.  E.  667 ;  41  N.  E.  1 ;  Hastings  v. 
Weber,  142  Mass.  232;  56  Am.  Rep. 
671;  7  N.  E.  846. 

11  Martin  v.  Haubner,  26  Can.  S. 
C.  142. 

1  Oglesby  Grocery  Co.  v.  Mfg.  Co., 
112  Ga.  359;   37  S.  E.  372.     To  the 
same    eflfect    are    Grafton    v.    Cuni- 
mings,  99  U.  S.  100;  American  Oak 
Leather   Co.  v.  Porter,   94   la.   117; 
62  X.  W.  658;  Lincoln  v.  Preserving 
Co.,   132   Mass.   129;    Coddington   v 
Goddard.  16  Gray  (Mass.)  436;  Mc 
Keag  V.  Piednoir,  74  Mo.  App.  593 
Carrick  v.  Mincke,  60  Mo.  App.  140 
Brown   v.   Whipple,   58   N.  H.   229 
Mentz  V.  Xewwitter.  122  N.  Y.  491 
19  Am.  St.  Rep.  514;    11  L.  R.  A 


97;  25  X.  E.  1044.  Salmon  Falls 
Mfg.  Co.  V.  Goddard,  14  How.  (U. 
S.)  446,  holds  that  the  memoran- 
dum need  not  identify  the  parties. 
This  case  has  been  criticised  in  Graf- 
ton V.  Cummings,  99  U.  S.  100,  and. 
disapproved  in  Mentz  v.  Xewwitter, 
122  X.  Y.  491;  19  Am.  St.  Rep.  514; 
11  L.  R.  A.  97;  25  X.  E.  1044. 

sMcGovern  v.  Hern,  153  Mass. 
308;  25  Am.  St.  Rep.  632;  10  L.  R. 
A.  815;  26  X.  E.  861 ;  Mentz  v.  Xew- 
witter, 122  X.  Y.  491;  19  Am.  St. 
Rep.  514;  11  L.  R.  A.  97;  25  X.  E. 
1044. 

3  Coombs  V.  Wilkes  (1891),  3  Ch. 
77;  Ross  v.  Allen.  45  Kan.  231;  10 
L.  R.  A.  835;  25  Pac.  570.  Contra, 
where  only  the  agent  of  the  vendor 
was  indicated.  Mantz  v.  Maguire,  52 
Mo.  App.  136.  If  the  vendor  is  indi- 
cated, signature  by  the  agent  is,  of 
course,   sufficient. 

4  Lewis  V.  Wood.  153  Mass.  321; 
11  L.  R.  A.  143;  26  X.  E.  802;  Cat- 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1053 

purports  to  discharge  part  of  the  laud  from  the  operation  of  the 
trust  deed  is  not  sufficient  as  a  contract  where  it  does  not  show 
that  the  trustee  was  acting  for  the  creditors  nor  does  it  show 
any  particular  person  as  grantee.^ 

It  is  not,  however,  necessary  that  either  party  be  named.  If 
indicated  in  any  mannner  with  sufficient  certainty,  the  mem- 
orandum is  not  on  this  account  defective.®  Thus  a  description 
of  vendors  of  realty  as  "  Phillips  &  Bro.,'"  or  a  description  of 
parties  acting  as  vendors  of  personalty  as  agents  of  certain 
named  principals,®  is  sufficient.  So  a  grant  of  a  "  further  lease  " 
shows  that  the  lessee  is  to  be  the  former  tenant  though  he  is  not 
named.®  So  an  offer  made  to  an  agent,  without  naming  his 
principal  but  accepted  by  the  agent  on  behalf  of  his  principal, 
naming  him,  sufficiently  shows  that  such  principal  is  a  party  to 
the  contract.^*' 

§699.     Subject  matter. —  Realty. 

Third,  the  memorandum  must  set  forth  the  subject-matter 
with  such  certainty  that  it  can  be  identified  without  resorting  to 
oral  evidence  of  the  intention  of  the  parties  direct  as  to  the  sub- 
ject-matter to  supplement  the  terms  of  the  memorandum.^  This 
principle  finds  its  most  frequent  application  in  contracts  for  the 
sale  of  some  interest  in  land.     While  the  memorandum  need 


terlin  v.  Bush,  39  Or.  498;   65  Pac.  » Carr    v.    Lynch     (1900),    1    Ch. 

1064;   59  Pac.  706;   Harney  v.  Bur-  613. 

hans,  91   Wis.  348;  64  N.  W.  1031.  loFilby  v.  Hounsell  (1896),  2  Ch. 

So  of  a  sheriff's  sale  on  execution,  737. 

where  the  statute  of  frauds  applies.  i  Alabama    Mineral    Land    Co.    v. 

Tombs  V.  Basye,  65  Mo.  App.  30.  Jackson,   121  Ala.   172;   77  Am.  St. 

5  Woodcock   V.   Merrimon,   122   N.  Rep.  46;  25  So.  709;  Eidgway  v.  In- 

C.  731;  30  S.  E.  321.  gram,    50   Ind.    145;    19    Am.    Rep, 

6McLeod  V.  Adams,  102  Ga.  533;  706;    Fiy  v.   Piatt,   32   Kan.   62;    3 

27  S.  E.  680.  Pac.  781 ;  Sherer  v.  Trowbridge,  135 

7  Phillips    V,     Cornelius     (Miss.),  Mass.  500;    Burgon  v.   Cabanne,   42 

28  So.  871.  Minn.  267;   44  N.  W.   118;   Lippin- 

8  American,  etc.  Co.  v.  Steel  Co.,  cott  v.  Bridgewater,  55  N.  J.  Eq. 
101  Fed.  200.  (The  memorandum  208;  36  Atl.  672 :  Kling  v.  Bordner, 
is  sufficient  to  bind  such  principals.)  65  0.  S.  86:  61  N.  E.  148;  Ferguson 

V.  Stover,  33  Pa.  St.  411. 


1054  PAGE    ON    CONTKACTS. 

not  give  a  technical  description  of  the  realty  contracted  for,  it 
still  must  give  sufficient  facts  to  identify  it.^  If  it  is  necessary 
to  resort  to  oral  evidence  of  the  intention  of  the  parties  direct  as 
to  the  realty  bargained  for,  the  memorandum  is  insufficient.^ 
So  a  contract  to  mortgage  realty  including  a  right  of  way  which 
is  not  appurtenant  to  the  realty  and  which  is  not  described,  is 
not  sufficient.*  A  memorandum  showing  that  a  specific  tract 
was  intended,  but  not  describing  it  further,  is  insufficient.^ 
Thus  a  contract  for  "  one  of  the  lots  set  aside  for  sale,"^  for 
"  that  lot,'"  or  for  "  four  lots  of  timber,  more  or  less,"*  are  each 
insufficient.  So  a  check  showing  that  it  is  given  as  "  part  pay- 
ment on  coal  lands  "  is  insufficient  where  the  vendor  owned 
much  more  coal  land  than  that  sold.^  So  a  sale  of  "  a  strip  of 
land  in  front  of  Golden  Rule  Store  and  Stent  Market "  has 
been  held  insufficient  where  such  strip  is  unenclosed  and  can  be 
identified  only  by  oral  evidence.^''  So  a  description  by  acreage 
only  as  a  memorandum  in  the  form  of  a  receipt  for  "'  thirty 
acres,""  or  a  contract  for  the  "  sixty  acres,"^^  or  for  "  115 
acres,"^^  or  "  one  third  interest  in  five  acres  located  near  said 
works,"^*  are  each  insufficient.  If  the  memorandum  shows 
that  the  location  of  the  realty  bargained  for  was  left  open  for 
future  agreement  it  is  insufficient."     Indeed,  in  cases  of  this 

2Kopp  V.  Reiter,  146  111,  437;  37  8  Douglass  v.  Bunn,  110  Ga.  159; 

Am.  St.  Rep.  156;  22  L.  R.  A.  273;  35   S.  E.  339. 

34  N.  E.  942;  Edens  v.  Miller,  147  »  Thompson  v.  Coal  Co.,  135  Ala. 

Ind.  208;  46  N.  E.  526.  630;  93  Am.  St.  Rep.  49;  34  So.  31. 

3  Alba  V.  Strong,  94  Ala.  163;   10  lo  Craig  v.  Zelian,   137   Cal.    105; 

So.  242;   Edens  v.  Miller,   147   Ind.  69  Pae.  853. 

208 ;  46  N.  E.  526 ;  Voorheis  v.  Eit-  n  Humbert  v.  Brisbane,  25   S.  C. 

ing    (Ky.),   22   S.   W.   80;    Weil   v.  506. 

Willard,  55  Mo.  App.  376.  12  Cooley    v.    Lobdell,    153    N.    Y. 

4, John  F.  Fowkes  Mfg.  Co.  v.  Met-  596;  47  N.  E.  783. 

calf,  169  Mass.  595;  48  K  E.  848.  "  Wortham   v.    Smith    (Ky.),   66 

5  Lippincott  v.  Bridgewater,  55  N.  S.   W.   390. 

J.   Eq.  208;    36  Atl.  672;   Davis  v,  i*  Hamilton    v.    Harvey,    121    111. 

Ross    (Tenn.   Ch.   App.),   50   S.  W.      469;  2  Am.  St.  Rep.  118;   13  N.  E. 

650.  210. 

6  Williams   v,   Stritz    (Miss.),  17          is  Weil   v.   Willard,   55  Mo.   App. 
So.   227.  376;    Falls    of    Neuse    Mfg.    Co,    v. 

7  Ray  V.  Card,  21  R.  I,  362;  43   Hendricks,  106  N.  C,  485;  11  S.  E. 
Atl.  846.  568. 


CONTRACTS    WIIICII    MUST    BE    PROVED    BY    WRITING.    1055 

class  there  is  no  contract.  The  difficuhy  is  deeper  than  the 
means  of  proof.  Thus  where  a  tract  is  to  be  selected  by  both 
parties  out  of  a  larger  tract,  as  where  the  parties  were  to  agree 
on  a  tract  of  forty  by  one  hundred  twenty  feet  out  of  a  certain 
eighty-acre  tract  to  front  on  a  street^*'  the  memorandum  is  in- 
sufficient. So  a  description  showing  a  sale  of  lots  out  of  a 
larger  tract  not  yet  subdivided  is  insufficient.^^  However,  a 
contract  to  sell  ten  acres  in  a  consecutive  tract  out  of  a  tract  of 
forty  acres,  to  have  the  same  average  value  and  quality  as  the 
entire  tract,  has  been  held  sufficient.^®  If  the  tract  is  to  be 
selected  out  of  a  larger  tract  by  one  of  the  parties,  a  different 
question  arises  on  which  there  is  a  divergence  of  authority ; 
some  courts  holding  the  contract  definite  and  the  memorandum 
sufficient,^^  others  taking  the  view  that  the  description  in  the 
memorandum  is  insufficieoit  since  it  must  be  supplemented  by 
oral  evidence.'"  A  memorandum  which  gives  the  length  of  the 
boundary  lines  without  the  means  of  locating  them  is  insuffi- 
cient.^^ Examples  of  this  are  as  follows:  A  contract  to  buy 
a  certain  number  of  feet  front  on  a  given  avenue  on  the  east 
side  between  two  designated  streets ;""  a  contract  to  lease  a  tract 
twenty  feet  square,  eight  rods  south  and  fifteen  east  of  the 
northwest  comer  of  a  certain  tract  f^  or  a  contract  to  sell  "  six 
by  ten  rods  deep  to  be  taken  either  way  "  from  a  house  on  a 
tract  of  land  twenty  rods  square  fronting  on  two  streets.^*     So 

16  Scanlon  V.  Oliver,  42  Minn.  538 ;  171;    Hayes    v.    Burkham,    51    Ind. 

44  N.  W.  1031.  130;     Smith    v.    Bowler,    2    Disney 

"Chellis  V.  Grimes,  —  N.  H.  — ;  (Ohio)    153;   Pulse  v.  Hamer,  8  Or. 

56  Atl.  742.  252;    Ledford   v.   Ferrell,    34   N.   C. 

18  Burgon    v.    Cabanne,   42   Minn.  285 ;      disapproving     Lingeman     v. 
267;  44  N.  W.  118.  Shirk,   15  Ind.  App.  432;   43  N.  E. 

19  Lauder  v.  Peoria,  etc..  Society,  33.) 

71  111.  App.  475;  Lingeman  V.  Shirk,  21  geanlon    v.    Oliver,    42    Minn. 

15  Ind.  App.  432;  43  N.  E.  33.  538;  44  N.  W.  1031. 

20  Alabama  Mineral  Land   Co.  v.  22  Fox  v.  Courtney,  111  Mo.  147; 
Jackson,  121  Ala.  172;   77  Am.  St.  20  S.  W.  20. 

Rep.  46;   25  So.  709.      (Citing  Am-  2.3  Diamond     Plate-Glass     Co.     v. 

burger  v.  Marvin,  4  E.  D.  Smith  393;  Tennell,  22  Ind.  App.  132;  52  N.  E. 

Warden  v.  Williams,  62  Mich.  50;  4  168. 

Am.   St.  Rep.   814;    28  N.   W.   796;  24  Reed  v.   Lowe,   8   Utah   39;    29 

Yates  V.  Martin,  2   Pinney    (Wis.)  Pac.  740. 


1056  PAGE    ON    CONTRACTS. 

a  memorandinn  which  gives  the  courses  and  distances  hut  does 
act  give  a  starting  point  for  the  lines  is  insufficient."^  A 
memorandum  which  gives  a  part  of  one  boundary,  as  by  describ- 
ing the  land  bounded  as  adjoining  a  specified  tract  is  insuffi- 
cient."" Whether  the  place  at  wdiich  the  contract  is  dated  can 
be  assumed  to  be  the  place  where  the  land  is  located,  to  supple- 
ment what  would  otherwise  be  a  deficiency  in  description,  is  a 
question  on  which  courts  differ,  some  holding  that  this  assump- 
tion can  be  made""  and  others  that  it  cannot."^ 

It  is  not,  however,  necessary  to  give  a  technical  description  of 
the  realty  bargained  for,^^  A  description  of  realty  by  its  popu- 
lar name,  together  with  a  sufficiently  definite  location,""  as  in  a 
given  county,^^  or  on  a  certain  island,^^  or  within  a  given  dis- 
tance and  in  a  certain  direction  from  a  specified  city,^^  or  in 
a  certain  range,  township  and  section,"*  have  each  been  held 
sufficiently  definite.  A  description  giving  section,  range  and 
township,  and  describing  the  tract  as  the  "  Merchant  Farm,"^° 
or  describing  the  land  as  "  the  Burns  farm,'"'®  have  each  been 
held  sufficient.  Merely  giving  its  name  without  the  state  or 
county  in  which  it  is  located,  as  calling  it  the  "  Baldwin  Place  " 
without  otherwise  identifying  its  owner,^^  is  insufficient. 

25Edens  v.  Miller,   147  Ind.  208;  lis    v.    Burgess,    37    Kan.    487;     15 

46  K  E.  526.  Pac.  536;  Springer  v.  Kleinsorge,  83 

26  Jones  V.  Tye,  93  Ky.  390;  20  Mo.  152;  House  v.  Jackson,  24  Or. 
S.  W.  388;  Vickers  v.  Henry,  110  N.  89;  32  Pac.  1027. 

C.  371 ;  15  S.  E.  115.  si  Cunyus  v.  Lumber  Co.,  20  Tex. 

27  Ross  V.  Purse,  17  Colo.  24;   28  Civ.  App.  290;  48  S.  W.  1106. 
Pac.  473;  Langert  v.  Ross,  1  Wash.  32  House  v.  Jackson,   24   Or.   89; 
250;  24  Pac.  443.  32  Pac.   1027. 

28  Ross  V.  Allen,  45  Kan.  231;  10  ss  Sailor  v.  Gilfillan,  73  Mo.  App. 
L.  R.   A.   835;    25   Pac.   570.      (The  152. 

land  was  described  by  certain  street  34  Hayes  v.  O'Brien,  149  111.  403; 

numbers  on  Delaware  Street  of  "  the  23  L.  R.  A.  555;  37  N.  E.  73.      (Tlie 

city     proper."    It     was     dated     at  part  of  a  specified  farm  east  of  a. 

"Leavenworth,"  and  did  not  other-  right  of  way.) 
wise  show  where  the  land  was.)  35  Hayes  v.  O'Brien,  149  111.  403; 

29  Sheldon  v.  Carter.  90  Ala.  380;  23  L.  R.  A.  555;  37  N.  E.  73. 

8  So.  63;   Baker  v.  Hall,   158  Mass  36  Mull  v.  Smith,  —  Mich,  — ;  94 

361;   33  N.  E.  612.  N.   W.   183. 

30  Hayes  v.  O'Brien.  149  111.  403;  3- Wood  v.  Zeigler,  99  Tenn.  515; 
23  L.  R.  A.  555;  37  N.  E.  73;  Hoi-  42  S.  W.  447. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1057 

A  description  of  realty  as  located  at  or  near  a  given  place  and 
owned  by  a  given  person  is  sufficient  if  no  other  realty  within 
the  locality  described  is  owned  by  such  person.^*  Thus  a  de- 
scription of  land  as  vendor's  "  place  in  Stratford,  Conn.,  con- 
taining 15  acres  more  or  less,"^*  or  of  "  one  one  and  a  half  stoiy 
frame  dwelling  house  with  bam  and  out  buildings  and  all  land 
now  being  used  in  connection  therewith,  being  about  seven  acres 
more  or  less  situated  in  Sagus  Center,  Essex  County,"*''  each 
is  sufficient.  This  rule  has  been  carried  so  far  in  some  juris- 
dictions that  "  twenty-four  acres  of  land  at  T "  has  been 

held  to  imix>rt  land  owned  by  the  promisor  and  hence  sufficiently 
described.*^ 

If  the  vendor  owns  more  than  one  tract  in  the  locality  speci- 
fied, a  description  of  land  as  in  that  locality  and  of  a  specified 
area  may  be  sufficiently  definite.*^  Without  additional  aid 
from  a  description  of  area  and  the  like,  mere  description  by 
the  owner  and  location  is  not  sufficient  where  such  owner  owns 
more  than  one  piece  of  property  in  such  location.*^  However, 
if  the  vendor  contracts  to  convey  an  undivided  third  of  all  his 
realty,  no  further  description  is  necessary.**  A  description  of 
land  by  reference  to  the  title  whereby  it  was  acquired,*^  as  land 
received  by  vendor  from  his  father,*"  or  land  bought  from  a 


38  Described  by  the  city  in  which  4i  plant  v.  Bourne  (1897),  2  Ch. 
it  is  located.  Hodges  v.  Rowing,  58  281;  so  Hurley  v.  Brown,  98  Mass. 
Conn.    12;    7   L.  R.   A.   87;    18   Atl.  545;  96  Am.  Dec.  671. 

979;   St.  Paul  Land  Co.  v.  Dayton,  42  Gray  v.  Smith,  76  Fed.  525. 

42   Minn.   73;    43   N.   W.   782.     De-  43  Doherty  v.  Hill,  144  Mass.  465; 

scribed  by  the  city  and  the  street  11  N.  E.  581. 

therein  on  which  the  land  is  located.  **  Moayon  v.  Moayon,  —  Ky.  — ; 

White   V.   Breen,    106   Ala.    159;    32  60  L.  R.  A.  415;   72  S.  W.  33. 

L.  R.  A.  127;  19  So.  59;  Scanlon  v.  45  Ewing    v.    Stanley     (Ky.).    69 

Geddes,  112  Mass.  15.     Described  as  S.    W.    724;    Atwood    v.    Cobb,    16 

a   store   lot    on   the   corner    of   two  Pick     (Mass.)     227;    26    Am.    Dec. 

given  streets  in  a  given  city.     White  657. 

V.  Mooers,  86  Me.  62;   69  Atl.  936.  46  Ryder    v.    Loomis,    161    Mass. 

39  Hodges  V.  Rowing,  58  Conn.  161;  36  N.  E.  836;  Parks  v.  Bank. 
12;  7  L.  R.  A.  87;  18  Atl.  979.  97  Mo.   130;    10  Am.  St.  Rep.  295; 

40  Sanders  v.  Boyer,  152  Mass.  11  S.  W.  41;  affirming  31  Mo.  App. 
141;   9  L.  R.  A.  255;  25  N.  E.  86.  12. 

67 


103S  PAGE    ON    CONTRACTS. 

given  person,*^  is  sufficient.  So  a  description  of  land  by  its 
present  ownership,  as  land  in  which  the  two  contracting  par- 
ties have  a  joint  equitable  estate/^  is  sufficient.  A  description 
of  land  by  the  use  to  which  it  is  put  is  sufficient.  Thus  a  sale 
of  vendor's  "  land  where  he  now  lives,"***  or  of  his  "  home  place 
and  storehouse,"^"  complies  with  the  statute.  A  contract  for 
the  sale  of  realty,  describing  its  boundaries  so  that  they  may 
be  located, ^^  or  giving  section  numbers,^"  or  lot  numbers,^^  not 
with  technical  accuracy,  yet  so  that  the  land  can  be  located 
from  the  description  in  view  of  the  surrounding  circumstances, 
is  sufficient.  A  description  giving  the  city,  street  and  street 
number  is  sufficient.^*  Thus  a  description  of  realty  as  "  house 
and  land  No.  10  Howard  Street,"  even  if  it  erroneously  adds 
''  belonging  to  A  "  when  it  in  fact  belongs  to  A  and  two  others, 
is  sufficient. ^^  If  the  number  is  omitted,  being  left  blank,  the 
description  has  been  held  to  be  sufficients^  If  the  street  and 
etreet  number  are  given,  but  not  the  city,  the  description  is 
insufficient.^^  A  description  of  land  which  gives  one  boundary, 
the  direction  of  an  adjoining  side  and  the  area  of  the  tract  con- 
veyed, is  sufficient. s^  Abbreviations  do  not  make  a  descrip- 
tion insufficient  if  they  are  such  that  one  familiar  with  the  land 
described  would  be  able  to  identify  the  land  by  means  of  such 
description.^^     If,  however,  it  is  necessary  to  employ  oral  evi- 

47  Newman   v.   Iron   Co.,   80   Fed.      Scott,  76  Wis.  662;  45  N.  W.  532. 
228 ;   25  C.  C.  A.  382.  ss  St.    Paul   Land   Co.   v.   Dayton, 

48  Black  V.  Crowther,  74  Mo.  App.      42  Minn.  73;  43  N.  W.  782. 

480.     For    somewhat    similar    facts  54  Claphan  v.  Barber,  —  N.  J.  Eq. 

see  Easton  v.  Thatcher,  7  Utah  99;  —  ;"56  Atl.  370. 

25  Pac.  728.  55  Tobin  v.  Larkin,  183  Mass.  389; 

49  Falls  of  Neuse  Mfg.  Co.  v.  Hen-  67  N.  E.  340. 

dricks,  106  N.  C.  485;  11  S.  E.  568.  56  Bulkley  v.  Devine,  127  111.  406; 

50  Henderson    v.   Perkins,    94    Ky.  3  L.  R.  A.  330;  20  N.  E.  16.      (Pos- 
207;   21   S.   W.   1035.  session  having  been  taken  under  the 

51  Kyle  V.   Rhodes,   71  Miss.  487;  lease.) 

15  So.  40;  Sherman  v.  Simpson.  121  57  Ross  v.  Allen,  45  Kan.  231;  10 

N.  C.  129;  28  S.  E.  186.  L.  R.  A.  835;   25  Pac.  570. 

52  Ryan  V.  United  States,   136  U.  58  Felty  v.   Calhoon,    139   Pa.    St. 
S.  68;  Mann  v.  Higgins,  83  Cal.  66:  378;   21  Atl.   19. 

23    Pac.    206;    Wilson   v.    Emig,   44  so  Melone  v.  Ruffino,  129  Cal.  514; 

Kan.    125;    24    Pac.    80;    Combs    v.      7!)  Am.  St.  Rep.  127;  62  Pac.  93. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    105  U 

deuce  of  the  intention  direct  to  show  the  realty  contracted  for, 
the  description  is  insufficient.  Thus  a  description  of  realty  as 
"  the  southeast  of  twenty-five,  nine,  Kingman,  Kansas,"  is  in- 
sufficient.*"" 

§700.     Other  types  of  subject-matter. 

While  questions  as  to  the  sufficiency  of  the  description  of 
the  subject-matter  are  raised  most  frequently  in  contracts  for 
the  sale  of  realty,  they  are  not  confined  to  that  class.  The 
same  test  applies  to  other  kinds  of  subject-matter  in  contracts 
Avithin  the  statute  of  frauds  as  applies  to  contracts  for  the  sale 
of  an  interest  in  realty.  Technical  accuracy  of  description  is 
not  necessary;  but  as  the  entire  contract  must  be  proved  by 
writing,  the  description  must  be  such  as  to  specify  the  subject- 
matter  so  that  one  familiar  with  such  subject-matter  can  iden- 
tify it,  without  further  evidence  of  the  intention  of  the  parties 
direct.  Thus  in  contracts  to  answer  for  the  debt  of  another 
the  debt  may  be  described  as  incurred  for  the  "  house  and  bam 
completed  for  Mr.  B,"^  or  as  the  bill  that  A  "  owes  your  con- 
cern,"" or  by  reference  to  the  "  amount  of  debt  and  damage 
contained  in  a  writ,"  giving  the  names  of  plaintiff,  defendant 
and  officer  making  the  service,  together  with  the  date  of  the 
service.^  So  a  contract  to  sell  goods  in  a  territory  not  suffi- 
ciently defined*  cannot  be  supplemented  by  oral  evidence  if  not 
to  be  performed  within  a  year  from  the  date  of  the  making 
thereof.  If  the  memorandum  refers  to  two  or  more  kinds  of 
chattels  to  be  sold  and  does  not  show  how  much  of  each  is  bar- 


60  Hartshorn    v.    Smart.    67    Kan.  *  Ralini    v.    Klerner,    99    Va.    10; 

543;  73  Pac.  73.  37    S.    E.    292.      (It    not    appearing 

1  Star  Brewery  v.  Farnsworth,  172  whether  the  contract  was  to  sell 
111.  247;  50  N.  E.  228;  affirming  70  goods  in  all  the  Southern  States 
111.    App.    150.  or  only  in  seven  out  of  the  eleven.) 

2  Haskell  v.  Tukesbury.  92  Me.  In  Kaufman  v.  :\Ifg.  Co.,  78  la. 
551;  69  Am.  St.  Rep.  529;  43  Atl.  679;  16  Am.  St.  Rep.  462;  43  N.  W. 
500.  (The  letter  being  addressed  to  612.  a  contract  to  sell  goods  in  a 
the  creditor.)  certain  city  "and  the  territory  trib- 

3  Savage  v.  Robinson,  93  Me.  262;  utary  thereto"  was  held  sufficiently 
44   Atl.   926.  definite. 


1060  PAGE    ON    CONTRACTS. 

gained  for,  it  is  insufficient.^  On  the  otLei-  hard,  u  tT»e  ve-^dor 
has  the  option  of  delivering  which  evet  kind  of  chattel  he  pleases 
the  memorandum  is  sufficient.®  A  contract  for  the  sale  of 
"  the  same  cattle  picked  out  by  said  Woods  on  Jan.  27,  1893," 
sufficiently  describes  them.''  Abbreviations  shown  to  have  a 
definite  meaning  in  the  trade,  or  business  do  not  make  the 
memorandum  defective.  Thus  a  memorandum :  "  Will  de- 
liver S.  R.  &  Co.  best  refined  iron  50  tons  within  90  days  at  5 
ct.  p.  lb.  4  of  cash.  Plates,  to  be  10  to  16  inches  wide  and  9  ft. 
to  11  long.  This  offer  good  till  2  o'clock  Sept.  11,  1862.  J. 
jN'.  F.  J.  B.  R."  was  held  sufficient.^  So  a  telegram,  "  Bought 
13  at  11%,"  and  a  telegram  in  reply,  "  We  confirm  purchase 
Wagner  11%  like  sample,"  is  sufficient;  the  extrinsic  evidence 
showing  that  the  contract  was,  for  the  sale  of  hops  made  by  the 
agent  Wagner.^  If  the  contract  provides  for  the  delivery  of  a 
certain  number  of  "  bales  "  of  cotton,  and  the  evidence  shows 
that  this  term  iy  ambiguous  and  denotes  more  than  one  weight, 
and  that  the>  parties  had  a  specified  agreement  as  to  what 
weight  w^as  meant,  the  memorandum  is  insufficient.^"  If  the 
consideration  expressed  is  a  promise  to  dig  a  well  on  certain 
specified  lots,  it  is  sufficiently  definite  without  locating  it  more 
exactly  or  defining  its  character  further."  Terms  of  a  contract 
fixed  by  law,  such  as  the  time  of  begin  to  teach,  where  the  open- 
ing of  the  term  is  fixed  by  the  rules  of  the  district,^'  need  not 
be  expressed  in  the  memorandum. 

§701.     Consideration. 

Fourth,  whether  the  consideration  must  be  set  forth  in  the 
memorandum  is  a  question  on  one  branch  of  which  there  is  a 

5  Ellis  V.  R.  R.,  7  Colo.  App.  350;  »  Brewer  v.  Horst  and  Lachmund 
43  Pae.  457.                                                  Co.,  127  Cal.  643;   50  L.  R.  A.  240; 

6  American,  etc.,  Mfg.  Co.  v.  Steel      60  Pac.  418. 

Co.,     101     Fed.     200;     Burgess-Sul-  lo  Stewart  v.  Cook.   118  Ga.  541; 

phite   Fibre   Co.   v.   Broomfield,   180  45  S.  E.  398. 

Mass.  283;  62  N.  E.  367.  n  Ross  v.  Purse,   17  Colo.  24;   28 

7  Woods  V,  Hart.  50  Neb.  497;   70  Pac.  473. 

N.  W.  53.  12  Burkhead  ,  v.    School    District, 

8  Sanborn      v.      Flagler,      9      All,      107  la.  29;  77  K  W.  491. 
(Mass.)   474. 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1061 

hopeless  conflict  of  authority.  There  are  really  two  separate 
questions  here  involved  which  must  be  treated  separately.  The 
first  question  concerns  the  consideration  alone  and  arises  when 
the  consideration  for  the  promise  is  not  an  executory  promise, 
but  has  been  performed  at  or  before  the  making  of  the  promise 
for  which  it  is  a  consideration.  Whether  in  such  cases  the  con- 
sideration must  appear  is  the  question  upon  which  the  conflict  is 
hopeless,  some  courts  holding  that  it  must  appear  on  the  theory 
that  the  statute  requires  the  substance  of  the  entire  contract  of 
which  the  memorandum  is  offered  in  evidence,  to  appear  therein, 
and  that  the  consideration  is  an  essential  element  of  such  con- 
tract,^ and  other  courts  holding  that  it  need  not  appear  on  the 
theory  that  it  is  only  the  executory  promise  which  must  be 
proved  by  a  writing.^  In  the  cases  here  cited  the  statute  under 
discussion  required  the  "  agreement "  or  some  note  or  memo- 
randum thereof  to  be  in  writing.  \Vhere  the  statute  uses 
"  agreement  or  promise  "  instead  of  "  agreement "  simply,  the 
courts  have  held  that  the  consideration  need  not  appear,^  and  in 


1  Wain  V.  Warlters,  5  East  10 ; 
Saunders  v.  Wakefield,  4  B.  &  Ad. 
595;  James  v.  Williams,  5  B.  &  Ad. 
1109;  Bainbridge  v.  Wade,  16  Q.  B. 
89;  Foster  v.  Napier,  74  Ala.  393; 
Hazeltine  v.  Larco,  7  Cal,  32;  Ep- 
pich  V.  Clifford,  6  Colo.  493;  Wel- 
din  V.  Porter,  4  Houst.  (Del.)  236; 
Fry  V.  Piatt,  32  Kan.  62;  3  Pac. 
781;  Culbertson  v.  Smith,  52  Md. 
628;  36  Am.  Rep.  384;  Messmore  v. 
Cunningham,  78  Mich.  623;  44  N. 
W.  145;  Parry  v.  Spikes,  49  Wis. 
384;  35  Am.  Rep.  782;  5  N.  W.  794. 
The  doctrine  of  Wain  v.  W^arlters, 
5  East  10,  was  doubted  in  Phillips 
V.  Bateman,  16  East  356,  and  de- 
nied in  ex  parte  Gardom,  15  Ves. 
286,  but  was  finally  established  in 
the  other  English  cases  cited. 

2  Ringgold  V.  Newkirk,  3  Ark.  96 ; 
Toomy  v.  Dunphy,  86  Cal.  639;  25 
Pac.  130;  Sage  v.  Wilcox,  6  Conn. 
81;  Davis  v.  Tift,  70  Ga.  52;  Ames 


V.  Moir,  130  111.  582;  22  N".  E.  535; 
affirming,  27  111.  App.  88;  Memory 
V.  Niepert,  33  111.  App.  131 ;  Strubbe 
V.  Lewis  (Ky.),  76  S.  W.  150;  Ew- 
ing  V.  Stanley  (Ky.),  69  S.  W.  724; 
Haskell  v.  Tukesbury,  92  Me.  551; 
69  Am.  St.  Rep.  529;  43  Atl.  500; 
Williams  v.  Robinson,  73  Me.  186; 
40  Am.  Rep.  352;  Packard  v.  Rich- 
ardson, 17  Mass.  122;  9  Am.  Dec. 
123;  Little  v.  Nabb,  10  Mo.  3;  Ruck- 
er  V.  Harrington,  52  Mo.  App.  481; 
McWilliams  v.  Lawless,  15  Neb.  131; 
17  IN.  W.  349;  Brown  v.  Fowler,  70 
N.  H.  634;  47  Atl.  412;  Nibert  v. 
Baghurst,  47  N.  J.  Eq.  201 ;  20  Atl. 
252;  Thornburg  v.  Masten,  88  N.  C. 
293;  Reed  v.  Evans,  17  Ohio  128; 
Gregory  v.  Gleed,  33  Vt.  405. 

sRateliff  v.  Trout,  6  J.  J.  Mar. 
(Ky.)  605;  Gilman  v.  Kibler,  5 
Humph.  (Tenn.)  19;  Fulton  v.  Rob- 
inson, 55  Tex.  401;  Colgin  v.  Hen- 
ley, 6  Leigh   (Va.)   85. 


1062  PAGE    ON    CONTRACTS. 

some  cases  have  based  their  decisions  on  this  difference  in  word- 
ing between  their  statute  and  the  English  statute.  It  is  danger- 
ous, however,  to  base  distinctions  in  construction  upon  the  as-. 
sumption  that  the  words  "  agreement,"  "  promise  "  and  "  con- 
tract "  are  used  with  technical  accuracy  and  with  distinct  mean- 
ings in  so  loosely  drawn  a  statute.  In  many  states  this  question 
is  settled  by  statute ;  but  unfortunately  some  statutes  provide 
that  in  some  or  all  of  the  contracts  included  in  the  statute  of 
frauds  the  consideration  must  appear,*  while  other  statutes  pro- 
vide that  it  need  not  appear,^  and  so  the  conflict  remains  more 
hopeless  than  ever. 

§702.    Price  and  Terms. 

The  second  question  concerns  the  consideration  when  it  con- 
sists of  executory  promises.  In  such  cases  the  consideration  is 
not  only  important  because  it  makes  the  executory  promise  of 
the  adversary  party  enforceable,  but  it  is  itself  one  of  the  prom- 
ises which  with  that  of  the  adversary  party  complete  the  con- 
tract. Omitting  to  state  a  consideration  which  is  an  executory 
promise  is  therefore  omittingMjne  of  the  terms  of  the  contract. 
Accordingly  the  Aveight  of  authority,  even  in  states  where  an 
executed  consideration  need  not  be  expressed  in  the  memoran- 
dum, requires  the  memorandum  to  disclose  the  consideration 
when  it  consists  of  executory  promises.^     The  distinction  be- 

^Speer  V.  Crowder   (Ala.),  32  So.  186;    40   Am.   Rep.    352;    White   v. 

658;    Lindsay   v.    McRae,    116    Ala.  Mfg.  Co.,  179  Mass.  427;   60  N.  E. 

542;    22   So.   868;    White  v.  White,  791;    Hayes   v.   Jackson,    159   Mass. 

107  Ala.  417;    18  So.  3;   Baltimore  451;   34  N.  E.  683;   MeWilliams  v. 

Breweries   Co.  v.   Callahan,   82  Md.  Lawless,    15    Neb.    131;    17    N.    W. 

106;  33  Atl.  460;  Siemers  v.  Siemers,  349. 

65  Minn.  104;  60  Am.  St.  Rep.  430;  i  Taylor  v.  Smith   (1893),  2  Q.  B. 

67    N.   W.    802;    Cooley   v.   Lobdell,  65;   Arnold  v.  Garth,   106   Fed.   13; 

153  N.  Y.  596;  47  N.  E.  783;  Kuener  Reid  v.  Plate-Glass  Co.,  85  Fed.  193; 

V.  Smith,   108  Wis.   549;   84  N.  W.  29    C.    C.    A.     110;     Peoria    Grape 

850;    Van    Doren    v.    Roepke,    107  Sugar  Co.  v.  Babcock  Co.,  67   Fed. 

Wis.    535;    83    N.   W.    754;    Twohy  892;  Phillips  v.  Adams,  70  Ala.  373; 

Mercantile  Co.  v.  Drug  Co.,  94  Wis.  Turner    v.    Lorillard    Co.,    100    Ga. 

319:  68  N.  W.  963.  645;   62  Am.  St.  Rep.  345;  28  S.  E. 

5  Williams    v.    Robinson.    73    Me.  383     (citing.    Wain    v.    Warlters,    5 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1063 

tween  the  necessity  of  stating  the  consideration  and  the  necessity 
of  stating  the  price  is  recognized  in  those  jurisdictions  in  which 
the  price  must  be  stated  if  an  executory  promise,  but  if  executed, 
it  need  not  be  stated.^ 

Thus  a  memorandum  of  a  sale  of  realty  in  the  form  of  a  re- 
ceipt, which  shows  the  price  for  one-third  of  which  the  receipt 
is  given,  and  which  provides  that  a  title  bond  will  be  given  on 
the  execution  of  notes  for  the  balance,  is  defective  if  it  does  not 
show  how  many  notes  are  to  be  given,  when  they  are  due  and 
what  rate  of  interest  they  are  to  bear.^ 

The  price  may  be  sufficiently  described  by  reference  to  other 
instruments,  however.  Thus  a  memorandum  of  a  contract  for 
the  sale  of  realty  at  a  given  price  with  a  clause  providing  for  the 
payment  of  a  certain  part  of  the  purchase  price  "  by  the  assign- 
ment of  a  certain  mortgage  now  held  by  X  for  that  amount " 
describes  the  mortgage  with  sufficient  certainty.*  A  memoran- 
dum which  shows  that  certain  terms  of  credit  and  of  the  pay- 
ment of  the  purchase  price  have  been  agreed  upon,  but  which 
does  not  show  what  such  terms  are,  is  defective.^     A  memoran- 


East    10;    Elmore    v.    Kingscote,    5  Mo.  422;  45  S.  W.  300;  reversing  in 

Barn.  &  C.  583;  Acebal  v.  Levy,  10  banc,  37  S.  W.  516,  the  court  pointed 

Bing.    376;     Ex-parte    Gardom,     15  out    that    the    "heresy"    that    oral 

Ves.  Jr.  286;   Goodman  v.  Griffiths,  evidence  was  admissible  to  show  the 

1  Hurl.  &  N.  574;  Ashcroft  v.  But-  price,    which    had    once   been    enter- 

terworth,  136  Mass.  511;  Waterman  tained    by    the    Missouri    court    in 

V.    Meigs,    4    Cush.     (Mass.)     497;  O'Neil   v.    Grain,    67    Mo.    250,    and 

James  v.  Muir,  33  Mich.  223;  Han-  Ellis  v.  Bray,  79  Mo.  227,  had  been 

son  V.  Marsh,  40  Minn.  1 ;  40  N.  W.  corrected    in    Ringer   v.    Holtzslaw, 

841;    Stone   v.   Browning,   68   N.   Y.  112   Mo.    519;    20   S.    W.    800,    and 

598;   Ide  v.  Stanton.  15  Vt.  685;  40  Boyd  v.  Paul,   125  Mo.  9;   28  S.  W. 

Am.  Dec.  698)  ;   Norris  v.  Blair,  39  171. 

Ind.  90;   Fry  v.  Piatt,  32  Kan.  62;  2  Sayward    v.    Gardner,    5    Wash. 

Kay  V.  Curd,  6  B.  Mon.   (Ky.)    100;  247;  31  Pac.  761;  33  Pac.  289. 

Rector   Provision    Co.   v.    Sauer,    69  3  Nelson   v.   Improvement   Co.,   96 

Miss.  235;   13  So.  623;  Newberry  v.  Ala.  515;   38  Am.  St.  Rep.  116;   11 

Wall,  65  N.  Y.  484.     This  rule  ob-  So.  695. 

tains    even    where    on    revision    the  *  Loveridge   v.   Shurtz.    Ill    Mich, 

clause   in  the   statute   requiring  the  618;  70  N.  W.  132. 

consideration  to  appear  is  intention-  s  Snow  v.  Nelson,    113   Fed.   353; 

ally  omitted.     Drake  v.   Seaman.  97  Nelson  v.  Improvement  Co.,  96  Ala. 

N.Y.  230.     In  Kelly  v.  Thuey,   143  .",1.5;    38   Am.   St.   Rep.    116;    11    So. 


1064:  PAGE    ON    CONTKACTS. 

diim  so  indefinite  that  it  might  show  a  contract  to  sell  realty  or  a 
contract  of  agency  is  insufficient.^ 

§703.     What  is  statement  of  consideration. 

In  jurisdictions  where  the  consideration  must  appear  the 
question  of  what  amounts  to  a  statement  of  the  consideration  has 
often  been  presented  for  decision.  If  the  consideration  is  ex- 
pressly stated,  this  rule  is,  of  course,  complied  with,  even  if  the 
consideration  as  expressed  is  a  nominal  one,  such  as  one  dollar/ 
If  a  sealed  contract  is  enforceable  without  a  consideration,  the 
presence  of  a  seal  upon  a  written  contract  dispenses  with  any 
statement  of  the  consideration  since  there  need  be  none,  and  if 
the  contract  is  enforceable  without  a  consideration,  the  memo- 
randum need  show  only  the  actual  terms  of  the  contract.^  If 
the  note  or  memorandum  of  the  agreement  shows  on  its  face  that 
the  promise  was  made  "  for  value  received  "  no  further  state- 
ment of  the  consideration  is  necessary.^  Thus  if  a  contract 
to  answer  for  the  debt  of  another  purports  to  be  for  "  value 
received,"  the  consideration  is  sufficiently  expressed.*  The  same 
rule  applies  to  contracts  for  the  sale  of  realty.^  It  is  not  neces- 
sary, however,  either  that  the  consideration  be  stated  expressly 
or  that  the  contract  should  be  sealed.  An  unsealed  contract  or 
memorandum  may  be  sufficient  if  the  consideration  reasonably 

695;   Lester  v.  Heidt,  86  Ga.  226;  Smith,  108  Wis.  549;  84  N.  W.  850. 

10  L.  R.  A.  108;  12  S.  E.  214;  Brun-  This  rule  is  sometimes  distorted  into 

dige  V.  Blair,  43  Kan.  364 ;  23  Pac.  the  form  that  the  seal  imports  a  con- 

482;    Parker's    Heirs    v.    Bodley,    4  sideration. 

Bibb.    (Ky.)     102;    Schenck   v.    Im-  See  §§  561-563. 

provement  Co.,  47  N.  J.  Eq.  44;   19  3  Flowers  v.  Steiner,  108  Ala.  440; 

Atl.    881;    Edichal    Bullion    Co.    v.  19   So.   321;   McMahan  v.  Jacoway, 

Gold  Mining  Co.,  87  Va.  641;   13  S.  105  Ala.  585;  17  So.  39;  Whitney  v. 

E.    100;    Buck   v.   Pickwell,    27    Vt.  Stearns,    16    Me.    394;    Dahlman   v. 

157.  Hammel,  45  Wis.   466;    Day  v.   El- 

eCatterlin  v.   Bush,   39   Or.   496;  more,  4  Wis.  190. 

65  Pac.  1064.  4  Martin   v.   Powder   Co.,    2    Colo. 

1  Boiling  V.  Munchus,  65  Ala.  558.  596;    Osborne    v.    Baker,    34    Minn. 

2  United  States  v.  Linn,  15  Pet.  307;  57  Am.  Rep.  55;  25  N.  W.  606; 
(U.  S.)  290;  Edelen  v.  Gough.  5  Gill.  Miller  v.  Cook,  23  N.  Y.  495;  Dahl- 
(Md.)   103;  Johnston  v.  Wadsworth,  man  v.  Hammel.  45  Wis.  466. 

24  Or.  494;   34  Pac.   13;   Kuener  v.  s  Cheney  v.  Cook,  7  Wis.  413. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITING.   1065 

and  fairly  appears  from  the  entire  instrument,  without  being 
expressly  stated.®  As  might  be  expected  from  so  abstract  a  pro})- 
osition,  the  courts  which  agree  upon  this  rule  do  not  agree  upon 
its  application.  The  following  are  examples  of  memoranda  of 
a  contract  to  answer  for  the  debt  of  another,  in  which  it  was 
held  that  the  consideration  could  be  inferred  reasonably  from, 
the  writing  itself:  A  letter  written  by  A  promising  to  pay  B 
the  amount  due  on  certain  lumber  sold  by  B  to  C  if  B  would 
deliver  such  lumber  to  C  to  enable  C  to  perform  his  con- 
tracts \^  a  letter  by  A  promising  that  if  B  will  release  certain 
securities  of  A's  employee  C,  A  will  guarantee  performance  by 
C  of  his  promise  to  pay  a  certain  sum  annually  on  his  debt  to  B, 
with  a  letter  from  C  referring  to  A's  letter  and  promising  to  pay 
such  sum  annually  f  a  writing  as  follows :  "  I  guarantee  the 
payment  of  the  contents  of  the  within  note  to  X,  the  one-half 
within  six  months  and  the  other  half  within  twelve  months ;"" 
a  promise  to  be  responsible  "  for  all  such  goods  as  B  shall  buy  of 
X  within  one  year  from  date  "  contemporaneously  indorsed  on  a 
written  contract  of  sale  between  X  and  B  ;^°  a  written  instru- 
ment addressed  by  A  to  B  agreeing  to  extend  A's  guaranty  of  C's 
credit  for  a  certain  time  to  cover  sales  by  B  to  C  for  such  time  ;^^ 
an  instrument  referring  to  future  sales  to  be  made  by  B  to  C  in 
which  A  agrees  to  guarantee  C's  "  account  ;"^^  a  written  promise 

6  Otis   V.    Hazeltine,    27    Cal.    81;  v.   Miller,   97   Wis.   300;    72   N.    W. 

Weldin   v.   Porter,   4   Houst.    (Del.)  869. 

236;     Baltimore    Breweries    Co.    v.  7  Choate    v.    Hoogstraat     (Wis.), 

Callahan,  82  Md.  106;   33  Atl.  460;  105  Fed.  713. 

Ordeman   v.    Lawson,    49    Md.    135;  8  Barney  v.  Forbes,  118  N.  Y.  580; 

Straight  v.  Wight,  GO  Minn.  515;  63  23  N.  E.  890;  distinguishing  Evans- 

N.   W.    105;    Church   v.    Brown,    21  ville  National  Bank  v.  Kauffman,  93 

N.  Y.  315;  Reid  v.  Packing  Assoeia-  N.  Y.  273;  45  Am.  Rep.  204;   as  a 

lion,  43  Or.  429;   73  Pac.  337;   Van  case  in  which   no  consideration  ap- 

Doren  v.  Roepke,   107  Wis.  535;   83  peared. 

N.  W.  754.     So  in  contracts  to  an-  9  Neelson    v.    Sanborne,    2    N.    H. 

swer     for     the     debt     of     another.  413;  9  Am.  Dec.  108. 

Straight   v.   Wight,    60   Minn.    515;  lo  Church  v.  Brown,  21  N.  Y.  315. 

63  N.  W.  105;  Highland  V.  Dresser,  n  Coxe    Bros.    v.    Milbrath.     110 

35  Minn.  345;  29  N.  W.  55;  Church  Wis.  499;  86  N.  W.  174. 

V.  Brown,  21  N.  Y.  315;  Waldheim  isWahlheim    v.    Miller,    97    Wis. 

300;  72  X.  W.  869. 


1066  PAGE    ON    CONTRACTS. 

as  follows :  "I  will  be  responsible  for  tbe  purchase  of  goods 
from  X  for  B  or  by  his  order  until  I  give  them  notice  to  the 
contrary"  ;^^  a  letter  introducing  a  new  customer  to  a  wholesale 
dealer,  which  states  "  I  hereby  guarantee  the  collection  of  any 
amount  which  you  credit  him  with  not  exceeding  two  thousand 
dollars."^*  A  contract  of  guaranty  made  contemporaneously 
Avith  the  original  contract  and  referring  to  it,  need  not  express  a 
separate  consideration,  since  the  consideration  of  the  original 
contract  supports  the  contract  of  guaranty/^  So  as  an  example 
of  this  rule  applying  to  contracts  not  to  be  performed  within  the 
year :  A  contract  signed  by  both  parties  whereby  A  recites  that 
he  has  employed  B  for  a  certain  time  at  a  certain  salary,  though 
there  is  no  express  promise  by  B  to  serve  for  such  time,^"  so  in 
contracts  of  sale,  a  memorandum  that  A  agrees  to  sell  the  mer- 
chandise in  certfiin  store  buildings  situated  on  certain  lots  to  B 
in  consideration  of  B's  purchase  of  such  lots  is  sufficient/^  On 
the  other  hand,  the  following  are  examples  of  memoranda  of  a 
contract  to  answer  for  the  debt  of  another,  insufficient  because 
the  consideration  is  not  expressed  with  sufficient  clearness ;  an 
agreement  by  A,  the  holder  of  a  chattel  mortgage  given  by  C  to 
pay  C's  debt  to  B  if  B  would  forbear  suit,^®  and  an  agreement 
by  A  to  pay  so  much  of  C's  note  to  B  as  is  unpaid  on  a  certain 
day,  though  the  agreement  is  dated  the  same  day  as  the  note 
and  recites  that  the  note  is  given  in  satisfaction  of  a  mortgage 
executed  by  C  to  B.^**  A  contract  of  guaranty  executed  after 
the  principal  obligation  is  incurred  must  express  the  considera- 
tion if  this  rule  is  in  force.""  Thus  a  mere  indorsement  of  a 
note  has  been  held  an  insufficient  contract  of  ffuarantv."^ 


13  Williams  v.  Ketchum,   19   Wis.  lahan,    82    :\Id.    106;    33    Atl.    460. 
231.  -17  Van  Doren  v.  Roepke,  107  Wis. 

14  Eastman    v.    Bennett,    6    Wis.  535;  83  N.  W.  754. 

232;   approved  in  Young  v.  Brown,  isTwohy  Mercantile  Co.  v.   Drug 

53  Wis.  333;  10  N.  W.  394.  Co.,  94  Wis.  319;  68  X.  W.  963. 

15  Davis  V.  Tift.  70  Ga.  52 ;  Xieh.  i9  Lindsay    v.    McRae,     116    Ala. 
ols,  etc.,   Co.   V.   Dedrick,   61   Minn.  542;  22  So.  868. 

513;  63  N.W.  1110;  Erie,  etc.,  Bank'  20  Brewster    v.    Silence,    8    X.    Y. 

V.   Coit,   104  N.   Y.   532;    11    N.   E.  207;  Hall  v.  Farmer,  2  N.  Y.  553. 

54.  21  Schafer  v.  Bank.  59  Pa.  St.  144; 

16  Baltimore  Breweries  Co.  v.  Cal-  98  Am.  Dec.  323;  Parry  v.  Spikes.  49 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    10G7 

Among  contracts  in  consideration  of  marriage  a  promise  by 
A  to  pay  B  "  on  the  wedding  day  when  she  shall  become  my  wife 
the  sum  of  one  thousand  dollars  "  has  been  held  insufficient.^" 
Among  contracts  for  the  conveyance  of  realty  a  promise  by  A  to 
B,  his  wife,  who  has  left  him,  that  if  she  will  come  back  he  will 
do  as  he  has  agreed  and  will  give  her  a  deed  of  sixty  acres,  has 
been  held  insufficient."^ 

§704.    Memorandum  showing  all  terms  sufficient. 

If  the  memorandum  shows  all  the  terms  of  the  transaction,  it 
is  clearly  sufficient  if  the  contract  is  one  which  is  definite  enough 
to  be  enforced  if  it  were  not  for  the  statute  of  frauds,  since  this 
statute  is  not  intended  either  to  add  to  or  to  take  from  the  pre- 
existing elenients  of  a  valid  contract.'"  Thus,  if  the  price  is 
agreed  upon  with  sufficient  certainty  by  reference  to  some  mode 
of  ascertaining  it  in  the  future,  the  memorandum  need  not  show 
anything  further."  Hence  if  the  parties  agree  that  the  lessor 
may  sell  the  premises  on  giving  sixty  days'  notice  to  lessee,  and 
on  giving  the  lessee  the  privilege  of  buying  the  premises  if  he 
will  pay  as  much  as  any  other  person,  a  memorandum  to  that  ef- 
fect shows  the  price  with  sufficient  certainty.^  So  a  memoran- 
dum showing  a  contract  to  pay  what  the  vendor  j^aid  for  the 
property,*  or  what  he  spent  on  it,^  or  to  settle  the  price  by  arbi- 
tration," is  sufficient.  So  if  the  parties  do  not  agree  upon  any 
price,  so  that  the  vender  is  entitled  to  recover  a  reasonable  price, 
the  memorandum  need  show  nothing  more  than  the  terms  of 


Wis.  384;  35  Am.  Rep.  782;  5  N.  W.  Am.  Rep.  173;  Brown  v.  Bellows,  4 

794;  Taylor  v.  Pratt,  3  Wis.  674.  Pick.    (Mass.)    179. 

22Siemers    v.    Siemers,    65    Minn.  3  Marske  v.  Willard.  169  111.  276; 

104;    60   Am.   St.   Rep.   430;    67   N.  48  N.  E.  290;  affirming,  68  111.  App. 

W.  802.  83. 

23Cooley   V.    Lobdell,    153    N.    Y.  *  Atwood      v.      Cobb,      16      Pick. 

596;  47  N.  E.  783.  (Mass.)   227. 

1  In  re  Robinson's  Estate.  142  Cal.  5  Vindquest  v.  Perky,  16  Neb.  284; 

152;  75  Pae.  777.  20  N.  W.  301. 

2Marske  v.  Willard,  169  111.  276;  6  Camp  v.  Moreman,  84  Ky.  635; 

48  N.  E.  290;  affirming.  68  111.  App.  2  S.  W.  179. 
83;  Norton  v.  Gale,  95  111.  533;  35 


1068 


PAGE    ON    CONTRACTS. 


their  agreement.'  So  if  the  contract  is  sufSciently  definite,  a 
memorandum  is  siifRcient  if  it  shows  tlie  terms  of  such  contract 
but  is  silent  as  to  terms  not  agreed  upon  by  the  parties.^  Thus 
a  memorandum  omitting  terms  of  performance,  such  as  place 
and  time  of  payment,  which  have  not  been  agreed  upon  by  the 
parties,  is  sufficient  if  the  contract  is  valid.^  So,  while  the 
terms  of  the  contract  must  appear  in  the  memorandum,  if  cer- 
tain terms  are  left  to  the  discretion  of  one  party  and  so  appear 
on  the  memorandum,  the  memorandum  is  sufficient  if  the  oral 
contract  is  so  definite  that  it  would  be  enforced  but  for  the  stat- 
ute. Thus  a  memorandum  showing  that  the  remainder  of  the 
purchase  price  of  certain  realtj'  sold  is  to  run  to  suit  the  pur- 
chaser's convenience,^"  or  one  showing  that  a  contract  of  employ- 
ment for  a  year  is  to  begin  at  some  time  in  the  future  to  be  fixed 
by  one  party  within  a  limit  of  two  weeks  agreed  upon  by  both,^* 
or  that  a  lease  is  to  run  for  five  years  from  the  completion  of  the 
building,^^  or  one  showing  that  certain  kinds  of  personalty  are  to 
be  sold  and  delivered  as  long  as  the  purchaser  continues  to  take 
them,^^  have  each  been  held  sufficient.  So  a  contract  for  the 
sale  of  realty  not  specifying  the  kind  of  deed  that  shall  be  exe- 
cuted," or  a  contract  for  a  lease  providing  that  it  should  be  "  in 
the  usual  form  in  use  "  in  the  city  where  the  leased  realty  was 


TValpy  V.  Gibson,  4  C.  B.'837; 
Ashcroft  V.  Morrin,  4  Man.  &  Gr. 
450. 

8  Kaufman  v.  Mfg.  Co.,  78  la. 
679;  16  Am.  St.  Rep.  462;  43  N.  W. 
612;  Miller  v.  Ry.,  58  Kan.  189; 
48  Pac.  853 ;  Smith  v.  Shell,  82  Mo. 
215;  52  Am.  Rep.  365:  Langart  v. 
Ross.  1  Wash.  250;  24  Pac.  443. 

9  Wilson  V.  Samuels,  100  Cal.  514; 
35  Pac.  148;  Miller  v.  R.  R.,  58 
Kan.  189;  48  Pac.  853;  Smith  v. 
Shell.  82  Mo.  215;  52  Am.  Rep.  365: 
Sayre  v.  Mohney.  35  Or.  141 :  56 
Pac.  526 ;  Langart  v.  Ross,  1  Wash. 
250;  24  Pac.  443. 

10  Langart  v.  Ross,  1  Wash.  250; 
24    Pac.    443.      (Such    remainder   of 


the  purchase  price  being  the  amount 
of  a  mortgage  on  the  premises  which 
the  purchaser  was  to  pay  when  due. ) 

11  Troy  Fertilizing  Co.  v.  Logan, 
96  Ala.  619;  12  So.  712. 

12  Hammond  v.  Barton,  93  Wis. 
183;  67  N.  W.  412.  So  Colclough  v. 
Carpeles,  89  Wis.  239 ;  61  N.  W.  836. 

13  Kaufman  v.  Mfg.  Co.,  78  la. 
679;  16  Am.  St.  Rep.  462;  43  N.  W. 
612.  (In  this  case  the  contract  gave 
the  purchaser  the  exclusive  right  to 
sell  a  given  brand  of  cigar  in  cer- 
tain territory  as  long  as  he  contin- 
ued to  order  it.) . 

"Miller  v.  R.  R.,  58  Kan.  189; 
48  Pac.  853. 


CONTRACTS    WHICH    MUST    BE    PEOVED    BY    WRITING.         1069 

located,^^  are  each  sufficient.  A  memorandum  of  a  sale  of  realty 
which  fixes  the  place  of  payment  at  a  certain  city  has  been  held 
sufficiently  definite,  and  oral  evidence  has  been  received  to  show 
at  what  place  in  such  city  payment  should  be  made.^°  So  the 
omission  of  tenns  which  may  be  supplied  from  the  rest  of  the 
memorandum  does  not  make  it  invalid.^''  Thus  leaving  blank 
the  amount  specified  does  not  avoid  such  memorandum  if  it 
furnishes  the  means  of  ascertaining  such  amount,  as  the  amount 
remaining  due  from  the  property-owner  to  the  contractor.^® 

IX.     Methods  of  Satisfying  the   Seventeenth   Section 
OF  the  Statute  of  Frauds. 

§705.     Methods  of  satisfying  the  seventeenth  section. 

An  important  point  of  difference  between  the  fourth  section 
and  the  seventeenth  section  of  the  statute  of  frauds  is  this.  The 
fourth  section  provides  without  alternative  provision,  that  the 
contract  or  some  note  or  memorandum  thereof  must  be  in  writ- 
ing. The  seventeenth  section  provides  four  courses:  (1)  a 
written  contract  or  memorandum ;  ( 2 )  acceptance  and  actual 
receipt  of  the  property  sold;  (3)  payment  of  part  or  all  of  the 
purchase  price ;  (4)  payment  of  earnest.  Any  one  of  these  four 
courses  complies  literally  with  the  statute  and  makes  the  con- 
tract enforceable.  Payment  of  the  purchase  price,  payment  of 
earnest,  and  acceptance  and  receipt,  are  none  of  them  merely 
acts  of  part  performance  which  justify  equit}'  in  enforcing  the 
contract  in  the  absence  of  a  written  memorandum  and  in  disre- 
gard of  the  statute.^  They  or  any  of  them  constitute  compli- 
ance with  the  statute  as  truly  as  the  wintten  memorandum. 
Pull  performance  by  one^  or  both^  of  the  parties,  is  a  compliance 

isScholtz   V.    Ins.    Co.,    100    Fed.  is  Wilson    v.    Samuels,    100    Col. 

673;  40  C.  C.  A.  556.  514;  35  Pac.  148. 

16  Sayre  v.   Mohney,   35   Or.   141;  i  See  §  717  et  seq. 

56  Pac.  526.  2  Fermont    Carriage    Mfg.    Co.    v. 

17  Wilson  V.  Samuels,  100  Cal.  Thomsen.  65  Neb.  370;  91  N.  W.  376. 
514;  35  Pac.  148;  McLeod  v.  Adams,  3  Lathrop  v.  Humble,  —  Wis.  — ; 
102  Ga.  533;  27  S.  E.  680.  97  N.  W.  905. 


1070  PAGE    ON    CONTRACTS. 

with  the  statute.  Hence  it  is  error  to  charge  that  there  can  be 
no  sale  of  personalty  without  a  memorandum  in  writing  and 
refusal  so  to  charge  is  not  error.*  If  on  the  other  hand  a  writr 
ten  memorandum  has  been  made  as  provided  for  by  statute,  no 
acts  of  performance  are  necessary.^ 

Furthermore,  the  seventeenth  section  specifically  provides  the 
methods  of  comj)lying  with  its  requirements.  Accordingly 
other  acts  intended  as  performance  of  the  contract  are  insuf- 
ficient as  compliance  with  the  statute.  Preparations  by  the 
vendee  for  receiving  the  goods,^  or  for  having  them  transported 
by  vendor,  as  furnishing  flour  sacks  in  which  vendor  is  to  ship 
the  flour  sold,^  or  trimming  the  sides  of  a  hay  rick,  sold  with 
others  for  delivery  by  vendor  at  another  place,*  do  not  prevent 
the  statute  from  applying.  Still  less  does  conduct  by  the  ven- 
dor, such  as  buying  goods  with  which  to  perform  the  contract  of 
sale^  prevent  the  statute  from  applying.  This  rule  is  modified 
in  England  by  the  present  statute  which  provides  that  accept- 
ance exists  within  the  meaning  of  the  contract  where  the  buyer 
does  any  act  which  recognizes  a  pre-existing  contract  of  sale 
whether  he  accepts  the  goods  in  performance  of  the  contract  or 
not.  Thus  the  statute  does  not  apply  where  the  vendee  exam- 
ines the  goods,  takes  a  sample  and  rejects  them  on  the  ground 
that  they  are  not  equal  to  a  sample  previously  given  to  him  with 
which  the  goods  were  to  correspond.^*^ 

The  statute  requires  acts  of  the  prescribed  classes  which 
clearly  show  the  intention  of  the  parties  to  make  the  contract 
which  they  seek  to  enforce.  Mere  words,  no  matter  how  clear, 
cannot  satisfy  the  statute. ^^     Tl\e  nature  of  the  written  mfimo- 

4  Williams  v.  Andrew,  185  111.  98;  sCorbett  v.  Wolford,  84  Md.  42G; 
56    N.    E.    1041;    affirming,    84    111.      95  Atl.  1088. 

App.  289.  9  Bernhardt  v.  Walls,  29  Mo.  App. 

5  Warner  v.  Warner,  30  Ind.  App.      206. 

578;  66  N.  E.  760;  Wade  v.  Curtis,  lo  Abbott  v.  Wolsey    (1895),  2  Q. 

96  Me.  309;  52  Atl.  762.  B.  97. 

6  Harris  v.  Rounsevel,  61  N.  H.  ii  It  is  said  to  be  definitely  set- 
250.  tied   that   "  words   are   not    enough, 

7  Galbraith  v.  Holmes,  15  Ind.  and  that  the  statute  can  he  satisfied 
App.  34;  43  N.  E.  575.  only  by  sometiiicg  done  subsequent 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1071 

randum  has  been  discussed  elsewhere/^  The  remaining  acts 
specified  by  this  section  of  the  statute  will  be  considered  in  de- 
tail. 

§706.     Part  payment. 

By  the  terms  of  the  statute  payment  of  part  of  the  purchase 
money  is  sufficient.^  Payment  implies  that  the  vendor  takes  the 
thing  given  in  payment  with  that  understanding.  Thus  a  ten- 
der of  the  purchase  money,^  or  of  earnest,^  if  unaccepted  is  not 
a  compliance  with  the  statute.  Payment  of  part  of  the  pur- 
chase price  to  the  agent  who  is  authorized  to  make  the  sale  is 
sufficient.*  So  if  several  contracts  of  sale  have  been  made  a  gen- 
eral payment  on  account  is  sufficient  to  comply  with  the  statute.^ 
Payment  need  not  be  in  money.  Anything  of  value  accepted 
and  received  in  payment  amounts  to  payment  within  the  mean- 
ing of  this  section.  Payment,  within  the  statute,  may  be  by 
check,^  or  note,'^  as  well  as  by  cash.  The  transfer  of  a  logging 
contract  is  payment  of  the  purchase  money  within  the  statute.* 
An  oral  promise,  however,  while  it  is  a  valuable  consideration 
for  a  promise  in  return,  is  not  payment  within  the  meaning  of 
the  statute.**  Whether  an  agreement  to  purchase  certain  goods 
and  to  credit  the  price  thereof  upon  a  debt  owed  by  the  vendor  to 
the  vendee  necessarily  involves  a  part  payment  for  such  goods  is 
a  question  on  which  there  is  some  divergence  of  authority.  The 
weight  of  authority  holds  that  a  mere  oral  agreement  to  credit 
the  purchase  price  on  the  antecedent  debt,  without  anything 

to  the  sale  unequivocally  indicating  *  Jones   v.    Wattles,   —   Xeb.   — ; 

the   mutual   intentions    of   the   par-  92  N.  W.  765. 

ties."     Alderton  v.  Buchoz,  3  Mich.  5  Berwin  v.  Bolles,  183  Mass.  340; 

322,  329;   cited  in  Gorman  v.  Bros-  67  N.  E.  323. 

sard,  120  Mich.  611,  618;  79  N.  W.  6  McLure  v.  Sherman,  70  Fed.  190. 

903.  7  Baldwin    v.     Threlkeld,    8    Ind. 

12  See  §§  696-704.  App.  312;   34  N.  E.  851;   rehearing 

1  Cooper  V.  Gas  Co.,  127  Fed.  482;  denied,     35     N.     E.     841.     Contra, 
C.  R.  Shaw  Lumber  Co.  v.  Manville,  Krohn  v.  Bantz,  68  Ind.  277. 

4  Ida.  369;  39  Pac.  559.  s  Burton   v.  Gage,   85  Minn.   355; 

2  Edgerton  v.  Hodge.  41  Vt.  676.  88  N.  W.  997. 

3  Hershey  Lumber  Co.  v.  Lumber  9  Edgerton  v.  Hodge,  41  Vt.  676. 
Co.,  86  Minn.  449;  69  N.  W.  215. 


1072  PAGE    ON    CONTKACTS. 

further  is  not  part  payment  within  the  meaning  of  the  statnte/" 
It  has  been  said  that  a  written  receipt  must  be  given  or  an  actual 
credit  on  the  old  debt  made."  Credit  given  on  the  notes  of  the 
vendor  which  were  held  by  the  vendee  is  part  payment  within 
the  meaning  of  the  statute/^  In  some  cases,  even  a  written  re- 
ceipt has  been  treated  as  a  memorandum  subject  to  the  rules 
which  control  its  form  and  essential  elements,  and  not  as  part 
payment/^  Hence  if  the  receipt  does  not  show  all  the  property 
bargained  for,  oral  evidence  is  inadmissible  to  show  that  addi- 
tional  property  was  included  in  the  contract."  Other  courts 
hold  that,  assuming  such  a  contract  to  be  within  the  statute,  the 
satisfaction  of  the  antecedent  debt  is  such  part  payment  as  to 
comply  w^ith  this  section  of  the  statute  of  frauds.^^ 

§707.     Earnest. 

Earnest  was  originally  a  sum  of  money  paid  by  the  vendee  to 
bind  the  vendor  to  his  offer ;  "  a  distinct  payment  for  the  seller's 
forbearance  to  sell  or  deliver  a  thing  to  any  one  else."^  As  it 
bound  the  vendor  and  not  the  vendee  it  corresponded  to  offers  at 
Modern  Law,  made  under  contract,  supported  by  valuable  con- 

10  Norton  v.  Davison  (1899),  1  Q.  App.  34;  43  X.  E.  575;  Brabin  v. 
B.    401 ;    Gorman    v.    Brossard,    120      Hyde.  32  X.  Y.  519. 

Mich.  611;  79  X.  W.  903;  Matthies-  i2Dieckman    v.    Young,    87    Mo. 

sen,  etc..  Refining  Co.  v.  McMahon,  App.  530. 

38  N.  J.  L.  536;  Brabin  v.  Hyde,  32  i3  Milos  v.  Covacevich,  40  Or.  239; 

N.  Y.  519.     "  Where  no  written  evi-  66  Pae.  914. 

dence   of  the  contract   is  made  and  i4  Milos  v.  Covacevich,  40  Or.  239; 

payment  is  relied  on  as  the  compli-  66   Pac.   914.      (This   case,   however, 

ance   with   the  statute,   mere   words  was  decided  under  a  statute  provid- 

are  not  sufficient.     Some  act  in  part  ing  that  payment  must  be  made  at 

performance  or  part  execution  of  the  the  time  of  the  sale,  and  the  receipt 

contract   such   as   the    surrender    or  was  given  two  days  afterwards.) 

cancellation  of  the  evidence   of  the  is  Johnson  v.  Buchanan.  29  X.  S, 

debt,  or  a  receipt  or  discharge  of  the  27.     To  this  effect  see  the  dictum  in 

indebtedness    is   necessary   to   make  Walker  v.   Xussey,   16  Mees.   &  W. 

the     contract    valid."     Matthiessen.  302.     See  also  Plow  Co.  v.  Hanthorn, 

etc.,   Refining   Co.   v.   McMahon,   38  71  Wis.  529;  37  X.  W.  825. 

X    J.  L.  536,   540;   quoted  in  Milos  i  Pollock   and  Maitland's   History 

V.  Covacevich,  40  Or.   239.   242;    66  of  English  Law   (2nd  Edition),  Vol. 

Pac.  914.  II.,  P-  206    (original  paging). 

11  Galbraith    v.    Holmes,    15    Ind. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1073 

sideration,  not  to  revoke,  which  are  often  called  options.  As 
the  theory  gradually  prevailed  and  finally  took  statutory  form,^ 
that  earnest  bound  both  vendor  and  vendee,  earnest  came  to 
be  considered  a  thing  of  value,  transferred  from  vendee  to  ven- 
dor to  bind  the  bargain,  not  a  part  of  the  purchase  price  nor  to 
be  deducted  from  it.  In  its  present  obsolescent  form,  earnest  is 
often  confused  with  purchase  money  and  is  treated  as  a  pay- 
ment in  advance  of  part  of  the  purchase  price.^  Earnest  must 
be  paid  to  the  vendor.  A  deposit  by  vendee  with  a  third  person 
as  forfeit  in  case  of  non-performance  is  not  part  payment  or 
earnest  within  the  statute,*  nor  is  it  a  payment  of  earnest  where 
*the  vendee  touched  the  vendor's  hand  with  money,  vendee  re- 
taining possession  of  it.^ 

§708.    Acceptance  and  receipt. —  Necessity  of  both. 

By  the  terms  of  this  section  of  the  statute,  acceptance  and 
actual  receipt  of  part  or  all  of  the  personalty  sold  is  sufficient  to 
make  the  contract  enforceable,  without  a  written  memorandum 
or  a  payment  of  part  of  the  purchase  price  or  earnest.^  Accord- 
ingly the  statute  does  not  apply  where  there  has  been  either  full 
performance,^  or  receipt  and  acceptance  of  part  of  the  person- 

2  Pollock  and  Maitland's  History  Co.,  165  Mass.  328;  52  Am.  St.  Rep. 
of  English  Law  {2nd  Edition),  Vol.  516;  43  N.  K  112;  Sullivan  v.  Sul- 
II.,  p.  209.  livan,  70  Mich.  583;  38  N.  W.  472; 

3  Howe  V.  Hayward,  108  Mass.  Beyerstedt  v.  Mill  Co.,  49  Minn.  1 ; 
54;  11  Am.  Rep.  306.  51  N.  W.  619;   Long  v.  Martin,   71 

4Noakes  v.   Morey,   30   Ind.   103;  Mo.  App.  569;  Wyler  v.  Rothschild, 

Jennings  v.   Dunham,   60  Mo.   App.  53  Neb.  566;  74  N.  W.  41;  Riley  v. 

635.  Bancroft,    51    Neb.    864;    71    N.   W. 

5  Blenkinsop  v.  Clayton,  7  Taunt.  745;    Roman    v.    Bressler,    32    Neb. 

597.  240;   49  N.  W.  368;   Duzan  v.  Me- 

1  Dinkier    v.    Baer,    92    Ga.    432;  serve,  24  Or.  .523  ;  34  Pae.  548 ;  Ting- 

17  S.  E.  953;  Coffin  v.  Bradbury,  3  ey  v.  Land  Co.,  9  Wash.  34;  36  Pac. 

Ida.   770;   95   Am.   St.   Rep.  37;   35  1098;  Kimble  v.  Ford,  7  Wash.  603; 

Pac.  715;  Leggett,  etc.,  Co.  v.  Col-  35  Pac.  395;  Gerndt  v.  Conrad,  117 

lier,    89    la.    144;    56    N.    W.    417;  Wis.   15:   93  N.  W.  804;   Alexander 

Leonard  v.  Medford,  85  Md.  666;  37  v.  Oneida  Co.,  76  Wis.  56;  45  N.  W. 

L.  R.  A.  449;  37  Atl.  365;  French  v.  21. 

Bank,  179  Mass.  404;  60  N.  E.  793;  2  Hinkle  v.  Fisher,  104  Ind.  84;  3 

New  England,  etc.,  Co.  v.  Worsted  N.  E.  624;    Edwards  v.  Brown,  98 
68 


1074 


PAGE    ON    CONTEACTS. 


alty  sold.^  In  dealing  with  decisions  as  distinguished  from 
dicia,  it  is  difficult  to  deduce  an  accurate  definition  of  receipt 
apart  from  acceptance,  or  acceptance  apart  from  receipt,  since  if 
either  is  lacking  the  presence  of  the  other  is  not  enough  to 
uphold  the  contract.  Acceptance  and  actual  receipt  must  co- 
exist. The  statute  uses  the  word  "  and,"  not  "  or,"  and  one 
without  the  other  is  insufficient.*     Accordingly^  mere  delivery  of 


Me.  165;  56  Atl.  654;  Gray  v.  Peter- 
son, 64  Neb.  671;  90  N.  W.  559; 
Brown  v.  Loan  &  Trust  Co.,  117  N. 
Y.  266;  22  N.  E.  952;  Walker  v. 
Bamberger,  17  Utah  239;  54  Pac. 
108. 

3  Scott  V.  Ry.,  12  M.  &  W.  33; 
Coffin  V.  Bradbury,  3  Ida.  770;  95 
Am.  St.  Rep.  37;  35  Pac.  715; 
Weeks  v.  Crie,  94  Me.  458;  80  Am. 
St.  Rep.  410;  48  Atl.  107;  New  Eng- 
land, etc.,  Co.  V.  Worsted  Co.,  165 
Mass.  328;  52  Am.  St.  Rep.  516;  43 
N.  E.  112;  Mississippi  Cotton  Oil 
Co.  V.  Smith,  —  Miss.  — ;  33  So. 
443;  Badger  Telephone  Co.  v.  Tele- 
phone Co.,  —  Wis.  — ;  97  N.  W.  907. 

4  Devine  v.  Warner,  75  Conn. 
375;  96  Am.  St.  Rep.  211;  53  Atl. 
782;  Corbett  v.  Wolford,  84  Md. 
426;  35  Atl.  1088;  Knight  v.  Mann. 
118  Mass.  143;  Powder  River  Live- 
stock Co.  V.  Lamb,  38  Neb.  339;  56 
N.  W.  1019;  Wilcox  Silver  Plate  Co. 
V.  Green,  72  N.  Y.  17;  Curtis  v. 
Lumber  Co.,  114  N.  C.  530;  19  S.  E. 
374 ;  Dinnie  v.  Johnson.  8  N.  D. 
153;  77  N.  W.  612;  Galvin  v.  Mae- 
Kenzie,  21  Or.  184;  27  Pac.  1039. 
"  The  question  as  to  what  is  an  ac- 
ceptance and  actual  receipt  of  goods 
within  the  purview  of  the  statute  is 
one  on  which  the  decisions  are  at 
variance.  These  propositions  may 
be  considered  as  settled  by  the  great 
weight  of  authority  in  England,  as 
well  as  in  the  courts  of  this  coun- 
try, and  the  doctrines   embraced  in 


them  accord  with  the  reasons  which 
gave  rise  to  this  important  statute. 
First,  the  statute  is  not  complied 
with  unless  two  things  concur  —  the 
buyer  must  accept  and  actually  re* 
ceive  part  of  the  goods  and  the  con- 
tract will  not  be  good  unless  he  does 
both.  Second,  tnere  may  be  an  ac- 
tual receipt  without  acceptance  and 
an  acceptance  without  a  receipt  — • 
an  acceptance  to  be  inferred  from 
the  assent  of  the  buyer,  meant  by 
him  to  be  final,  that  the  goods  are  to 
be  taken  by  him  as  his  property  un- 
der the  contract.  Third,  it  is  imma- 
terial whether  the  buyer's  refusal  to 
take  the  goods  be  reasonable  or  not. 
If  he  refuses  the  goods,  assigning 
grounds  false  or  frivolovis  or  as- 
signing no  reasons  at  all,  it  is  clear 
that  he  does  not  accept  the  goods. 
The  question  is  not  whether  he  ought 
to  accept,  but  whether  he  has  ac- 
cepted them.  Fourth,  the  question 
of  acceptance  or  not  is  a  question  as 
to  what  was  the  intention  of  the 
buyer  as  signified  by  his  outward 
acts.  .  .  .  Another  proposition 
that  is  vouched  for  upon  principle 
and  by  the  weight  of  authority  is 
that  possession  of  itself  is  not  evi- 
dence of  an  acceptance,  and  that  a 
compliance  with  the  statute  would 
require  an  acceptance  by  the  vendee 
as  owner."  Mechanical  Boiler 
Cleaner  Co.  v.  Kellner,  62  N.  J.  L. 
.544,  558;  43  Atl.  599.  For  similar 
views    see    Devine    v.    Warner,    76 


CONTBACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1075 

the  goods  sold,  transferring  possession,  but  not  under  such  cir- 
cumstances as  to  show  that  the  vendee  has  accepted  them  as  full 
or  part  perfonnance  of  the  contract  of  sale  is  not  compliance 
with  the  statute.^  Thus  if  A  sells  hay  standing  in  ricks  to  B, 
to  be  transported  by  A  to  a  station  to  be  selected  by  B,  at  which 
point  B  was  to  take  charge  of  the  hay  and  pay  for  it,  acts  of 
B's  servants  under  his  direction  in  taking  some  of  the  hay  from 
one  of  the  ricks  and  trimming  down  one  of  the  sides,  do  not  con- 
stitute receipt  and  acceptance  as  a  matter  of  law,  so  that  the  ven- 
dor can  recover  where  the  hay  was  burned  a  few  minutes  after 
this  work  on  it  had  begim.*'  Receipt  and  acceptance  need  not 
occur  at  the  same  time.  Receipt  may  precede  acceptance,^  or 
acceptance  may  precede  receipt.^  The  definition  of  the  one  is 
not  infrequently  so  framed  as  to  imply  the  presence  of  the  other. 
"  Acceptance  is  the  receipt  of  the  thing  with  an  intention  to  re- 
tain it,  indicated  by  some  act  or  words  sufficient  for  that  pur- 
pose."^ It  is  therefore  safer  to  state  in  what  cases  they  co-exist 
than  to  attempt  to  state  in  what  cases  they  exist  separately.  As 
far  as  their  meanings  can  be  treated  separately,  these  terms  are 
discussed  in  the  following  sections.  Whether  receipt  and  ac- 
ceptance exist  is  a  question  of  fact.^" 

§709.    Receipt. 

Receipt  within  the  meaning  of  the  statute  is  the  acquisition  by 
the  vendee,  and  the  corresponding  surrender  by  the  vendor,  of 
the  right  of  possession  of  the  property  sold.^     The  act  of  the 

Conn.  229;    56   Atl.   562.     In  Utah  e  Corbett  v.  Wolford,  84  Md.  426; 

the  original   statute  of  frauds  pro-  35  Atl.  1088. 

vided  for  acceptance  'or  receipt;  but  "  Schmidt  v.  Thomas.  75  Wis.  529; 

this   was   held    to   be    impliedly   re-  44  N.  W.  771. 

pealed  by  a  later  statute  of  evidence  »  Cusack  v.   Robinson.    1   B.  &  S. 

requiring     acceptance     and    receipt.  299. 

Hudson  Furniture  Co.  v.  Carpet  Co.,  » Schmidt    v.     Thomas,     75    Wis. 

10  Utah  31;  36  Pac.  132.  529;  44  N.  W.  771. 

5  Oilman  v.' Hill,  36  N.  H.   311;  lo  Garfield  v.  Paris,  96  U.  S.  557; 

Caulkins  v.  Hellman,  47  N.  Y.  449;  Corbett  v.  Wolford,  84  Md.  426;  35 

7  Am.  Rep.  461;  Dinnie  v.  Johnson,  Atl.  1088. 

8  N.  D.  153;  77  N.  W.  612,  i  (In  the  following  quotation  "re- 


1076  PAGE    ON    CONTRACTS. 

vendee  in  taking  possesion  with  the  vendor's  consent,  of  the 
thing  sold  is  a  sufficient  receipt  where  though  incomplete,  it  ex- 
tends as  far  as  circumstances  permit.^  So,  as  has  already  been 
stated,  taking  possession  of  part  only  of  the  personalty  sold  is 
sufficient.^  If  the  statute  prohibits  making  a  contract  on  Sun- 
day, some  courts  treat  receipt  and  acceptance  as  so  far  an  essen- 
tial element  of  the  contract  that  a  receipt  and  acceptance  on  Sun- 
day does  not  make  the  contract  valid.*  Property  received  on 
Sunday  may  be  accepted  on  a  week-day.  Thus  where  A  bought 
an  organ,  book  and  stool  by  oral  contract  and  the  organ  w^as  de- 
livered on  Sunday,  and  subsequently  the  book  and  stool  were  de- 
livered on  a  week-day,  the  vendee  recognizing  the  organ  as  his, 
receipt  and  acceptance  exist. ^  Greater  difficulties  are  presented 
where  there  has  been  no  actual  transfer  of  possession  from  the 
vendor  to  the  vendee.  Constructive  or  symbolic  delivery  with 
the  assent  of  the  vendee  may  be  a  sufficient  receipt.*'  Thus  the 
transfer  of  a  bill  of  lading,^  or  a  delivery  ticket,*  or  the  indorse- 
ment and  transfer  of  a  stock  certificate,®  have  all  been  held  suf- 
ficient receipt  and  acceptance,  if  by  their  terms  such  instruments 
were  made  assignable.  Even  the  indorsement  of  an  undelivered 
stock  certificate,  retained  by  the  vendor  as  security  for  a  note  of 
the  vendee  has  been  held  to  be  sufficient  receipt  and  acceptance.^" 
Constructive  or  symbolic  receipt  and  aceptance  of  articles  too 


ceipt"      is      termed      "delivery.")  3  See  §  708. 

"There   must   be   a   delivery   of   the  *  Ash  v.  Aldrich,  67  X.  H.  .581;  39 

goods  with  intent  to  vest  the  right  Atl.    442;    Schmidt    v.    Thomas,    75 

of  possession  in  the  vendee  and  there  Wis.  ,529;   44  X.  W.  771. 

must  be  an  actual  acceptance  by  the  5  Schmidt  v.  Thomas,  75  Wis.  529 ; 

latter  with  intent  to  take  as  owner."  44  N.  W.  771. 

Belt  V.  Marriott,  9  Gill   (Md.)    331;  e  Gibson   v.    Stevens,    8   How.    (U, 

quoted    in    Corbett    v.    Wolford,    84  S.)     384;    Michigan,    etc.,    R.    R.    v. 

Md.  426,  429;    35  Atl.   1088.     It  is  Phillips,  60  111.  190. 

incorrect     to     use     "  delivery "     as  7  Wadhams  &  Co.   v.   Balfour,   32 

synonymous  with  "receipt."     Good-  Or.  313;  51  Pac.  642. 

wine  V.  Cadwallader,  158  Ind.  202;  s  Webster  v.  Granger,  78  111.  230. 

61  N.  E.  939.  9Meehan  v.  Sharp,  151  Mass.  564; 

2Remick   v.   Sandford.    120   Mass.  24  N.  E.  907. 

309 ;    Cunningham   v.    Ashbrook,    20  lo  St.  Paul,  etc.,  Co.  v.  Howell,  59 

Mo.  553 ;   Somers  v.  McLaughlin,  57  Minn.  295 ;  61  N.  W.  141. 
Wis.  358;  15  N.  W.  442. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1077 

ponderous  to  be  taken  into  actual  custody  have  been  held  suf- 
ficient.^^ Some  courts  have  refused  to  allow  words  alone  to 
constitute  a  symbolic  delivery  of  articles,  however  ponderous.^^ 
Since  the  vendee  must  acquire  the  right  to  the  possession  of  the 
goods  sold,  conduct  of  the  vendor  showing  a  retention  of  a  lien 
for  the  price,  on  the  goods  sold,  prevents  the  transaction  from 
amounting  to  receipt  and  acceptance.^^  So  if  the  goods  are  left 
in  the  possession  of  the  vendor  pending  an  inventory  to  deter- 
mine their  price,  there  is  no  receipt  and  acceptance,  even  though 
the  vendor  at  the  request  of  the  vendee,  makes  announcement  to 
others  of  the  transfer,  and  sends  them  orders  to  be  filled  for  the 
vendee  in  place  of  the  vendor.^'* 

§710.    Acceptance. 

Acceptance  within  the  meaning  of  the  statute  consists  of 
words  or  acts  of  the  buyer  sufficient  to  show  his  intention  to 
assume  exclusive  dominion  over  the  property  purchased,  thereby 
acquiring  title  thereto.^  It  involves  the  intention  on  the  part  of 
the  vendee  to  take  the  goods  sold  as  the  owner  thereof."  So 
where  vendee,  under  a  contract  to  buy  vendor's  accumulation  of 
sawdust,  received  several  loads  of  it  and  used  it,^  or  where  a 

11  Chaplin  v.  Rogers,  1  East  192.  Thomas,  75  Wis.  529;  44  N.  W.  771. 
Such  as  growing  trees  when  treated  Acceptance  consists  of  "  acts  of  such 
as  personalty.  Leonard  v.  Medford.  character  as  to  place  the  property 
85  Md.  666;  37  L.  R.  A.  449;  37  Atl.  unequivocally  within  the  power  and 
3(55  under  the  exclusive  dominion  of  the 

12  Such  as  curb-stones.  Gorman  buyer  as  absolute  owner,  discharged 
V.  Brossard,  120  Mich.  611;  79  N.  of  all  lien  for  the  price."  Mechan- 
W.  903.  ical   Boiler   Cleaner   Co.   v.   Kellner, 

isDevine  V.  Warner.  75  Conn.  375:  62  N.  J.  L.  544,  5.59;   43  Atl.  599; 

96  Am.  St.  Rep.  211;  53  Atl.  782.  Hinchman  v.  Lincoln,  124  U.  S.  38. 

14  Brunswick    Grocery   Co.   v.   La-  Acceptance  consists  of  acts  sufficient 

mar,  116  Ga.  1 ;  42  S.  E.  366.  "  to  pass  title."     Kerhhof  v.  Paper 

iRemick   v.    Sandford,    120  Mass.  Co.,  68  Wis.  674,  676;  32  N.  W.  766. 

309;   Gilman  v.  Hill.  36  N.  H.  311;  2  Curtis  v.  Lumber  Co.,  114  N.  C. 

Mechanical    Boiler    Cleaner    Co.    v.  530;    19   S.  E.   374;   Galvin  v.  Mac- 

Kellner,    62   N.   J.   L.   .544;    43   Atl.  Kenzie.  21  Or.  184:  27  Pac.  1039. 

599 ;    Stone   v.   Browning.   68   N.   Y.  ^  Beyerstedt  v.  Mill  Co.,  49  Minn. 

598;   s.  c,  51  N.  Y.  211;  Redington  1  ;   51  N.  W.  619. 
v.   Roberts,  25  Vt.  686;    Schmidt  v. 


1078  PAGE    ON    CONTRACTS. 

vendee  of  a  dress  made  to  order  tried  it  on,  declared  that  it  fitted 
and  asked  the  maker  to  change  part  of  the  trimming  which  had 
been  selected  originally,*  the  statute  was  complied  with.  Ac- 
cordingly acceptance  may  be  inferred  from  acts  of  the  vendee 
which  are  rightful  if  he  owns  the  goods,  but  wrongful  if  he  does 
not.^  So  where  vendee  of  standing  timber  entered  and  cut 
down  the  trees,  the  contract  being  regarded  as  a  contract  for  the 
sale  of  personalty,®  acceptance  may  be  inferred.  Mere  change 
of  possession  is  not  sufficient.  While  it  may  amount  to  receipt, 
there  must  be  something  further  to  constitute  an  acceptance.' 
Thus  delivery  to  the  vendee  for  the  purpose  of  testing  the  chat- 
tel,^ or  to  enable  him  to  determine  whether  it  corresponds  to  the 
sample,**  or  delivery  of  a  small  quantity  of  the  property  sold  to 
be  used  by  vendee  as  a  sample  in  effecting  a  resale,^"  none  of 
them  amount  to  an  acceptance,  since  no  intention  to  take  as 
owner  apears.  Aceptance  by  an  agent  of  vendee  is  in  the  con- 
templation of  the  law  acceptance  by  the  vendee."  Without  ex- 
press authority,  however,  a  carrier  empowered  to  receive  the 
goods  does  not  thereby  accept  them.^"  The  acts  of  the  agent  re- 
lied on  as  acceptance  must  be  unequivocal.  Thus  the  act  of  the 
vendee's  agent  in  marking  the  property  sold,  with  the  vendee's 
initials  is  not  a  receipt  and  acceptance  within  the  statute/^ 


*Galvin    v.    MacKenzie,     21     Or.  App.  577;   54  K  E.  461;  Remick  v. 

184;  27  Pac.  1039.  Sandford,  120  Mass.  309;  Dinnie  v. 

5  "If  the  vendee  does  any  act  to  Johnson,  8  N.  D.  153;  77  N.  W.  612. 
the  goods  of  wrong  if  he  is  not  the  «  Mechanical  Boiler-Cleaner  Co.  v. 
owner  of  the  goods,  and  of  right  if  Kellner,  62  N.  J.  L.  544;  43  Atl. 
he  is  the  owner  of  the  goods,  the  599;  Stone  v.  Browning,  68  N.  Y. 
doing  of  that  act  is  evidence  that  he  598;  s.  c,  51  N.  Y.  211. 

has      accepted     them."     Parker     v.  9  Bacon  v.  Eceles,  43  Wis.  227. 

Wallis,  5  E.  &  B.  21,  27;   quoted  in  loDierson  v.  Petersmeyer,  109  la. 

Leonard    v.    Medford,    85    Md.    666,  233 ;  80  N.  W.  389.     See  also  Moore 

673;  37  L.  P.  A.  449;  37  Atl.  365.  v.  Love,  57  Miss.  765. 

6  Leonard  V.  Medford,  85  Md.  666 ;  "Schroder    v.   Hardware   Co.,    88 
37  L.  P.  A.  449;  37  Atl.  365;  Wilson  Ga.    578;    15    S.    E.    327;    Meyer   v. 
V.  Fuller,  58  Minn.   149;   59  N.  W.  Thompson,  16  Or.  194;   18  Pac.  16. 
988.  12  See  §  711. 

7  Sprankel    v.    Trulove,     22     Ind.  "  Hart  v.  Anderson,  24  N.  S.  157. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.   1079 

§711.     Acts  of  vendor  insufficient  as  receipt  and  acceptance. 

Acceptance  and  receipt  must  be  acceptance  and  receipt  by  the 
purchaser.  Acts  of  the  seller  alone,  though  in  performance  of 
the  contract,  cannot  serve  as  compliance  with  the  statute  of 
frauds.^  If  the  vendor  delivers  to  a  common  carrier  whom  ho 
selects,  the  goods  sold  by  oral  contract,  such  delivery  does  not 
amount  to  a  receipt  and  acceptance  within  the  meaning  of  the 
statute."  If  the  vendee  takes  the  goods  from  the  carrier,  and 
pays  the  freight,  receipt  and  acceptance  exist.^  Even  if  the  ven- 
dee has  selected  the  carrier,  the  weight  of  authority  is  that  mere 
delivery  by  the  vendor  to  the  carrier  is  not  receipt  and  accept- 
ance by  the  vendee,  since  the  carrier  is  authorized  only  to  trans- 
port the  goods,  and  not  to  bind  vendee  by  accepting  them.*  So 
acts  in  performance  of  the  contract  by  the  vendor  not  amounting 
to  delivery,  such  as  piling  the  property  by  the  side  of  the  road 
under  the  terms  of  the  contract,^  or  altering  and  painting  wagon 


1 "  Xo  act  of  the  seller  alone,  in 
however  strict  conformity  to  the 
terms  of  the  contract,  will  satisfy 
the  statute.  There  must  be  acts  of 
the  buyer,  of  accepting  and  actually 
receiving  the  goods  sold,  beyond  the 
mere  fact  of  entering  into  the  con- 
tract to  bind  the  latter."  Shepherd 
V.  Pressey,  32  N.  H.  49,  55;  quoted 
in  Dierson  v.  Peter smeyer,  109  la. 
233,  235;  80  N.  W.  ■  389.  (Citing 
Maxwell  v.  Brown,  39  Me.  98;  63 
Am.  Dec.  605 ;  Boardman  v.  Spooner, 
13  All.  (Mass.)  353;  90  Am.  Dec. 
196;  Prescott  v.  Locke,  51  N.  H. 
94;  12  Am.  Rep.  55. 

2Denme-.d  v.  Glass,  30  Ga.  637; 
Hausman  v.  Nye,  62  Ind.  485;  30 
Am.  Rep.  199;  Keiwert  v.  Meyer,  62 
Ind.  587;  30  Am.  Rep.  206;  Ft. 
Worth  Packing  Co.  v.  Meat  Co.,  86 
Md.  635 ;  39  Atl.  746 ;  Gatiss  v.  Cyr, 
—  Mich.  — ;  96  N.  W.  26;  Kuppen- 
heimer  v.  Wertheimer,  107  Mich.  77; 
61  Am.  St.  Rep.  317;  64  X.  W.  952; 


Rindskopf  v.  De  Ruyter,  39  Mich. 
1 ;  33  Am.  Rep.  340 ;  Simmons  Hard- 
ware Co.  V.  Mullen,  33  Minn.   195; 

22  N.  W.  294;  Rogers  v.  Philips,  40 
N.  Y.  519;  Hudson  Furniture  Co. 
V.  Carpet  Co.,  10  Utah  31;  36  Pac. 
132;  Agnew  v.  Dumas,  64  Vt.  147; 

23  Atl.  634;  Williams-Hayward 
Shoe  Co.  V.  Brooks,  9  Wyom.  424; 
64  Pac.  342. 

sLeggett  V.  Collier,  89  la.  144; 
56  N.  W.  417. 

4  Taylor  v.  Smith  (1893),  2  Q.  B. 
05;  Billin  v.  Henkel,  9  Colo.  394; 
13  Pac.  420;  Jones  v.  Bank,  29  Md. 
287;  96  Am.  Dec.  533;  Johnson  v. 
Cuttle,  105  Mass.  447;  7  Am.  Rep. 
545;  Smith  v.  Brennan,  62  Mich. 
349;  4  Am.  St.  Rep.  867;  28  N.  W. 
892;  Waite  v.  McKelvy,  71  Minn. 
167;  73  N.  W.  727;  Allard  v.  Grea- 
sert,  61  N.  Y.  1.  Contra,  Strong  v. 
Dodds,  47  Vt.  348;  Spencer  v.  Hale, 
30  Vt.  314;  73  Am.  Dec.  309. 

3  Finney    v.    Apgar,   31    X.    J.    L. 


1080  PAGE    ON    CONTRACTS. 

trucks  in  accordance  with  the  order/'  do  not  satisfy  the  requi/^ 
luents  of  the  statute/  A  tender  by  the  vendor  or  his  agent  on 
condition  of  receiving  immediate  payment  is  not  receij»t  and 
acceptance.*  Thus  sending  stock  to  a  bank  with  a  draft  at- 
tached for  delivery  to  vendee  on  payment  of  the  draft  is  not 
receipt  and  acceptance.®  A  transfer  of  possession  in  contempla- 
tion of  immediate  payment  does  not  constitute  receipt  and  ac- 
ceptance where  possession  was  re-delivered  by  the  prospective 
vendee  because  he  had  not  the  means  of  paying  thei-efor.^°  If 
the  vendor  retains  possession  as  bailee  of  the  vendor,  this  haO 
been  held  sufficient.^^  If  the  vendee  had  possession  before  the 
sale,  and  retains  possession  afterwards,  sufficient  re^-eipt  and  ac- 
ceptance exist.^^  If  the  proj^erty  is  in  the  possession  of  a  third 
person  as  bailee  of  the  vendor,  and  such  third  person  agrees  to 
hold  them  thenceforth  for  the  vendee,  sufficient  r»»ceipt  and  ac- 
ceptance exist.^^  If  the  third  person  does  not  agree  to  hold  the 
property  as  bailee  of  the  vendee,  but  retains  it  in  his  original 
capacity  as  agent  of  the  vendor,  his  rentention  is  'tmot  receipt  and 
acceptance.^*     We  have  already  seen^^  that  the  transfer  of  a 

266.     But    see,     apparently    contra,  12  It    is    "  all    the    delivery    that 

Daniel  v,   Hannah,   106   Ga.   91;    31  could  be  made."     Jsnider  v.   Thrall, 

S.   E.  734.  56  Wis.  674,  676;  14  N.  W.  814. 

6  Parvelski   v.   Hargreaves,   47   N.  i3  King  v.  Jarman,  35  Ark.   190; 
J.  L.  334.  37  Am.  Rep.   11;   Amson  v.  Dreher, 

7  Hanson   v.  Roter,    64   Wis.   622;  35  Wis.  615.  Conir**,  Gunn  v.  Knoop, 
25  N.  W.  530.  73    Ga.   510;    Sparrow   v.   Pate,    67 

8  Spear  v.  Bach,  82  Wis.  192;   52  Ga.  352.     These  cases,  however,  are 
N.  W.  97.  controlled  by  §  1593  of  the  Georgia 

9  Spear  v.  Bach,  82  Wis.  192;   52  code   providing   thav  title   does   not 
N.  W,  97.  pass  until  the  price  is   paid   where 

10  Spear  v.  Bach,  82  Wis.  192;  52       delivery    and    payment    are    by    the 
N.  W.  97.  terms    of   the    contract   concurrent; 

11  Green  v.  Merriman,  28  Vt.  801.       hence  the  l6ss  of  the  cotton  in  the 
(In  this  case  A  sold  B  certain  sheep      hands     of    the     warehouseman     fell 

which  were  then   in  a  yard  of  A's.  upon  the  vendor. 

A    and   B   then   drove   them   to    an-  1*  Farina   v.   Home,    16   M.   &   W. 

other  yard  of  A's,  where  by  agree-  119;  Bentall  v.  Burn,  3  B.  «fe  C.  423; 

ment  they  were  to  be  left  two  days,  Boardman     v.      Spooner,      13      All. 

B   to   pay   for  keeping   them.     This  (Mass.)  353;  90  Am.  Dee.  196;  Bas- 

was  held  a  sufficient  receipt  and  ac-  sett  v.  Camp,  54  Vt.  232. 

ceptance.)  is  See  §  709. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1081 

warehouse  receipt  or  bill  of  lading  given  to  vendor  "  or  order  " 
or  with  other  words  of  assignibility  amounts  to  constructive  de- 
livery. Such  a  form  of  order  may  be  considered  as  a  consent 
of  the  warehouse  man  or  carrier,  given  in  advance,  to  hold  the 
goods  for  the  assignee  of  the  order.^*^ 

§712.     Time  at  which  receipt  and  acceptance,  and  part  payment, 
must  be  made. 

Receipt  and  acceptance  need  not  accompany  the  sale.  If  they 
occur  subsequently  in  pursuance  of  the  sale,  the  statute  is  com- 
plied with.^ 

In  the  absence  of  specific  statutory  provision  part  payment 
may  be  made  after  the  contract  of  sale  is  made.^  In  some  juris- 
dictions, however,  the  statute  provides  that  part  payment  must 
be  made  "  at  the  time  "  that  the  contract  of  sale  is  made.^  Un- 
der such  statute,  if  payment  is  made  subsequent  to  the  contract, 
"  there  must  be  a  distinct  renewal  of,  or  assent  to  the  terms  of 
the  original  agreement,  so  as  to  make  the  payment  applj^  on  a 
present  and  not  in  a  past  agreement  o:^  sale,"*  in  order  to  have 
the  subsequent  payment  operate  as  a  compliance  with  the  stat- 
ute.^ Thus  where  A  agreed  to  transfer  his  stock  in  a  corpora- 
tion and  to  resign  his  position  therein  in  consideration  of  certain 
goods,  A's  resignation  presented  some  time  thereafter  was  not 
part  payment  within  the  meaning  of  the  statute  unless  there  was 

16  See  as  showing  the  necessity  of  (Mass.)    428;    Dallavo    v.    Richard- 
words  of  assignability,  Hallgarten  v.  son,  —  Mich.  — ;  96  N.  W.  20. 
Oldham,   135  Mass.  1;   46  Am.  Rep.  3  Raymond    v.    Colton,    104    Fed. 
433.  219;  43  C  C.  A.  501 ;  Milos  v.  Cova- 

1  Marsh  v.  Hyde,  3  Gray  (Mass.)  cevich,  40  Or.  239;  66  Pae.  914. 
331;  Ward  v.  Ward,  75  Minn.  269;  4  Crosby  Hardwood  Co.  v.  Tester, 
77  N.  W.  965;  Ortloflf  v.  Klitzke,  90  Wis.  412,  413;  63  N.  W.  1057; 
43  Minn.  154;  44  K  W.  1085;  Aus-  citing  Kirkhof  v.  Paper  Co.,  68  Wis. 
tin  V.  Boyd,  23  Mo.  App.  317;  674;  32  X.  W.  766;  Paine  v.  Ful- 
Towne  v.  Davis,  66  N.  H.  396;  22  ton,  34  Wis.  83;  Bates  v.  Chesebro, 
Atl,    450;    Jackson    v.    Tupper,    101  32  Wis.  594;  s.  e.,  36  Wis.  636. 

N.  Y.  515;   Schmidt  v.   Thomas.   75  5  Hunter  v.  Wetsell,  84  N.  Y.  549; 

Wis.  529;  44  N.  W.  771.  38   Am.   Rep.   544;    s.   c,   57   N.   Y. 

2  Thompson    v.     Alger,     12     Met.      375;    15  Am.  Rep.  508. 


1082 


PAGE    ON    CONTRACTS. 


such  reaffirmance  or  restatement  of  the  contract  as  to  render  the 
payment  one  made  at  the  time.® 

Under  the  theory  that  an  unenforceable  offer  is  revocable 
until  so  accepted  as  to  be  enforced,  receipt  and  acceptance/  or 
part  payment^  by  the  vendee  after  the  offer  is  revoked  by  the 
vendor  is  insufficient. 

X.     Effect    of    Complete    Performance    of    Contracts 
Within  the  Fourth  Section  of  Frauds. 

§713.     Complete  performance  on  both  sides. 

The  section  of  the  statute  under  discussion  provides  that  "  no 
action  shall  be  brought  vt^hereby  to  charge  "  parties  to  the  classes 
of  contracts  therein  specified.  From  this  wording  it  is  plain 
that  the  legislature  was  referring  only  to  contracts  which  were 
in  part  at  least  executory  and  to  enforce  which  a  right  of  action 
was  necessary.  Accordingly  if  the  contract  is  completely  per- 
formed on  both  sides  it  is  not  within  this  section  of  the  statute 
either  in  letter  or  in  spirit.^  Thus  an  oral  contract  for  the 
sale,-  or  lease^  of  realty;  or  an  oral  contract  for  an  easement, 


6  Raymond  v.  Colton,  104  Fed. 
219;  43  C.  C.  A.  501.  (Merely 
presenting  his  resignation  and  stat- 
ing that  it  was  in  fulfillment  of  the 
agreement  was  not  sufficient.) 

'  Smith  V.  Hudson,  6  B.  &  S.  431 ; 
118  Eng.  C.  L.  429. 

8  Edgerton  v.  Hodge,  41  Vt.  67G. 

iBibb  V.  Allen,  149  U.  S.  481; 
Walsh  V.  Calcough,  56  Fed.  778;  6 
C.  C.  A.  114;  Merrell  v.  Witherby, 
120  Ala.  418;  74  Am.  St.  Rep.  39; 
23  So.  994;  26  So.  974;  Bates  v. 
Babcock,  95  Cal.  479;  29  Am.  St. 
Rep.  133;  16  L.  R.  A.  745;  30  Pac. 
605;  Coffin  v.  Bradbury,  3  Ida.  770; 
95  Am.  St.  Rep.  37;  35  Pac.  715; 
Anderson  School  Township  v.  Mil- 
roy  Lodge,  130  Ind.  108;  30  Am.  St. 
Rep.  206;  29  X.  E.  411;  Nicholson 
V.   Schmucker,  81  Md.  459;   32  Atl. 


182;  Wetherbee  v.  Potter,  99  Mass. 
354;  Stone  v.  Dennison,  13  Pick. 
(Mass.)  1;  23  Am.  Dec.  654;  Me- 
Cue  V.  Smith,  9  Minn.  252;  86  Am. 
Dee.  100;  Brown  v.  Trust  Co.,  117 
X.  Y.  266 ;  22  X.  E.  952 ;  Remington 
V.  Palmer,  62  N.  Y.  31;  Gregg  v. 
Willis,  71  Vt.  313;  45  Atl.  229; 
Howe  V.  Chesley,  56  Vt.  731;  Pi- 
reaus  v.  Simon,  79  Wis.  392;  48 
X.  W.  674;  Larsen  v.  Johnson,  78 
Wis.  300;  23  Am.  St.  Rep.  404;  47 
X.  W.  61.5. 

2  Grippen  v.  Benham,  5  Wash. 
589;  32  Pac.  555;  Larsen  v.  John- 
son, 78  Wis.  300;  23  Am.  St.  Rep. 
404;  47  X.  W.  615.  Such  as  a  re- 
lease of  dower  and  homestead  rights. 
Gerber  v.  Upton,  123  Mich.  605;  82 
X.  W.  363. 

3  Stautz  V.  Protzman,  84  111.  App. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1083 

siicli  as  the  right  to  construct  a  ditch  over  the  land  of  another,* 
or  an  agreement  to  convey  a  right  of  way  to  a  railway,^  or  a  con- 
tract to  partition  realty,*'  cannot  after  full  performance  on  both 
sides  be  avoided  because  within  the  statute.  Thus  where  A 
agreed  orally  to  convey  certain  realty  to  B  in  consideration  of 
B's  supporting  A  for  life,  such  contract  though  verbal  cannot  be 
avoided  where  A  has  made  such  conveyance  and  B  has  furnished 
such  support.'^  So  an  oral  contract  to  pay  the  debt  of  another 
cannot  be  avoided  after  performance.^  So  a  subsequent  oral 
modification  of  a  written  contract  of  a  class  included  within  the 
statute  cannot  be  avoided  when  fully  performed  on  both  sides.^ 
After  performance  one  party  cannot  ignore  the  contract  and  sue 
to  recover  a  reasonable  compensation  for  what  he  has  parted 
with  thereunder.^" 

§714.     Complete  performance  on  one  side,  leaving  no  act  within 
the  statute  to  be  done. 

If  the  contract  requires  A  to  do  an  act  which  is  one  of  those 
named  in  this  section  of  the  statute  of  frauds,  and  requires  B  to 
do  an  act  which  is  not  one  of  those  named  in  this  section,  com- 
plete performance  by  one  party  may  have  a  very  different  effect 
upon  the  contract  from  performance  by  the  other.  If  A,  the 
party  who  is  required  by  the  terms  of  the  contract  to  perform  an 
act  which  is  one  of  those  included  within  this  section  of  the  stat- 


434;  Harris  v.  Harper,  48  Kan.  418;  6  Bacon  v.  Fay,  63  N.  J.  Eq.  411; 

29   Pac.   697.     So   with   the    surren-  51  Atl.  797. 

der   of  a   lease.     Tobener   v.   Miller,  7  Larsen  v.  Johnson,  78  Wis.  300; 

68  Mo.  App.  569.  23  Am.  St.  Rep.  404;  47  N.  W.  615. 

4Flickinger  v.  Shaw,  87  Cal.  126;  sRling  v.  Tunstall,  124  Ala.  268; 

22  Am.  St.  Rep.  234;    11  L.  R.  A.  27  So.  420;  Webster  v.  Le  Compte, 

134;  25  Pac.  268;  McLure  v.  Koen,  74   Md.    249;    22   Atl.    232;    Milner 

25   Colo.    284;    53    Pac.   1058;    Bal-  v.  Harris,  1  Neb.  tin.  584;  95  N.  W. 

dock  V.  Atwood,  21  Or.  73;   26  Pac.  682. 

1058.  9Doherty  v.   Doe,    18    Colo.    456; 

sMaupin  v.  Ry.,  171  Mo.  187;   71  33   Pac.    165. 
S    W.  334.     For  a  similar  case  see  lo  St.     Louis     Hay,     etc.,     Co.     v. 
Michigan    Central    Ry.    v.    Ry.,    —  United  States.  191  U.  S.  159;   Stan- 
Mich.  — ;   93  N.  W.   882.  att  v.  Mullen,   148  Mass.  570;   2  L. 

E.  A.  697. 


1084: 


PAGE    ON    CONTRACTS. 


ute,  has  fully  performed  the  terms  of  the  contract  on  his  part  to 
be  performed,  leaving  B  liable  for  an  act  which  is  not  one  of 
those  named  in  this  section,  A's  performance  prevents  the  statute 
from  applying  to  such  contracts,  since  B's  promise  may  be 
proved  by  oral  evidence  and  A's  performan^'e  need  be  shown 
only  as  consideration  for  B's  promise,  no  attempt  to  enforce  A's 
promise  being  necessary.^  A  may  sue  B  at  law  on  the  contract 
itself,  without  either  suing  for  a  reasonablt  compensation  inde- 
pendent of  the  contract,  or  being  compelled  to  resort  to  equity.^ 
Thus  if  A  has  agreed  orally  to  convey  realty  to  B  in  considera- 
tion of  some  recompense  in  value  not  within  the  statute  and  A 
has  performed  the  terms  of  the  contract  on  his  part  to  be  per- 
formed by  executing  and  delivering  a  deed  for  such  realty  to  B, 
A  can  enforce  the  contract  against  B.^  If  A  agrees  to  convey 
realty  to  B  and  performs  the  contract,  a  further  oral  contract 
between  A  and  B  with  reference  to  the  payment  of  the  purchase 
price  is  not  affected  by  this  clause  of  the  statute.*     Thus  an  oral 


1  McConnell  v.  Brayner,  63  Mo. 
461;  Marks  v.  Davis,  72  Mo.  App. 
5.57;  Flower  v.  BarnekoflF,  20  Or. 
132;  11  L.  R.  A.  149;  25  Pac.  370; 
Warwick,  etc.,  Co.  v.  Allen  (E.  I.), 
35  Atl.  579. 

2  Marks  v.  Davis,  72  Mo.  App. 
557. 

3  Wood  V.  Perkins,  57  Fed.  258; 
Merrell  v.  Witherby,  120  Ala.  418; 
74  Am.  St.  Rep.  39;  23  So.  994;  26 
So.  974;  Dargin  v.  Hewlitt,  115  Ala. 
510;  22  So.  128;  Butler  v.  Lee,  11 
Ala.  885;  46  Am.  Dec.  230;  Devalin- 
ger  V.  Maxwell,  —  Del.  — ;  54  Atl. 
684;  Stringer  v.  Stringer,  93  Ga. 
320;  20  S.  E.  242;  Ballard  v.  Camp- 
lin,  161  Ind.  16;  67  N.  E.  505  [re- 
versing (Tnd.  App.)  64  N.  E.  931]; 
Lingeman  v.  Shirk,  15  Ind.  App. 
432;  43  N.  E.  33;  Bird  v.  Ja- 
cobus, 113  Ta.  194;  84  N.  W. 
1062;  McKinley  v.  McKinley 
(Ky.).   66   S.   W.    831;    O'Grady   v. 

O'Grady,  162  Mass.  290;   38  N.  E. 


196;    Parker  v.   Tainter,    123   Mass. 
185;  Gardner  v.  Gardner.  106  Mich. 
18;     63     N.     W.    988;     Hagelin    v. 
Wacks,    61    Minn.    214;    63    N.    W. 
624;  Smock  v.  Smock,  37  Mo.  App. 
56;    Skow   v.   Locks    (Neb.),   91   N. 
W.    204;    Griffith    v.    Thompson,    50 
Neb.  424;   69  N.  W.  946;   Bigler  v, 
Baker,   40    Neb.   325;    24   L.   R.   A, 
255;    58  N.  W.   1026;    Smith  v.  Ar 
thur,  110  N.  C.  400;  15  S.  E.  197 
Maguire  v.  Heraty.  163  Pa.  St.  381 
43  Am.   St.  Rep.  800;   30  Atl.   151 
Wilkins  v.  Totty   (Tenn.  Ch.  App.) 
64  S.  W.  338 ;  Showalter  v.  Macdon 
nell.    83   Tex.    158;    18    S.    W.   491 
Johnson     v.     Clarkson     (Tex.     Civ, 
App.),  29  S.  W.  178;  Davis  v.  Farr, 
26  Vt.  596. 

^Turpie    v.    Lowe.    114    Ind.    37; 
15  N.  E.  834;  Cummings  v.  Arnold, 

3  Met.    (Mass.)    486;    37   Am.   Dec. 
l."5:    Brown  v.  Brown,  47  Mo.,  130; 

4  Am.  Rep.  320;   Negley  v.  Jeffors, 
28  O.  S.  90;  Whiflfen  v.  Hollister,  12 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.     1085 

agreement  by  vendee  to  pay  a  debt  of  vendor's^  as  a  lien  for  the 
purchase  money  due  from  vendor  to  his  grantor,"  or  a  mortgage 
given  by  vendor  to  secure  his  debt/  as  part  of  the  purchase  price 
of  such  realty,  is  not  within  this  clause  of  the  statute.*  So 
an  oral  contract  by  vendee  to  discharge  certain  assessments 
claimed  to  be  liens  on  the  realty  conveyed  is  not  within  this 
clause."  So  a  contract  forfeiting  an  advance  deposit  of  the 
purchase  price  if  the  written  contract  for  the  purchase  of 
realty  as  extended  by  the  oral  contract  in  question  is  not  com- 
plied with,  is  not  within  the  statute.^*^  A  contract  by  vendor  to 
refund  a  part  of  the  purchase  price  on  tendering  a  deed  of  a  lot 
less  in  area  than  that  contracted  for"  is  not  within  the  statute. 
While  an  oral  contract  whereby  A  agrees  with  B  that  A  shall 
buy  land  from  X  and  resell  it  to  B  is  within  the  statute,  yet  if  A 
causes  the  deed  to  be  made  out  to  B  and  otherwise  performs  his 
part  of  the  contract,  B  must  compensate  him  in  accordance  with 
the  contract  on  his  part  to  be  performed.^^  So  where  X  oifered 
two  tracts  for  sale,  refusing  to  sell  them  separately,  and  A,  who 
wished  one  of  them,  agreed  to  pay  B  $100  if  B  would  buy  the 
other  tract  at  $900,  which  X  asked  for  it,  so  that  A  could  buy 

S.  D.   68;    80  N,  W.   156;    Johnson  « Nor  is  it  within  the  clause  eon- 

V.  Clarkson   (Tex.  Civ.  App.),  30  S.  cerning  contracts  to  answer  for  the 

W.  71 ;  29  S.  W.  178.  debt  of  another.     See  §  623. 

5  McLaren  v.  Hutchinson,  22  Cal.  9  Heald  v.  Ross  (N.  J.  Eq.),  47 
187;    83  Am.  Dec.   59.     So   with    a  Atl.  575. 

promise   to   pay  a   debt   of  vendor's  lo  Hurlburt    v.     Fitzpatrick,     176 

husband.     Brown  v.  Brown,  47  Mo.  Mass.  287;  57  N.  E.  464. 

130;  4  Am.  Rep.  320.  n  Haviland  v.   Saramis,   62   Conn. 

6  Pickett  V.  Jackson  (Tex.  Civ..  44;  36  Am.  St.  Rep.  330;  25  Atl. 
App.),  42  S.  W.  568.  394. 

7  Lowe  V.  Hamilton,  132  Ind.  406;  12  Baker  v.  Wainwright,  36  Md. 
31  N.  E.  1117;  Neiswanger  v.  Me-  336;  11  Am.  Rep.  495.  (A  pur- 
Clellan,  45  Kan.  599;  26  Pae.  18;  chased  at  sheriff's  sale  in  accordance 
Bennett  v.  Knowles,  111  Mich.  226;  with  B's  instructions,  and  had  the 
69  N.  W.  491;  Negley  v.  Jeffers,  28  deed  made  out  to  B.  B  refused  to 
O.  S.  90.  So  where  such  mortgage  pay  the  purchase  price;  and  the 
is  to  secure  vendor's  debt  to  his  property  was  resold  in  accordance 
grantor  for  the  purchase  price  of  with  the  terms  of  the  sale  and  the 
the  realty  sold  to  vendee.  Bedford  loss  charged  to  A.  A  was  allowed 
Belt    Ry.    v.    Winstandley,    16    Ind.  to  recover  this  loss  from  B.). 

App.  143;  44  N.  E.  556. 


1086  PAGE    ON    CONTKACTS. 

his  tract  at  the  same  time,  A's  promise  was  not  within  the  stat* 
ute/^  So  if  A  by  an  oral  contract  agrees  to  sell  realty  to  B  and 
C,  and  subsequently  at  B's  request,  A  conveys  to  C  alone,  B  is 
liable  in  an  action  on  the  contract  for  the  purchase  money.^* 
So  an  oral  sale  of  articles  which  are  treated  by  the  law  as  a  part 
of  the  realty,  such  as  rock,^^  growing  timber,^'*  or  hay,^''  is  not 
affected  by  the  statute  where  the  vendor  has  performed  by  per- 
mitting vendee  to  sever  the  articles  sold  from  the  realty  and  to 
appropriate  them.  Thus  an  oral  contract  for  the  assignment  of 
a  lease,^^  or  for  an  easement,  such  as  a  party-wall,^",  or  a  right  of 
way,^"  are  not  within  this  clause  of  the  statute  when  completely 
performed  by  the  party  who  is  to  convey  the  interest  in  realty. 
If  A  orally  promises  to  pay  B's  debt  to  C,  performance  by  A 
withdraws  the  contract  from  the  operation  of  the  statute.^^ 
\Yliether  a  contract  which  by  its  term,s  is  not  to  be  performed 
within  a  year  from  the  date  of  the  making  thereof  is  taken  out 
of  the  operation  of  the  statute  by  full  performance  on  the  side  of 
the  party  whose  part  was  not  to  be  complete  within  the  year,  is  a 
question  upon  which  the  decisions  are  in  conflict.  Some  courts 
hold  that  in  such  cases  the  statute  does  not  apply,^"  others,  that  it 

13  Ambrose  v.  Ambrose,  94  Ga.  Rep.  61;  5  S.  W.  887;  it  seems  to 
655;  19  S.  E.  980;  citing  Little  v.  be  regarded  as  an  open  question 
McCarter    89  N.  C.  233.  (though   in  that  case,   immaterial) 

14  Randall  v.  Turner,  17  0.  S.  v/hether  the  contract  itself  could  be 
262.  enforced  or  whether  the  party  who 

15  Rich  V.  Donovan,  81  Mo.  App.  had  erected  the  wall  could  recover  ou 
lg4^  a  quantum  meruit  and  use  the  oral 

16  Oconto  Co.  V.  Lundquist,  119  contract  to  show  the  amount  of 
Mich.  264;  77  N.  W.  950;  Wilson  v.  damages. 

Fuller,  58  Minn.  149;  59  K  W.  988.  20  Scott  v.   Ry.,   94  Fed.   340;    36 

iTMowrey  v.  Davis,  12  Ind.  App.  C    C.    A.    282;    Texas,   etc.,   Ry.    v. 

681;  40  K  E.  1108.  Scott,  77  Fed.  726;  37  L.  R.  A.  94; 

18  Cleveland,    etc.,    Ry.    v.    Wood,  23  C.  C.  A.  424. 

189  111.  352;  59  X.  E.  619.  21  Hasterlick    v.    Applebaum,    64 

i9Rindge  v.  Baker,  57  N.  Y.  209;  111.  App.  433. 

15  Am.  Rep.  475;  Hall  v.  Geyer,  14  22  Ives  v.  Gilbert,  1  Root    (Conn.) 

Ohio  C.  C.  229;   7  Ohio  C.  D.  436;  89;     1    Am.    Dec.    35;    Louman    v. 

Horr   V,   Hollis,   20   Wash.   424;    55  Sheets,    124   Ind.   416;    7   L.   R.    A. 

Pae.  565;  Pireaux  v.  Simon,  79  Wis.  784;  24  K  E.  351;  Taylor  v.  Turn- 

392;   48  N.   W.  674.     In  Walker  v.  pike  Co.  (Ky.)  ,  34  S.  W.  226;  Win- 

Shackeford,  49  Ark.  503;  4  Am.  St.  ters  v.  Cherry,  78  Mo,  344. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1087 

does.-^  In  many  states  it  is  held  that  this  clause  of  the  statute 
does  not  applj  to  contracts  to  be  performed  on  one  side  within 
the  year  and  on  the  other  not  within  the  year.^* 

§715.     What  constitutes  performance. 

The  question  of  the  applicability  of  the  statute  depends  there- 
fore in  many  cases  on  whether  the  contract  has  been  performed 
or  not.  Delivery  of  a  deed  by  the  vendor  to  his  own  agent  sub- 
ject to  his  orders,  is,  of  course,  not  performance.^  Delivery  in 
escrow  is  held  not  to  be  full  perfomiance  by  the  vendor,  and  the 
statute  of  frauds  applies.^  Whether  a  tender  of  a  deed  for  the 
realty  by  the  vendor,  which  tender  is  refused  by  the  vendee, 
amounts  to  full  performance  in  this  sense  is  a  question  upon 
which  the  authorities  are  in  conflict.^  Where  such  tender  is 
held  to  constitute  full  performance  a  vendee  cannot  avoid  liabil- 
ity for  the  purchase  price  if  the  vendor  is  ready  and  willing  to 
deliver  his  deed  in  accordance  with  his  oral  contract.*     Whether 


23Towsley  v.  Moore,  30  O.  S.  184; 
27  Am.  Rep.  434.  In  these  cases 
the  remedy  is  on  quantum  meruit. 
See  §§  749-751. 

21  See  §  669. 

1  So  wards  v.  Moss,  .59  Neb.  71; 
80  >sL  \Y^  268;  reversing  58  Xeb. 
119;   78  N.  W.  373. 

2  Swain  v.  Burnette,  89  Cal.  564 ; 
26  Pac.  1093;  Kopp  v.  Reiter,  146 
111.  437;  37  Am.  St.  Rep.  156;  22 
L.  R.  A.  273;  34  N.  E.  942;  Shultz 
V.  Pinson,  63  Kan.  38 ;  64  Pac.  963 ; 
Ducett  V.  Wolf,  81  Mich.  311;  45 
K  W.  829;  Cagger  v.  Lansing,  43 
X.  Y.  550;  Cooper  v.  Thomason, 
30  Or.  161;  45  Pac.  296;  Campbell 
V.  Thomas,  42  Wis.  437;  24  Am. 
Rep.  427.  Under  delivery  in  es- 
crow three  questions  are  involved: 
( 1 )  is  such  delivery  full  perform- 
ance; (2)  if  not,  can  an  undelivered 
deed  be  a  memorandum  sufficient  to 
comply   with   the    statute,   and    (3) 


if  an  undelivered  deed  can  comply 
with  the  requirements  of  the  stat- 
ute, does  the  deed  in  the  specific 
case  contain  enough  to  be  a  suffi- 
cient memorandum.  See  §  696  et 
seq. 

3  That  it  is  full  performance, 
Scott  V.  Glenn,  98  Cal.  168;  32  Pac. 
983;  Stephens  v.  Harding,  48  Neb. 
659;  67  N.  W.  746;  Hodges  v. 
Green,  28  Vt.  358.  That  it  is  not 
full  performance.  Graham  v.  Theis, 
47  Ga.  479;  Sands  v.  Thompson,  43 
Ind.  18;  Kroll  v.  Match  Co.,  113 
Mich.  196;  71  K  W.  630;  Moore  v. 
Powell,  6  Tex.  Civ.  App.  43;  25  S. 
W.  472. 

4  Washington  Glass  Co.  v.  Mos- 
baugh,  19  Ind,  App.  105;  49  N.  E. 
178;  Rowland  v.  Garman,  1  J.  J. 
Mar.  (Ky.)  76;  19  Am.  Dec.  54; 
Barnes  v.  Wise_,  3  T.  B,  Mon.  (Ky.) 
167;  McGowen  v.  West,  7  Mo.  569; 
38   Am.   Dec.  468;    Green  v.   R.  R., 


1088 


PAGE    ON    CONTRACTS. 


tender  of  a  deed  can  amount  to  full  performance  or  not,  there 
can  be  no  performance  without  at  least  a  tender.  Thus  where  a 
deed  was  executed  by  the  grantor  and  left  with  the  notary,  no 
tender  ever  being  made,  it  was  held  that  an  oral  contract  for  the 
sale  of  realty  was  not  taken  out  of  the  statute  by  these  acts,^ 

§716.     Complete  performance  on  one  side  leaving  act  within  the 
statute  to  be  done. 

If,  on  the  other  hand,  B,  who  by  the  terms  of  the  contract  is  to 
do  an  act  which  is  not  within  the  statute,  performs  the  contract 
fully  on  his  part,  while  A,  who  by  the  terms  of  the  contract  was 
to  perform  an  act  which  is  one  of  those  named  in  the  statute,  has 
not  performed  on  his  part,  the  contract  is  within  the  statute. 
Thus  if  A  has  agreed  to  convey  realty  to  B  for  a  valuable  con- 
sideration and  B  has  performed  as  by  paying  the  purchase 
money,^  or  by  rendering  the  services  agreed  upon,^  and  A  has 
not  conveyed  the  realty  agreed  upon,  the  contract  is  within  the 
statute. 


77  K  C.  95;  Crutchfield  v.  Dona- 
thon,  49  Tex.  691;  30  Am.  Rep. 
112.  "He  is  at  the  wrong  end  of 
the  contract  to  do  this."  Taylor  v. 
Russell.  119  N.  C.  30;  25  S.  E.  710. 

sShultz  V.  Pinson,  63  Kan.  38; 
64  Pac.  963.  (The  buildings  on  the 
realty  sold  were  wrecked  by  a  tor- 
nado and  the  vendee  repudiated  the 
contract.) 

iDuff  V.  Hopkins,  33  Fed.  599; 
Manning  v.  Pippen,  95  Ala.  537;  11 
So.  56;  Forrester  v.  Flores,  64  Cal. 
24;  28  Pac.  107;  Percifield  v.  Black, 
132  Ind.  384;  31  N.  E.  955;  God- 
dard  v.  Donaha,  42  Kan.  754;  22 
Pac.  708;  Nay  v.  Mograin,  24  Kan. 
80;  Truski  v.  Streseveski,  60  Mich. 
34;  26  N.  W.  823;  Peckham  v. 
Balch,  49  Mich.  179;  13  N.  W.  506; 
Townsend  v.  Fenton,  30  Minn.  528; 
16  N.  W.  421 ;  Simmons  v.  Headlee, 
94  Mo.  482;  7  S.  W.  20;  Baker  v. 
Wiswell,  17  Xeb.  52;  22  X.  W.  Ill; 


Xibert  v.  Baghurst,  47  N.  J.  Eq. 
201;  20  Atl.  252;  Cooley  v.  Lobdell, 
153  N.  Y.  596;  47  N.  E.  783;  Arm- 
strong V.  Kattenhorn,  11  Ohio  265; 
Pollard  V.  Kinner,  6  Ohio  528; 
Sites  V.  Keller,  6  Ohio  483;  Boo- 
zer  V.  Teague,  27  S.  C.  348;  3  S. 
E.  551;  Humbert  v.  Brisbane,  25 
S.  C.  506;  Wright  v.  Bearrow,  13 
Tex.  Civ.  App.  146;  35  S.  W.  190; 
Munk  V.  Weidner,  9  Tex.  Civ.  App. 
491;  29  S.  W.  409;  Maxfield  v. 
West,  6  Utah  327.  379;  23  Pac.  754; 
24  Pac.  98;  Miller  v.  Lorentz,  39 
W.  Va.  160;  19  S.  E.  391;  Gallagher 
V.  Gallagher,  31  W.  Va.  9;  5  S.  E. 
297;  Jourdain  v.  Fox,  90  Wis.  99; 
62  N.  W.  936.  This  rule  is  modified 
by  special  statute  in  some  states 
as  in  Iowa.     See  §  731. 

2  Townsend  v.  Venderwerken.  9 
Mackey  (D.  C.)  197;  Crabill  v. 
Marsh,  38  O.  S.  321. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1089 

This  view  is  generally  taken  both  in  law  and  equity.^  So 
where  A  agrees  to  mortgage  certain  realty  to  B  to  secure  a  loan 
and  B  makes  the  loan,  A's  promise  to  make  the  mortgage  cannot 
be  enforced  if  oral.*  Many  of  the  cases  which  belong  under 
this  topic  are  treated  for  convenience  under  part  performance.^ 
If  A  agrees  to  perform  an  act  which  by  the  terms  of  the  contract 
cannot  be  performed  within  the  year,  and  B  in  consideration 
thereof  agrees  to  perform  another  act,  performance  by  B  still 
leaves  the  contract  within  the  statute.^  Thus  if  A  agrees  not  to 
sue  on  a  note  for  two  years  in  consideration  of  payment  by  B 
of  part  of  the  interest  in  advance  payment  by  B,  does  not  take 
•  the  case  out  of  the  statute.^ 

XI.     Effect  of  Part  Performance  of  Contracts  Within 
THE  Fourth  Section  of  the  Statute. 

§717.     Part  performance. 

In  equity  it  is  settled  that  certain  acts  in  performance  of  an 
oral  contract  which  without  such  acts  would  be  within  the  stat- 
ute of  frauds,  will  withdraw  such  contract  from  the  operation  of 
the  statute  and  leave  even  the  executory  part  thereof  enforceable, 
though  oral.^     In  some  jurisdictions,  however,  the  doctrine  of 

sTownsend   v.    Fenton,    32   Minn.  Moore,  115  Ga.  327;  41  S.  E.  609; 

482;  21  N.  W.  726;  Brown  v.  Drew,  Deeds  v.   Stephens,   —  Ida.   — ;    69 

67  N.  H.  569;  42  Atl.  177.  Pae.  534;   Swazey  v.  Moore,  22  111. 

*  Brown  v.  Drew,  67   N.  H.  569;  63;  74  Am.  Dec.   134;   Bogle  v.  .Jar- 

42   Atl.    177.  vis,  58  Kan.  76;  48  Pac.  558;   Pike 

5  See  §  717  et  seq.  v.  Pike,  121  Mich.  170;   80  Am.  St. 

eReinheimer  v.   Carter,   31   O.    S.  Rep.    488;    80    N.    W.    5;    Delavan 

579.  V.  Wright,  110  Mich.  143;  67  N.  W. 

TReinheimer   v.  Carter,   31    0.   S.  1110;    Borden    v.    Curtis,    48    N.   J. 

579.  Eq.  120;   21  Atl.  472;   46  N.  J.  Eq. 

iRiggles  V.  Ermey,  154  U.  S.  244;  468;    19  Atl.    127;   Johnson  v.  Hub- 

St    Louis,   etc.,   Ry.   v.   Graham,   55  bell,   10  N.  J.   Eq.    (2   Stockt.   Ch.) 

Ark.  294;   18  S.  W.  56;   Calanehini  332;    66    Am.    Dec.    773;    Ryan    v. 

V.  Branstetter,  84  Cal.  249;  24  Pac.  Dox,    34    N.   Y.    307;    90    Am.   Dec. 

149;  Grant  v.  Grant,  63  Conn.  530;  696;    Butler    v.    Thompson,    45    W. 

38   Am.   St.   Rep.   379;    29   Atl.    15;  Va.  660;   72   Am.  St.  Rep.  838;    31 

Chapman   v.    Allen,   Kirby    (Conn.)  S.  E.  960;  McWhinne  v.  Martin,  77 

399;     1    Am.    Dec.    24;    Collins    v.  Wis.  182;  46  N.  W.  118. 
69 


1090  PAGE    ON    CONTRACTS. 

part  performance  is  not  recognized.^  This  doctrine  is  known 
as  the  doctrine  of  part  performance.  The  name,  while  possibly 
as  convenient  as  any  is  inexact  and  liable  to  mislead.  It  is  by 
no  means  every  act  of  part  performance  which  amounts  to  a 
technical  part  performance.  Furthermore,  the  name  "  part 
performance  "  is  not  infrequently  applied  to  acts  which  consti- 
tute full  performance  on  one  side.^  The  very  existence  of  this 
doctrine,  while  settled  by  precedent  beyond  controversy,  would 
probably  be  challenged  if  the  question  were  now  open.  It  is 
often  characterized  as  a  judicial  repeal  of  the  statute.  While 
the  courts  recognize  it  as  applicable  in  cases  where  it  is  estab- 
lished by  precedent,  they  are  unwilling  in  most  jurisdictions  to  t 
extend  it  further.  Part  performance,  when  operative,  with- 
draws the  entire  contract  from  the  statute  of  frauds  and  makes  it 
enforceable.  It  must  therefore  be  distinguished  from  the  doc- 
trine, recognized  in  some  jurisdictions  that  if  a  contract  has 
been  partly  performed  on  one  side,  the  rights  of  the  parties  as 
to  what  has  been  performed  are  fixed  by  the  contract,  though 
such  acts  may  not  amount  to  a  technical  part  performance  to 
withdraw  the  contract  from  the  operation  of  the  statute.*  The 
doctrine  of  part  performance  is  only  a  special  application  of  a 
wider  doctrine  of  equity,  namely,  that  its  power  of  granting  re- 
lief against  fraud  is  not  limited  by  the  statute  of  frauds.  Thus 
while  an  oral  contract  in  consideration  of  marriage  is  ordinarily 
uneforceable,  both  at  law  and  in  equity,  yet  if  at  the  time  of 
making  such  contract  the  promisor  does  not  intend  performance 
this  is  such  fraud  as  calls  for  the  interposition  of  a  court  of 
equity  without  interference  from  the  statute  of  frauds.^  Some 
authorities  have  gone  so  far  as  to  give  relief  for  breach  of  such 

2  Washington  v.  Soria,  73  Miss.  116  la.  61;  89  N.  W.  100;  Graves 
665;  55  Am.  St.  Rep.  555;  19  So.  County  Water  Co.  v.  Ligon,  112  Ky. 
485;  Box  v.  Stanford,  13  Sm.  &  M.  775;  66  S.  W.  725;  Sanger  v.  French.. 
(Miss.)   93;   51  Am.  Dec.  142.  157  N.  Y.  213;  51  N.  E.  979. 

3  See  §  714  e*  seg.  s  Peek  v.  Peek,   77   Cal.    106;    11 

4  City  of  Greenville  v.  Water-  Am.  St.  Rep.  244;  1  L.  R.  A.  185; 
works  Co.,  125  Ala.  625;  27  So.  19  Pac.  227;  Green  v.  Green,  34 
764;  Lagerfelt  v.  McKie,  100  Ala.  Kan.  740;  55  Am.  Rep.  256;  10  Pac. 
430;  14  So.  281 ;  Murphy  v.  DeHaan,  156. 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1001 

contract,  where  the  marriage  would  not  have  been  entered  into 
but  for  such  promise,  even  if  it  is  not  shown  that  intention  not 
to  perform  existed  when  the  contract  was  made,  on  the  theory 
that  such  breach  works  a  constructive  fraud.*^  Part  perform- 
ance, as  such,  does  not,  however,  have  any  place  in  contracts  in 
consideration  of  marriage. 

§718.     Is  part  performance  a  doctrine  of  equity  alone? 

The  doctrine  of  part  performance,  so-called,  is  in  most  juris- 
dictions treated  as  a  purely,  equitable  doctrine.  Accordingly  in 
such  jurisdictions  part  performance  of  an  oral  contract  which  is 
within  the  statute  does  not  withdraw  it  from  the  operation  of  the 
statute  at  law,  and  no  action  at  law  can  be  brought  thereon.^ 
Thus  an  oral  conract  for  the  assignment  of  a  lease  by  which  the 
assignee  agrees  to  pay  to  the  lessor  the  rent  stipulated  in  the 
lease  does  not,  by  part  performance,  cease  to  be  within  the  stat- 
ute as  far  as  concerns  the  right  of  lessor  to  sue  the  assignee  at 
law  upon  the  covenants  of  the  lease."  So  a  vendor  cannot  on 
part  performance  of  an  oral  contract  to  convey  an  interest  in 

6  Moore  V.  Allen,  26  Colo.  197;  77  567;    81   N.   W.    556;    (modified   on 

Am.  St,  Eep.  255;  57  Pac.  698;  Cat-  rehearing  in   122  Mich.  573;   82   N. 

alini   v.   Catalini,    124    Ind.    54;    19  W.   827;    because  under   the  statute 

Am.    St.    Rep.    73;    24    N.    E.    375;  assumpsit  would  lie  for  the  fraudu- 

Petty   V.    Petty.    4    B.    Mon.    (Ky. )  lent  representations  by  defendant  in 

215;  39  Am.  Dec.  501.  this  case  to  induce  plaintiff  to  buy 

1  Eaton    V.    Whitaker,     18    Conn.  realty  from   defendant's  principal)  ; 

222;  44  Am.  Dec.  586;  Chicago  At-  Nally  v.  Reading,   107  Mo.  350;   L7 

tachment    Co.    v.   Machine   Co.,    142  S.    W.    978;.  Tiefenbrun    v.    Tiefen- 

111.  171;   15  L.  R.  A.  754;  28  N.  E.  brun,    65   Mo.   App.   253;    Smith   v. 

959;  reversed  on  rehearing  25  N.  E.  Phillips,  69  IN.  H.  470;  43  Atl.  183; 

669;  affirmed  31  N.  E.  438;  Sigmund  McElroy   v.   Ludlum,   32    N!  J.   Eq. 

V.  Newspaper  Co.,  82  111.  App.  178;  828;    Kling    v.    Bordner,    65    O.    S. 

Butler  V.  Sheehan,  61  111.  App.  561;  86;  61  N.  E.  148;  Buck  v.  Pickwell, 

Hunt   V.   Coe,    15    la.    197;    81   Am.  27  Vt.  157;  Hibbard  v.  Whitney,  13 

Dec.  465;  Hamilton  v.  Thirston,  93  Vt.   21. 

Md.    213;    48    Atl.    709;    Thompson  2  Chicago  Attachment  Co.  v.  Ma- 

V.    Gould,    20    Pick.     (Mass.)     134;  chine  Co.,  142  111.  171;   15  L.  R.  A. 

Kidder   v.    Hunt,    1    Pick.    (Mass.)  754;    28    N.    E.    959;    reversing   on 

328;    11   Am.   Dec.   183;    Schultz   v.  rehearing,    25    N.    E.   669;    affirmed 

Huffman,  127  Mich.  276;   86  N.  W.  31    N.    E.    438;    Nally   v.    Reading, 

823;   Hallett  v.   Go;  Ion.    122   Mich.  107   ]\Io.  350;    17  S.  W.  978. 


1092  PAGE    ON    CONTRACTS. 

realty/  such  as  an  easement,*  maintain  an  action  at  law  for 
breach  of  the  contract.  So  in  an  oral  contract  to  partition 
realty,  taking  possession  of  their  respective  shares,  does  not  con- 
fer the  legal  title  upon  the  parties.^  This  view  is  not  entertained 
in  all  jurisdictions.  In  some,  part  performance  withdraws  a 
contract  from  the  operation  of  the  statute  even  at  law.®  Thus  in 
Nebraska  taking  possession  of  realty  under  an  oral  contract  and 
making  valuable  improvements  thereon  even  though  coupled 
with  a  default  in  payment  of  the  purchase  price  are  such  acts 
of  part  performance  as  to  defeat  an  action  of  ejectment  by  the 
vendor  against  a  vendee  in  possession."^ 

§719.     What  acts  constitute  part  performance. 

Since  part  performance  is  a  doctrine  of  equity  only,  ques- 
tions of  part  performance  usually  arise  in  suits  for  specific  per- 
formance, and  as  in  each  case  the  ultimate  question  is  whether 
specific  performance  should  be  given  or  not,  the  two  doctrines 
are  often  involved,  and  re-act  each  upon  the  other.  The  doc- 
trine of  part  performance  rests  upon  a  combination  of  two 
distinct  grounds :  first,  that  where  one  party  has  performed  the 
contract  on  his  part  so  far  that  he  cannot  be  restored  to  his 

3  Kidder  V.  Hunt,  1  Pick.  (Mass.)  v.  Griffin,  46  N.  H.  2.31;  Dow  v. 
328;  11  Am.  Dec.  183;  Smith  v.  Jewell,  18  N.  H.  340;  45  Am.  Dec. 
Phillips,  69  N.  H.  470;  43  Atl.  183.  371;  Medlen  v.  Steele,  75  N.  C.  154; 

4  Schujtz  V.  Huffman,  127  Mich.  unless  possession  lasts  for  the  period 
276;   86  N.  W.  823.  of  limitations;  Johnson  v.  Goodwin, 

5  Berry  v.  Seawell,  65  Fed.  742;  27  Vt.  288;  Pope  v.  Henry,  24  Vt. 
13  C.  C.  A.  101;  Gates  v.  Salmon,  560;  Booth  v.  Adams,  11  Vt.  156; 
46  Cal.  362;  McCall  v.  Reybold,  1  34  Am.  Dec.  680;  contra,  that  pos- 
Har.  (Del.)  146;  Duncan  v.  Dun-  session  under  a  contract  for  parti- 
can,  93  Ky.  37;  40  Am.  St.  Rep.  159;  tion  passes  the  legal  title;  McKnight 
18  S.  W.  1022;  White  v.  O'Bannon,  v.  Bell,  135  Pa.  St.  358;  19  Atl. 
86  Ky.  93;  5  S.  W.  346;  Chenery  v.  1036;  Rountree  v.  Lane,  32  S.  C. 
Dole,  39  Me.  162;  Duncan  v.  Sylves-  160;  10  S.  E.  941;  Kennemore  v. 
ter,  16  Me.  388;  Mfg.  Co.  v.  Heal<!,  Kennemore,  26  S.  C.  251;  1  S.  E. 
5  Me.  384;   Porter  v.  Hill,  9  ]\Iass.  881. 

34;   6  Am.  Dec.  22;  Porter  v.  Per-  6  Dewey   v.   Payne,    19   Neb.   540; 

kins,    5    Mass.    233;     4    Am.    Dec.  26  X.  W.  248. 

52 ;     Ballou    v.     Hace,     47     N.     H.  '  Bigler  v.  Baker.  40  Neb.  325 ;  24 

347;     93     Am.     Dec.     438;     Wood  L.  R.  A.  255;   58  N.  W.  1020. 


CONTEACTS    WHICH    MUST    BE    PKOVED    BY    WKITING.     1093 

former  condition  even  by  compensation  in  money,  refusal  by  the 
other  party  to  perform  operates  as  a  fraud  against  which  equity 
will  relieve/  Part  performance  involves  actual  possession  or 
some  act  whereby  the  vendee  has  received  an  injury  for  which 
a  court  of  law  cannot  give  a  complete  remedy.^  The  general 
and  abstract  form  of  stating  the  rule  as  to  what  may  constitute 
part  performance  is  that  the  acts  relied  on  must  be  "such  part 
performance  as  cannot  be  compensated  in  damages."^  As  a  cor- 
ollary to  this  proposition,  if  money  damages  will  fairly  compen- 
sate the  party  seeking  relief,  technical  part  performance  does 
not  exist.*  Accordingly  it  is  sometimes  said  that  the  acts 
of  the  party  to  be  charged  do  not  of  themselves  amount  to  part 
performance,  since  even  if  he  is  prejudiced  thereby  it  gives 
no  rights  to  the  adversary  party.^  According  to  some  authori- 
ties, the  party  to  be  charged  with  the  oral  contract  must  have 
been  benefited  by  the  acts  done  in  performance  of  the  contract 
in  order  to  have  the  doctrine  of  part  performance  apply.*'  Thus 
a  contract  by  lessor  to  pay  the  son  of  lessee  for  his  work  and 

1  Higgles  V.  Erney,  154  U.  S.  244;  v.  Einey,   154  U.  S.  244,  254;  quot- 

Von  Trotha  v.   Bamberger,   15  Colo.  ed    in    Hancock   v.   Melloy,    187   Pa. 

1;   24  Pae.  883;   Kicker  v.  Kelly,   1  St.  371,   379;   41   Atl.  313. 
Greenl.   (Me.)    117;  10  Am.  Dec.  38;  2  Smith  v.  Finch,  8  Wis.  245;  Har- 

Borden  v.  Curtis,  48  N.  J.  Eq.  120;  ney  v.  Burhans,  91  Wis.  348;  64  N. 

21   Atl.   472;    46  N.  J.  Eq.   468;    19  W.    1031. 

Atl.    127;    Robbing   v.   McKnight,    1  3  Moore  v.  Small,  19  Pa.  St.  461, 

Halst.  Ch.  (N.  J.)  642;  45  Am.  Dee.  467;   quoted  in   Hancock  v.  Melloy, 

406.     "If    the.  parol    agreement   be  187  Pa.  St.  371,  379;  41  Atl.  313. 
clearly  and  satisfactorily  proved  and  4  Williams    v.    Morris,    95    U.    S. 

the     plaintiff,     relying     upon     such  457;    Bennett   v.   Dyer,   89   Me.    17; 

agreement   and    the   promise   of   the  35   Atl.    1004;    Brown   v.    Hoag.   35 

defendant   to   perform   his    part  has  Minn.    373 ;    29    N.    W.    135 ;    Lord's 

done    acts    in    part    performance    of  Appeal,    105   Pa.    St.    451 ;    Mayer's 

such  agreement  to  the  knowledge  of  Appeal,   105  Pa.  St.  432. 
the  defendant  —  acts  which  have  so  s  Bennett  v.  Dyer,  89  Me.   17;  44 

altered  the  relations  of  the  parties  L.  R.  A.  482;   35  Atl.  1004;  Abbott 

as   to    prevent   their   restoration    to  v,    Baldwin,   61    N.   H.   583;    Morris 

their  former  condition  —  it  would  be  v.   Gaines,    82   Tex.    255;    17   S.   W. 

a    virtvial    fraud    to    allow    the    de-  538. 

fendant  to  interpose  the  statute  as  s  Dnnphy  v.  Ryan,  116  U.  S.  491; 

a   defense  and  thus   secure   to  him-  Shumate   v.   Farlow,    125   Ind.   359; 

self   the    benefit   of   what    has   been  9  L.  R.  A.  657;  25  N.  E.  432;  Bris- 

done  in  part  performance."     Higgles  tol  v.  Sutton,  119  Mich.  693;  78  N. 


1094  PAGE    ON    CONTEACTS. 

labor  to  be  performed  on  the  farm  for  his  father  until  he  be- 
comes of  age,  is  not  taken  out  of  the  statute  where  the  lessee 
may  have  been  benefited  by  increased  crops,  even  if  the  son's 
labor  improved  the  fann.  Second,  a  further, reason  for  holding 
that  part  performance  withdraws  the  contract  from  the  opera- 
tion of  the  statute  is  that  the  performance  of  such  acts  as  are 
classed  in  equity  as  part  performance  shows  w^ithout  relying 
upon  the  oral  contract  alone,  that  there  is  some  kind  of  agree- 
ment between  the  parties,  and  the  terms  of  such  contract  may 
then  be  shown  by  oral  evidence/  Accordingly  the  acts  relied 
on  as  part  performance  must  be  referable  exclusively  to  the 
oral  contract.*  Thus  part  performance  of  a  valid  w^ritten  con- 
tract does  not  validate  an  oral  modification  thereof.**  So  pos- 
session under  a  prior  valid  lease  or  deed  is  not  part  performance 
of  a  subsequent  oral  contract.^**  This  general  statement  of  the 
grounds  upon  which  the  doctrine  of  part  performance  rests  is 
important  as  showing  the  considerations  which  have  controlled 
courts  in  deciding  the  specific  questions  to  be  discussed  here- 
after; but  from  its  abstract  form,  it  is  of  little  value  in  deter- 
mining a  priori  the  results  which  the  courts  reach  in  specific 
cases.  Xot  infrequently  different  courts  reach  opposite  results 
while  professing  to  apply  the  same  general  principles  under- 
lying part  i^erformanee.  Accordingly  the  following  questions 
will  be  discussed  specifically:  first,  wdiat  acts  amount  to  part 
performance  in  contracts  for  the  sale  of  realty  or  some  interest 
therein ;  second,  to  what  extent  if  any  does  the  docftrine  of  part 
performance  apply  to  contracts  other  than  those  for  the  sale 
of  realty.  The  acts  usually  invoked  as  acts  of  part  perform- 
ance to  take  the  contract  out  of  the  statute  are  change  of  pos- 

W.  885;   same  case,  115  Mich.  365;  sary,    88    Va.    125;    13    S.    E.    348. 

73  N.   W.  424;   Lydick  v.  Holland,  « Grant  v.   Grant,   63   Conn.   530; 

83  Mo.  703.  38  Am.    St.   Rep.   379;    29  Atl.   15; 

7  Grant  v.   Grant,   63   Conn.   530;  Truman    v.    Truman,    79    la.    506; 

38  Am.   St.  Rep.   379;    29   Atl.   15;  44  N.  W.  721;   Nibert  v.  Baghurst 

Rogers  v.  Wolfe,  104  Mo.  1;    14  S.  (N.  J.  Eq.),  25  Atl.  474. 

W.  805 ;   Shahan  v.  Swan,  48  O.  S.  »  Buttz  v.  Colton,  6  Dak.  306 ;  43 

25;     29     Am.     St.     Rep.     517;     26  N.  W.  717. 

N.    E.     222 ;     Reynolds    v.    Neees-  lo  See  §  727. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1095 

session  of  the  realty  sold,  erection  of  improvements  and  pay- 
ment of  part  or  all  of  the  purchase  price.  It  will  be  necessary 
to  discuss  the  effect  of  these  separately  and  in  combination, 
together  with  such  other  acts  as  are  invoked  to  show  a  change  of 
condition  in  reliance  on  the  contract  which  cannot  be  compen- 
sated in  damages. 

§720.     Part  performance  as  applying  to  contracts  for  the  sale  of 
realty. 

The  doctrine  of  part  performance  clearly  applies  to  contracts 
for  the  sale  of  realty  or  some  interest  therein.^  Thus  if  the 
parties  to  an  oral  contract  of  partition  have  taken  possession 
in  severalty  of  their  respective  allotments,  such  contract  is  not 
within  the  statute."  An  oral  assignment  of  dower  if  follow- 
ing by  possession  is  not  within  the  statute.^  Such  a  contract 
does  not  create  an  interest  in  realty.  It  "  only  admeasured 
and  established  the  limits  of  the  estate  the  law  conferred  upon" 
the  widow.*  Taking  possession  of  realty  exchanged,^  or  taking 
possession  and  making  valuable  improvements  thereon®  takes  an 

1  Higgles    V.     Erney,     154    U.    S.  4G  Pa.   St.   376;    same  case,   70  Pa. 

244;  St.  Louis,  etc.,  Ry.  v.  Graham,  St.   15;   Mass  v.  Bromberg,  28  Tex. 

55  Ark.  294;   18  S.  W.  .56;   Bogle  v.  Civ.  App.  145;  66  S.  W.  468;  Whit- 

Jarvis,    58   Kan.    76;    48   Pac.   558;  temore    v.    Cope,    11    Utah    344;    40 

Delavan  v.  Wright,   110  Mich.   143;  Pac.   256. 

67  N.  W.  1110;  Butler  V.  Thompson,  3  Pearee  v.   Pearce,    184   III.   289; 

45   W.   Va.    660;    72    Am.    St.    Rep.  56  N.  E.  311;  affirming  83  III.  App. 

838;    31    S.    E.    960;    McWhinne    v.  77;   Lenfers  v.  Henke,   73   111.   405; 

Martin,  77  Wis.  182;  46  N.  W.  118.  24  Am.  Rep.  263;  Shattuck  v.  Gregg, 

2Tuffree    v.    Polhemus,    108    Cal.  23   Pick.    (Mass.)    88. 
670;   41   Pac.   806;    Long  v.  Dollar-  4  Pearce   v.    Pearce,    184    111.    289, 

hide,    24    Cal.    218;     Higginson    v.  293;  56  N.  E.  311;  affirming  83  Hi. 

Schaneback    (Ky.),  66  S.  W.   1040;  App.  77. 

Natchez    v.    Vandervede,     31    Miss.  5  Kimbrough    v.   Nelms,    104   Ala. 

706;    66   Am.    Dec.   581;    Wildey   v.  554;   16  So.  619;   Webb  v.   Ballard. 

Bonney,    31    Miss.    644;    Borden    v.  97   Ala.   584;    12   So.    106;    Bennett 

Curtis,   48   N.   J.   Eq.    120;    21   Atl.  v.  Knowles,  111  Mich.  226;  69  N.  W. 

472;  46  N.  J.  Eq.  468:  19  Atl.  127;  491;    Brown  v.   Bailey,   1.59  Pa.   St. 

Piatt  V.   Hubboll,   5   Ohio   243;    Mc-  121;  28  Atl.  245. 
Knight  V.  Bell,  135  Pa.  St.  358;   19  e  Hunkins   v.   Hunkins,   65   N.   H. 

\U.   10.36;   Mellon  v.  Reed.   114  Pa.  95;  18  Atl.  655. 
St.  647;   8  Atl.  227;  Rider  v.  Maul, 


1096  PAGE    ox    CONTKACTS. 

oral  contract  of  exchange  out  of  the  statute.  So  an  oral  rescission 
of  a  contract  of  exchange  which  has  been  itself  partly  performed 
by  exchange  of  possession  though  deeds  for  the  realty  have  not 
been  delivered,  is  not  within  the  statute  where  such  oral 
rescission  is  partly  performed  by  a  restitution  of  original  pos- 
session to  one  party/  So  if  an  oral  release  is  accompanied  by 
acts  which  are  inconsistent  with  the  continuance  of  the  estate 
released  and  which  are  acted  on  by  the  adversary  party,  the 
release  is  binding  though  oral.*  Thus  if  A  agrees  in  writing  to 
sell  realty  to  B,  and  B  surrenders  such  option  orally  and  in- 
duces A  to  make  a  new  written  contract  with  X  for  the  sale 
of  such  realty,  A's  surrender  is  enforceable.''  On  the  other 
hand,  an  oral  surrender  of  a  written  contract  of  sale  and  a 
re-delivery  of  the  original  contract  is  within  the  statute.^"  The 
validity  of  such  oral  releases  is  due  to  principles  of  estoppel,  to 
which  the  statute  of  frauds  does  not  apply. 

§721.     Change  of  possession,  payment  of  consideration  and  erec- 
tion of  valuable  improvements. 

If  in  reliance  on  the  oral  contract  the  vendee  has  taken  pos- 
session of  the  realty  sold,^  has  paid  part  or  all  of  the  consider- 
ation agreed  upon  and  has  made  valuable  improvements  upon 
such  realty,  the  contract  is  not  within  the  statute  in  equity.^ 

7  Boggs  V.  Bodkin,  32  W.  Va.  566 ;  damages,    126    Mich.    6;    Maxon    v, 

5  L.  R.  A.  245;  9  S.  E.  891.  Gates,   112  Wis.  196;   88  N.  W.  54. 

sFenner  v.  Blake   (1900),  1  Q.  B.  i  What  constitutes  such  possession 

426;    Wheeler    v.    Walden,    17    Neb.  is    subsequently    discussed.     See    §§ 

122;  22  N.  W.  346;  Bedford  v.  Ter-  726,  727. 

hune,    30   N.   Y.  462 ;    86   Am.   Dec.  2  Townsend  v.   Vanderwerker,   160 

394;  Telford  v.  Frost,  76  Wis.  172;  U.   S.   171;    Pembroke  v.   Logan,  — 

44  N.  W.  835 ;  Goldsmith  V.  Darling,  Ark.   — ;    74    S.    W.   297;    Epps   v. 

92  Wis.  363;  66  N.  W.  397;  Hutch-  Story,  109  Ga.  302;   34  S.  E.  662; 

ins  V.  Da  Costa,  88   Wis.   371;    60  McClure  v.  Otrich,  118  111.  320;    8 

N.  W.  427;   O'Donnell  v.  Brand,  85  N.  E.   784;    Swales  v.  Jackson,   126 

Wis.  97;  55  N.  W.  154.  Ind.   282;    26   N.   E.   62;    Marsh  v. 

9  Telford  v.  Frost,  76  Wis.  172;  Davis,  33  Kan.  326;  6  Pac.  612; 
44  N.  W.  835.  Goodwin  v.   Smith,   89  Me.   506;    36 

10  Stewart  v.  McLaughlin,  126  Atl.  997;  Johnson  v.  Hurley.  115 
Mich.  1;  85  N.  W.  266;  87  N.  W.  Mo.  513;  22  S.  W.  492;  Schloet- 
218;    modified    on    the    question    of      terer   v.    Wagner    (N.   J.    Eq.),    21 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1097 

§722.     Payment  of  purchase  price  as  an  essential  element  of  part 
performance. 

That  payment  of  part  or  all  of  the  purchase  price  is  not  an 
essential  feature  of  fiart  i3crformauce  is  evident  from  the  rule 
which  applies  to  oral  promises  to  make  gifts  of  realty.  If,  in 
reliance  upon  such  oral  promise,  the  donee  takes  possession  of 
the  realty  and  erects  valuable  improvements  thereon,  specific 
performance  will  be  decreed,  though  the  original  promise  was 
not  a  valid  contract  because  of  want  of  consideration  and  if  a 
valuable  consideration  had  existed,  the  statute  of  frauds  would 
have  applied  to  the  original  promise.^ 

^723.     Change  of  possession  and  payment  of  consideration. 

If  the  vendee  in  reliance  upon  an  oral  contract  for  the  sale 
of  realty  enters  into  possession  under  the  contract  of  sale  and 
pays  part  or  all  of  the  purchase  price,  these  acts  constitute  such 
part  performance  as  take  the  case  out  of  the  statute.^     Thus 


Atl.  863;  Peay  v.  Seigler,  48  S.  C. 
496;  59  Am.  St.  Rep.  731;  26  S.  E. 
885;  Humbert  v.  Brisbane,  25  S.  C. 
506;  Gulf,  etc.,  Ry.  v.  Settegast, 
79  Tex.  256 ;  15  S.  W.  228 ;  Houston, 
«te.,  Ry.  V.  Wright,  15  Tex.  Civ. 
App.  151;  38  S.  W.  836;  Peck  v. 
Stanfield,  12  Wash.  101;  40  Pac. 
€35;  McWhinnie  v.  Martin,  77  Wis. 
182;  46  N.  W.  118. 

iMackall  v.  Mackall,  135  U.  S. 
167;  Manning  v.  Franklin,  -81  Cal. 
205;  22  Pac.  550;  Todd  v.  Leach, 
100  Ga.  227;  28  S.  E.  43;  Gaines  v. 
Kendall,  176  111.  228;  52  N.  E.  141; 
Dunn  V.  Berkshire,  175  111.  243;  51 
N.  E.  770;  Starkey  v.  Starkey,  136 
•Ind.  349;  36  N.  E.  287;  Gilmore  v. 
Asbury,  64  Kan.  383;  67  Pac.  864; 
Seavey  v.  Drake,  62  I^J.  H.  393; 
Brown  v.  Prescott,  61  N.  H.  643; 
Davis  V.  Portwood.  20  Tex.  Civ. 
App.  .548;  50  S.  W.  615;  Baker 
V.  De  Freese,  2  Tex.  Civ.  App.  524; 


21  S.  W.  963;  Harrison  v.  Harrison, 
36  W.  Va.  556;  15  S.  E.  87. 

iHodson  v.  Heuland  (1896),  2 
Ch.  428;  Smallwood  v.  Sheppards 
(1895),  2  Q.  B.  627;  Townsend  v. 
Vanderwerker,  160  U.  S.  171;  Mer- 
rell  V.  Witherby,  120  Ala.  418;  74 
Am.  St.  Rep.  39;  23  So.  994;  26 
So.  974;  Day  v.  Cohn,  65  Cal.  508; 
4  Pac.  511;  Eaton  v.  Whitaker,  18 
Conn.  222;  44  Am.  Dec.  586;  Hat- 
field V.  Miller,  123  Ind.  463;  24  N. 
E.  330;  Gould  v.  Banking  Co.,  136 
111.  60;  26  N.  E.  497;  reversing  36 
111.  App.  390;  Caldwell  v.  Drum- 
mond,  —  la..  — ;  96  N.  W.  1122; 
Winkleman  v.  Winkleman,  79  la. 
319;  44  N.  W.  556;  Green  v.  Jones, 
76  Me.  563;  Dugan  v.  Gittings,  3 
Gill.  (Md.)  138;  43  Am.  Dec.  306; 
Sigler  V.  Sigler,  108  Mich.  591:  66 
N.  W.  489;  Walker  v.  Owen,  79  Mo. 
563;  Kelley  v.  Stanberry,  13  Ohio 
408;  Baker  v.  Hussey,  63  S.  C.  551; 


1098  PAGE    ON    CONTKACTS. 

taking  possession  of  realty  and  using  a  right  of  way  under  a 
deed  conveying  the  realty  only  is  part  performance  of  an  oral 
contract  to  Convey  the  right  of  way."  In  some  jurisdictions 
change  of  possession  and  payment  of  the  consideration  are  not 
suflScient  as  part  performance,  if  no  valuable  improvements 
are  erected.^ 

§724.     Change  of  possession  and  alteration  in  circumstances. 

If  the  vendee  takes  possession  of  realty  under  an  oral  con- 
trol for  its  sale  and  alters  his  position  in  reliance  on  such  con- 
tract, the  contract  is  not  within  the  statute.^  Illustrations  of 
the  change  of  condition  here  referred  are  as  follows:  Giving 
a  note  and  mortgage,"  payment  by  vendee  to  a  third  person  of  a 
debt  of  vendor  assumed  by  him  as  part  of  the  purchase  price  of 
the  realty  sold,^  removal  by  vendee  of  fixtures  and  machinery 
at  great  expense  from  the  realty  sold,*  abandonment  by  ven- 
dee of  his  former  employment,  change  of  residence  and  sup- 
port of  the  vendor,^  or  the  purchase  of  a  mill  site  and  the 
construction  of  a  dam  by  promisee  in  reliance  on  an  oral  prom- 
ise to  allow  him  to  flow  the  land  of  another,^ 

41   S.  E.  758;   Rapley  v.  Klugh,  40  berger   v.    Jones,    118   Mo.    559;    24 

S.  C.   134;   18  S.  E.  680;   Watts  v.  S.   W.   203;    White   v.   Ingram,    110 

Witt,   39   S.  C.  356;   17   S.  E.   822;  Mo.  474;    19   S.  W,   827;    Olmstead 

Griffith  V.  Abbott,  56  Vt.  356;  Brow-  v.  Abbott,  61  Vt.  281;    18  Atl.  315. 

der   V.   Phinney,    30   Wash.    74;    70  2  Hatfield  v.  Miller,  123  Ind.  463 ; 

Pac.  264.  24  N.  E.  330. 

2  Russell  V.  Napier,  80  Ga.  77;   4  s  Eosenberger    v.    Jones,    118    Mo. 
S.   E.  857.  559;   24  S.  W.  203. 

3  Bradley  v.  Owsley,  74  Tex.   69 ;  *  Andrew    v.    Babeock,    63    Conn. 
11  S.  W.  1052;  Ann  Berta  Lodge  v.  109;   26  Atl.  715. 

Leverton,   42   Tex.   18;   Robinson  v.  s  Hinkle  v.  Hinkle,   55  Ark.  583; 

Davenport,  40  Tex.  342 ;  Hickman  V.  18   S.   W.    1049;    see   Pike   v.    Pike, 

Withers,  83  Tex.  575:  19  S.  W.  138;  121    Mich.    170;    80    Am.    St.    Rep. 

Merchants'  National  Bank  v.  Eustis,  488 ;  80  N.  W.  5 ;  for  similar  facts. 

8    Tex.    Civ.    App.    350;    28    S.    W.  e  Olmstead  v.  Abbott,  61  Vt.  281  r 

227.  18    Atl.    315.     For   a    similar    state 

1  Andrew    v.    Babeock,    63    Conn.  of  facts  see  Wilson  v.  Chalfa^t.   15 

109;  26  Atl.  715;  Hatfield  v.  Miller.  Ohio  248;   45   Am.  Dec.  574;   Heis- 

123  Ind.  463;  24  N.  E.  330;  Rosen-  kell  v.  Cobb,  11  Heisk.   (Tenn.)  638- 


CONTKACTS    WHICH    MUST    BE    PKOVED    BY    WRITING.    1099 

§725.     Change  of  possession  and  erection  of  valuable  improve- 
ments. 

If  the  vendee,  in  reliance  on  the  oral  contract,  has  taken 
possession  of  the  realty  sold  and  has  erected  valuable  improve- 
ments thereon  the  contract  is  not  within  the  statute  in  equity,^ 
Thus  if  a  railroad  company,  in  reliance  upon  an  oral  promise 
for  a  right  of  way,  has  taken  possession  of  the  right  of  way 
and  laid  a  track  thereon,^  or  the  location  of  a  side  track  has 
been  altered  under  contract  between  the  owners  of  the  dominant 
and  servient  tenements,''  or  a  telegTaph  company  builds  its  line 
along  the  right  of  way  of  a  railroad  in  reliance  on  an  oral  con- 
tract with  the  railroad,*  or  a  toll-road  enters  on  land  under  oral 
contract  with  the  owner  thereof  and  constructs  its  roads  thereon,^ 
or  if  A  agrees  to  give  a  tract  of  ground  for  school  purposes  in 
consideration  that  B  and  others  will  erect  a  school-house  thereon, 
and  they  erect  such  school-house  in  reliance  on  such  promise,* 
or  if  A  under  an  oral  contract  with  B  for  an  easement  to  flood 
B's  lands  constructs  and  uses  a  mill-dam  on  B's  lands,^  such 
part  performance  withdraws  the  contract  from  the  operation  of 

iHoak  V.  Trust  Co.,  95  Fed.  41;  86;  97  Am.  St.  Rep.  871;  70  S.  W. 

36  C.  C.  A.  645;  reversing  89  Fed.  737;  La  Master  v.  Dickson,  91  Tex. 

410;    32   C.   C.   A.   238;    Latimer  v.  593;  45  S.  W.  1;   affirming  17  Tex. 

Hamill,  —  Ariz.  — ;    52   Pae.   364;  Civ.  App.  473;  43  S.  VV.  911;  Wanh- 

Mooney    v.    Rowland,    64    Ark.    19;  seaffe  v.  Pontoja   (Tex.  Civ.  App.), 

40   S.   W.   259;    Moulton   v.   Harris,  63   S.   W.   663;    Graves  v.  Smith,   7 

94  Cal.  420;  29  Pac.  706;  Calanchini  Wash.    14;    34    Pac.    213;    Mudgett 

V.  Branstetter,  84  Cal.  249;  24  Pae.  v.  Clay,  5  Wash.   103;   31   Pac.  424. 

149;   Hall  v.  Ry.,  143   111.    163;    32  2  Denver,  etc.,  R.  R.  v.  Ristine,  77 

N.  E.  598;  Horner  v.  McConnell,  158  Fed.  58;   23  C.  C.  A.  13;   Capps  v. 

Ind.  280;   63  N.  K  472;   Weaver  v.  Ry.,   21    Tex.   Civ.   App.    84;    50   S. 

Shipley,  127  Ind.  526;  27  N.  E.  146;  W.  643. 

Gilmore  v.  Asbury,  64  Kan.  383 ;  67  ^  Kent     Furniture     Mfg.     Co.     v. 

Pac.    864;    Miner    v.    O'Harrow,    60  Long,  111  Mich.  383;  69  N.  W.  657. 

Mich.  91;  26  N.  W.  843;  Mournin  v.  *  Western  ITnion  Telegraph  Co.  v. 

Trainor,    63   Minn.   230;    65   N.   W.  R,  R.,  86  111.  246;  29  Am.  Rep.  28. 

444;  Hayes  v.  R.  R.,  108  Mo.  544;  5  Uncanoonuck  Road  Co.  v.  Orr,  67 

18  S.  W.  1115;  Hunkins  v.  Hunkins,  N.  H.  541;   41   Atl.  665. 

65  N".  H.  95;  18  Atl.  655;  Luton  v.  6  Martin    v.    McCord,     5     Watts. 

Badham,  127  N.  C.  96;   80  Am.  St.  (Pa.)   493;  30  Am.  Dec.  342. 

Rep.  783;  53  L.  R.  A.  337;  37  S.  E.  7  Heiskell     v.     Cobb,     11     Heisk. 

143;    Cauble  v.    Worsham,    96   Tex.  (Tenn.)     638;     and    see    Wilson    v. 


1100  PAGE    ON    CONTEACTS. 

the  statute.  On  the  same  principle  where  A  agrees  orally  to 
sell  to  B  a  half  interest  in  A's  land,  and  A  divides  the  rent  with 
B,  and  B  pays  half  the  cost  of  certain  improvements,  these  acts 
amonnt  to  part  performance.*  In  some  jurisdictions  the  courts 
seem  to  hold  that  change  of  possession  and  the  erection  of  val- 
uable improvements  do  not  constitute  part  performance  so  as  to 
form  a  basis  for  specific  performance^  though  the  party  who 
erects  such  improvements  may  have  compensation  therefor^** 
whether  he  makes  demand  for  such  compensation  in  an  action  of 
ejectment  brought  by  his  vendor  against  him^^  or  surrenders 
possession  to  vendor  on  demand  therefor  and  sues  in  equity  for 
compensation.^^ 

§726.     Change  of  possession. 

Thus  far  the  acts  commonly  relied  on  as  part  performance 
have  been  treated  as  to  their  effect  in  combination.  A  discus- 
sion of  their  effect  separately  still  remains.  If  the  vendee  in 
reliance  upon  an  oral  contract  for  the  sale  of  realty  takes  pos- 
session thereof,  such  mere  change  of  possession  is  of  itself 
sufficient  to  take  the  contract  out  of  the  statute.^     Thus  a  ven- 

Chalfant,  15  Ohio  248;  45  Am.  Dec.  Ala.  554;   16  So.  619;   Trammel!  v. 

574;    Olmstead    v.    Abbott,    61    Vt.  Craddock,    100    Ala.    266;    13    Ala. 

281;    18  Atl.  315.  911;  Houston  v.  Hilton,  67  Ala,  374; 

8  Shearer  v.  Gibson,  123  Mich.  Lacy  v.  Gard,  60  111.  App.  72;  Pu- 
467;   82  N".  W.  206.  terbaugh    v.    Puterbaugh,    131    Ind. 

9  Thomas  v.  Kyles,  54  N.  C.  302.  288;  15  L.  R.  A.  341;  30  N.  E.  519; 
So  under  the  California  Statute  Ague  v.  Seitsinger,  85  la.  305;  52 
■where  the  contract  is  made  by  an  N,  W.  228;  Anderson  v.  Canter, 
agent  without  authority  in  writing.  10  Kan.  App.  167;  63  Pae.  285; 
Hall  V.  Wallace,  88  Cal.  434;  26  O'Grady  v.  O'Grady,  162  Mass.  290; 
Pac.  360.  38    N.    E.    196;    Pike   v.    Pike,    121 

10  North  V.  Bunn,  122  N.  C.  766;  Mich.  170;  80  N.  W.  5;  Bennett  v, 
29  S.  E.  776.  Knowles,   111  Mich.  226;   69  N.  W. 

11  Pass  V.  Brooks,  125  N",  C.  129;  491;  Toan  v.  Pline,  60  Mich.  385; 
34  S.  E.  228;  Albea  v.  Griffin,  22  27  N.  W.  557;  Weed  v.  Terry,  2 
N.  C.  9.  Dougl.    (Mich.)    344;    45   Am.   Dec. 

12  Luton  V.  Badham,  127  N.  C.  257;  Archer  v.  Helm.  69  Miss.  730; 
96;  80  Am.  St.  Rep.  783;  53  L.  R.  11  So.  3;  Bless  v.  Jenkins,  129  Mo. 
A.  337;  37  S.  E.  143.  647;   31   S.  W.  938;   Carney  v.  Car- 

1  Bullion,  etc..  Bank  v.  Otto.  .59  ncy.  95  Mo.  353;  8  S.  W.  729;  Smith 
Fed.  256;  Kimbrough  v.  Xelms,  104      v.  Pierce,  65  Vt.  200;  25  Atl.  1092; 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1101 

dee"  or  lessee^  in  possession  under  the  contract  cannot  resist  pay- 
ment under  the  contract.  This  may,  however,  be  looked  upon  in 
this  sense  as  full  performance  on  the  part  of  the  vendor :  though 
it  is  not  strictly  speaking  full  performance,  as  the  legal  title  has 
not  passed.  So  a  note  given  in  consideration  of  an  oral  contract 
to  devise  realty  is  enforceable  if  the  heirs  of  the  devisee  are  in 
possession  of  the  realty  contracted  for.*  Change  of  possession 
has,  however,  been  held  insufficient  if  the  contract  is  to  be  en- 
forced against  the  vendee.^  Some  jurisdictions  hold  that  change 
of  possession  is  not  of  itself  sufficient  to  keep  the  statute  of 
frauds  from  applying,  if  such  change  of  possession  does  no  in- 
jury to  the  vendee  and  confers  no  benefit  on  the  vendor.*' 

§727.     Elements  of  change  of  possession. 

Possession,  in  order  to  constitute  part  performance,  must  be 
taken  under  and  by  virtue  of  the  contract  and  must  be  referable 
solely  to  such  contract.^  If  the  vendee  is  in  possession  when 
the  contract  is  made  and  merely  retains  his  former  possession, 
such  possession  does  not  constitute  part  performance.^     Thus 

Brundage    V.    Loan    Association,    11  la.  704;   89  N.  W.  1118;  Hartshorn 

Wash.  277;   39   Pac.   666;   Reinhart  v.  Smart,  67  Kan.  543;  73  Pac.  73; 

V.    Gregg,    8    Wash.    191;    35    Pac.  Perkins  v.  Perkins,   181   Mass.  401; 

1075;    Miller    v,    Lorentz,     39    W.  63  N.  E.  926;  Emmel  v.  Hayes,  102 

Va.    160;    19    S.    E.    391;    Boggs   v.  Mo.   186;   22  Am.  St.  Rep.  769;    11 

Bodkin,  32  W.  Va.  566;  5  L.  R.  A.  L.  R.  A.  323;   14  S.  W.  209;   Glad- 

245;   9  S.  E.  891.  well  v.   Holcomb,  60  0.   S.  427;    71 

^Houston  V.  Hilton,  67  Ala.  374;  Am.   St.   Rep.   724;    54   N.   E.   473; 

Schierman  v.  Beckett,  88  Ind.  52.  Boozer  v.  Teague,   27   S.   C.   348;    3 

3Kriz  V.  Peege,  119  Wis.  105;  95  S.   E.   551;    Gallagher  v.   Gallagher, 

N.  W.  108.  31  W.  Va.  9;  5  S.  E.  297;  Cutler  v. 

*  Ballard  v.  Camplin,  161  Ind.  16;  Babcock,   81    Wis.    195;    29   Am.   St." 

67  N.  E.  .505.  Rep.   882;    51   N.   W.   420;    Ellis  v. 

0  Bennett  v.  Dyer,  89  Me.   17;   35      Gary,  74  Wis.  176;  17  Am.  St.  Rep. 
Atl.  1004.  125;  4  L.  R.  A.  55;  51  N.  W.  420. 

6  Eshleman  v.   Vineyard  Co.,   102  2  Lake   Erie,   etc.,   Ry.  v.   Ry.,   86 

Cal.  199;  36  Pac.  579.  Fed.   840;    Shovers  v.   Warrick,   152 

1  Bromley  v.  Aday,  70  Ark.  351;  111.   355;    38   N.   E.    792;    Swales   v. 

68  S.  W.  32;  Von  Trotha  v.  Bam-  Jackson,  126  Ind.  282;  26  N.  E.  62; 
berger,  15  Colo.  1;  24  Pac.  883;  Wilmer  v.  Farris,  40  la.  309;  Bil- 
Allan  V.  Bemis,  120  la.  172;  94  lingslea  v.  Ward,  33  Md.  48;  Mess- 
N.  W.  560;  Lowery  v.  Lowery,  117  more  v.  Cunningham,  78  Mich.  623; 


Il02  PAGE    ON    CONTRACTS. 

possession  of  land  by  one  who  takes  possession  as  lessee  is  not 
such  part  })erformance  of  a  subsequent  oral  contract  between 
himself  and  his  lessor  as  vests  an  interest  in  land  for  the  new 
term  in  the  lessee  f  nor  is  it  part  performance  of  a  contract  to 
convey  such  land  ;*  nor  is  possession  retained  by  a  judgment 
debtor  of  realty  sold  on  execution  part  performance  of  a  con- 
tract between  himself  and  a  purchaser  at  the  execution  sale.^ 
So  possession  of  realty  by  one  to  whom  the  owner  had  promised 
to  devise  it  is  not  part  performance  of  such  contract  where  pos- 
session was  not  taken  imder  such  contract.*'  An  assignment  of 
a  lessee's  interest  in  the  unexpired  term  and  his  assignee's  tak- 
ing possession  under  such  assignment  do  not  constitute  part  per- 
formance of  an  oral  contract  between  the  lessee,  his  assignee 
and  his  lessor,  by  which  the  lessor  in  consideration  of  the  as- 
signment agrees  to  renew  the  lease/  A's  withdrawal  of  an 
application  for  a  patent  for  a  given  mining  claim  and  abandon- 
ment of  a  contest  of  B's  application  for  a  patent  for  the  same 
claim  is  not  a  change  of  possession  within  the  meaning  of  this 
rule.* 

To  constitute  part  performance  the  possession  taken  must  be 
such  as  shows  the  existence  of  some  contract  for  conveyance. 
Residence  in  a  dwelling  by  one  who  might  have  been  so  resid- 

44  N.  W.  145;  Bigler  v.  Baker,  40  L.  R.  A.  255:  58  N.  W.  1026;  Arm- 
Neb.  325;  24  L.  R.  A.  255;  58  N.  strong  v.  Kattenhorn.  11  Ohio  265. 
W.  1026;  Gladwell  v,  Holcomb,  60  *  Hutton  v.  Doxsee,  110  la.  13; 
O.    S.   427;    71    Am.    St.   Rep.    724;  89  N.  W.  79. 

54   N.   E.  473;   Lefferson  v.   Dallas,  5  Emmel  v.  Hayes,   102  Mo.   186; 

20  O.  S.  68;   Crawford  v.  Wick,   18  22  Am.   St.  Rep.   769;    11   L.  R.  A. 

O.  S.   190;   98  Am.  Dec.   103;   Arm-  323;    14    S.    W.   209    (overruling  on 

strong  V.  Kattenhorn,  11  Ohio,  265;  this  point,   Simmons  v.  Headlee,  94 

Jones  V.  Peterman,  3  S.  &  R.   (Pa.)  Mo.   482;    7    S.    W.    20;    Emmel    v. 

543;    8    Am.    Dec.    672;    Ellison    v.  Headlee    (Mo.),   7   S.   W.   22)-.     See 

Torpin,   44   W.   Va.   414;    30   S.    E.  Lewis   v.    North,    62    Neb.    552;    87 

183.  N.  W.  312. 

sShovers     v.     Warrick,     1.52     111.  « Ellis  v.   Gary,   74   Wis.   176;    17 

355;  38  N.  E.  792;  Swales  v.  Jack-  Am.   St.  Rep.   125;   4  L.   R.  A.  55; 

son,    126    Ind.    282;    26    N.    E.    62;  42  N.  W.  252. 

Hutton   V.   Doxsee,    116    la.    13;    89  7  Koch    v.    Building    Association, 

N.    W.    79;    Messmore   v.    Cnnning-  137  111.  497;   27  N.  E.  530;   affirm- 

ham.  78  Mich.  623;  44  N.  W.   145;  ing,  35  111.  App.  465. 

Bigler   v.    Baker,   40   Neb.    325;    24  sDiicie  v.  Ford,  138  U.  S.  587. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1103 

ing  by  the  permission  of  the  owner,  such  as  his  wife,"*  or  his 
mistress,^"  or  gaiest,^^  is  not  part  perfonnance.  Possession  un- 
der circumstances  which  suggest  a  lease  is  not  part  performance 
of  a  contract  of  sale.  Thus,  A's  possession  of  realty  for  the 
sole  purpose  of  raising  crops  thereon  and  his  payment  to  B,  the 
owner,  of  the  usual  cropper's  rent  —  one-third  of  the  crop  — 
is  not  part  performance  of  an  oral  contract  by  B  to  sell  such 
realty  to  A/"  So  using  a  vacant  lot  to  store  bricks  temporarily 
is  not  such  possession  as  constitutes  part  performance,^^  nor  is 
putting  some  fence  posts  and  lumber  on  the  land/* 

To  constitute  part  performance  the  possession  must  be  ex- 
clusive of  the  vendor's.  Possession  in  common  with  the  vendor 
is  not  sufficient  to  take  the  case  out  of  the  statute,^^  as  where 
plaintiff  had  used  a  right  of  way  jointly  with  defendant  under 
an  oral  contract.^*'  Possession  must  be  taken  with  the  knowl- 
edge of  the  vendor  in  order  to  constitute  part  performance.^' 

If  a  tenant  in  possession  enters  into  an  oral  contract  with  his 
lessor  for  a  renewal  of  the  lease  upon  different  terms,  as  on  an 
increased  rent,^^  or  a  diminished  rent,^"  retention  of  possession 

aCooley    v.    Lobdell,    153    N.    Y.  is  Long    v.    Mayberry,     96    Tenn. 

596;    47   N.  E.   783.     So  where   she  378;  36  S.  W.  1040. 

remains   in  possession   after  he  has  it  Foster     v.     Maginnis,     89     Cal. 

left  the  state.     Erringdale  v.  Riggs,  264;  26  Pac.  828;   Barnett  v.  Glass 

148  111.  403 ;  36  N.  E.  93.  Co.,    12    Ind.    App.    631 ;    40    N.    E 

10  Van  Epps  v.  Redfield,  69  Conn.  1102;   Carrolls  v.  Cox,  15  la.  455 
104;   36  Atl.  1011.  Pawlak    v.     Granowski,     54     Minn 

11  Davis   V.   Moore,    9    Rich.    Law  130;   55  N.  W.  831;  Cockrell  v.  Mc 
(S.  C.)    215.  Intyre,  161  Mo.  59;   61  S.  W.  648 

12  Bresnahan     v.     Bresnahan,     71  Nibert   v.    Baghurst,   47    N.   J.    Eq, 
Minn.  1;  73  N.  W.  515.  201;  20  Atl.  252;  Groucher  v.  Mar 

13  Hunt  V.  Lipp,  30  Neb.  469;  46  tin,   9   Watts    (Pa.)    106. 

N.  W.  632.  18  Miller  v.  Sharp    (1899),   1   Ch. 

1*  Foster     v.     Maginnis,     89     Cal.  622;  Moore  v.  Harter,  67  0.  S.  250; 

264;   26  Pac.  828.  65  N.  E.  883. 

15  Lake  Erie,  etc.,  Co.  v.  Ry.,   86  isDoherty  v.   Doe,    18   Colo.  456; 

Fed.    840;    Gorham    v.    Dodge,    122  33  Pac.  165.      (In  this  case  the  les- 

111.    528;     14    N".    E.    44;    Johns    v.  see   refused    to    perform    unless   the 

Johns,  67  Ind.  440;  Larison  v.  Pol-  rent  was  reduced,  and  the  landlord 

hemus,  36  N.  J.  Eq.  506 ;   Newcomb  agreed    orally    on    a    reduction    of 

V.  Cox,   27  Tex.  Civ.  App.   583;    66  rent.     This  oral  agreement  was  held 

S.    W.    338;    Munk    v.    Weidner,    b  to  be  a  waiver  of  the  lease,  and  the 

Tex.  Civ.  App.  491 ;   29  S.  W.  409.  retention   of  possession  by  the  ten- 


1104  PAGE    ON    CONTRACTS. 

and  payment  of  the  rent  due  under  the  new  contract  are  held  to 
take  the  lease  out  of  the  statute;  at  any  rate  as  concerns  the 
time  during  which  the  tenant  retained  possession.  The  courts 
are  not,  however,  unanimous  on  this  question.  Thus  where  the 
tenant  held  over  after  the  expiration  of  his  lease  under  an  oral 
contract  with  his  landlord  for  a  reduction  in  rent,  and  paid 
such  reduced  rent,  it  was  held  that  the  contract  was  within  the 
statute  and  that  the  landlord  could  recover  the  difference  be- 
tween the  original  rent,  and  the  rent  actually  paid  under  the 
oral  contract.^" 


§728.     Erection  of  valuahle  improvements. 

If  the  vendee  is  in  possession  Avhen  the  contract  for  the  sale 
of  the  realty  is  made  the  subsequent  construction  by  him  of  val- 
uable improvements  in  reliance  on  such  contract  may  amount 
to  part  performance.^  Such  improvements,  however,  must  be 
made  with  the  consent  of  the  vendor."  They  must  be  of  sub- 
stantial benefit  to  the  property.  Repairs,^  improvements  in  the 
ordinary  course  of  husbandry,*  or  the  setting  out  of  flowers  and 
shrubbery,^  are  not  valuable  improvements  in  this  sense.  The 
improvements  must  be  constructed  at  the  expense  of  the  ven- 
dee.    If  made  by  a  third  person,^  or  by  vendee  at  the  expense 

ant,    and    acceptance   by   the   lessor  2  Nibert    v.    Baghurst,    47    N.    J. 

of   the   reduced    rent    were    held    to  Eq.  201;  20  Atl.  252. 

take  the  case  out  of  the  statute.)  3  Holland    v.    Atkinson,    112    Ga. 

20  Goldsborough  v.  Gable,  140  111.  346;    37    S.    E.    380;    Gallagher    v. 

269;    15   L.    R.    A.    294;    29    N.    E.  Gallagher,    31    W,   Va.    9;    5    S.    E. 

722;    reversing,    36    111.    App.    363.  297. 

(It  was  further  held  that  there  was  *  Enamel  v.  Hayes,   102  Mo.   186; 

no  consideration  for  the  promise  to  22  Am.   St.  Rep.   769;    11   L.  R.  A. 

reduce  the  rent.)  323;   14  S.  W.  209. 

1  Manly  v.   Howlett,   55   Cal.   94;  5  Cooley    v.    Lobdell,    153    N.    Y. 

Morrison  v.   Herrick,    130   111.   631;  596;  47  X.  K  783. 

22  N.  E.  537;  affirming,  27  111.  App.  e  Abbott    v.    Baldwin.    61    X.    H. 

339;  Drum  v.  Stevens,  94  Ind.  181;  583.     Here   the   improvements   were 

Bard    v.    Elston,    31    Kan.    274;     1  made  by  one   to   whom   vendee   had 

Pae.     565;     Dawson    v.    ^MeFadden,  conveyed  the   land,   and  who   recon- 

22  Xeb.  131;   34  N.  W.  ^^S;   Pugh  veyed    it    to    vendee    after    making- 

V.    Spicknall,   43   Or.  489;    73   Pac.  such  improvements. 
1020. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1105 

of  the  vendor/  they  do  not  constitute  part  performance.  The 
vendee  must  be  prejudiced  by  the  making  of  such  improvements. 
Thus,  if  a  tenant  in  common  buys  his  co-tenant's  share  by  oral 
contract  and  improves  the  tract,  such  improvements  do  not 
amount  to  part  performance  where  it  is  possible  to  partition 
the  tract  so  as  to  set  them  off  to  the  party  making"  them.®  Ac- 
cording to  some  authorities  improvements  for  the  value  of  which 
the  vendee  has  been  fully  compensated,  as  by  the  use  of  the 
land,®  do  not  amount  to  part  performance.  Other  authorities 
hold  that  valuable  improvements  amount  to  part  performance 
even  though  the  party  making  them  may  be  fully  compensated 
by  the  rents  and  profits  of  the  realty."  Payment  of  rent  by  the 
party  in  possession  who  makes  the  valuable  improvements  in 
question  may  rebut  any  presumption  that  would  otherwise  arise 
that  such  improvements  were  made  in  performance  of  a  con- 
tract of  sale." 

§729.     Contracts  locating  boundaries.  i 

If  the  boundary  between  two  adjoining  owuers  of  realty  is 
in  dispute,  an  oral  agreement  between  them  locating  such  boun- 
dary line  is  not  within  this  clause  of  the  statute,^  according  to 

TGeer  v.  Goudy,  174  111.  514;   51  v.    Dudley,    1    Litt.     (Ky.)     66;    13 

N.  E.  623.  Am.   Dec.   222;    May   v.   Baskin,    12 

sTunison   v.    Bradford,   49   K   J.  Smedes  &  M.   (Miss.)   428;  Diggs  v. 

Eq.  210;   22  Atl.  1073.  Kurtz,    132    Mo.    250;    53    Am.    St. 

9  Gallagher  v.  Gallagher,  31  W.  Rep.  488;  33  S.  W.  815;  Turner  v. 
Va.  9;  5  S.  E.  297.  Baker,    64   Mo.    218;    27    Am.    Rep. 

10  La  Master  v.  Dickson,  91  Tex.  226;  Hitchcock  v.  Libhy,  70  N.  H. 
593;  45  S.  W.  1 ;  affirming,  17  Tex.  399;  47  Atl.  269;  Terry  v.  Chand- 
Civ.  App.  473;  43  S.  W.  911.  ler,  16  N.  Y.  354:  69  Am.  Dec.  707; 

11  Allan  V.  Bemis,  120  la.  172;  Vosburgh  v.  Teator,  32  X.  Y.  561; 
94  N.  W.  560.  Hills  v.  Ludwig,  46   0.   S.   373;    24 

1  Jenkins  v.  Trager,  40  Fed.  726;  N.  E.  596  (obiters  in  Bobo  v.  Rich- 
Sherman  V.  King,  —  Ark.  — ;  72  S.  mond,  25  0.  S.  115,  and  in  McAffer- 
W.  571;  Dierssen  v.  Nelson,  138  ty  v.  Conover,  7  O.  S.  99;  70  Am. 
Cal.  394;  71  Pac.  456;  Cavanaugh  Dee.  57,  are  to  the  same  effect)  ; 
V.  Jackson,  91  Cal.  580;  27  Pac.  Walker  v.  Devlin,  2  O.  S.  593:  Len- 
931;  Farr  v.  Woolfolk,  118  Ga.  nox  v.  Hendricks,  11  Or.  33;  4  Pac. 
277;  45  S.  E.  230;  Grigsby  v.  515;  Niehol  v.  Lytle,  4  Yerg. 
Combs  (Ky.),  21  S.  W.  37;  Smith  (Tenn.)  456;  26  Am.  Dee.  240; 
70 


1106  PAGE    ON    CONTRACTS. 

the  weight  of  authority,  at  least  where  possession  is  taken 
thereunder." 

In  some  jurisdictions  mere  occupation  under  an  oral  contract 
locating  a  disputed  boundary  is  held  insufficient.^  Even  in 
such  jurisdictions  occupation  and  making  valuable  improve- 
ments,* or  occupation  for  the  period  of  limitations  by  virtue  of 
the  contract^  is  sufficient. 

If,  on  the  other  hand,  such  boundary  is  not  in  dispute,  a  con- 
tract between  two  adjoining  land-owners  changing  the  location 
of  the  line  is  a  contract  for  the  transfer  of  the  realty  between 
the  true  line  and  the  line  as  established,  and  is  within  the  stat- 
ute.^ 

§730.    Acts  of  part  performance  not  involving  possession  of  realty. 

It  is  often  said  by  the  courts  that  there  can  be  no  part  per- 
formance of  an  oral  contract  for  the  sale  of  realty  which  will 
prevent  the  statute  of  frauds  from  applying  unless  possession 
if  the  realty  sold  is  taken  under  the  contract.^  While  this  is 
undoubtedly  true  in  these  cases,  since  no  other  acts  were  shown 

Gilchrist  v.  McGee,  9  Yerg.  (Tenn.)  mond,  25  0.  S.  115;  Davis  v.  Rus- 

455;    Leconte   v.  Toudouze,   82   Tex.  sell,   142  Pa.  St.  426;   21  Atl.  870; 

208;  27  Am.  St.  Rep.  870;  17  S.  W.  Larson  v.  Onesite,  21   Utah  38;   59 

1047;  Harris  v.  Crenshaw,  3  Rand.  Pac.    234;    McMaster   v.    Morse,    18 

(Va.)    14.  Utah  21;  55  Pac.  70. 

2  Anderson  v.  Canter,  10  Kan.  e  Xathan  v.  Dierssen,  134  Cal. 
App.  167;  63  Pac.  285;  Archer  v.  282;  66  Pac.  485;  Smith  v.  Dudley, 
Helm,  69  Miss.  730;   11  So.  3.  1  Litt.   (Ky.)  66;  13  Am.  Dec.  222; 

3  Strickley  v.  Hill,  22  Utah  257 ;  Vosburgh  v.  Teator,  32  N.  Y.  561 ; 
83  Am.  St.  Rep.  786;  62  Pac.  893.  Mynatt  v.  Smart  (Tenn.  Ch.  App.)  , 
(But  in  this  case  the  evidence  left  it  48  S.  W.  270;  Northern  Pine  Land 
in  doubt  whether  any  contract  had  Co.  v.  Bigelow,  84  Wis.  157;  21  L. 
in  fact  been  made.     If  it  had.  it  was  R.  A.  776;  54  N.  W.  496. 

by  one  co-owner  who  could  not  bind  i  Geer  v.  Goudy,  174  111.  514;   51 

the  others.)  N.    E.    623;    Dickens    v.    McKinley, 

4Dupont    V.    Starring,    42    Mich.  163  111.  318;   54  Am.  St.  Rep.  471; 

492;   4  N.   W.   190;    Joyc-e  v.  Will-  45  N.  E.   134;   Grant  v.  Ramsey,  7 

iams,  26  Mich.  332;  Smith  v.  Ham-  O.  S.  157;  Moore  v.  Beasley,  3  Ohio 

ilton,    20    Mich.    433;    4    Am.    Rep.  294;    Waggoner    v.    Speck.    3    Ohio 

398.  292:  Derr  v.  Ackerman,  182  Pa.  St. 

sSchoonmaker    v.    Doolittle.     118  591 ;   38  Atl.  475. 
111.  605;  8  N.  E.  839;  Bobo  v.  Rich- 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1107 

which  could  amount  to  part  performance,  and  while  in  the 
greater  number  of  cases,  change  of  possession  is  the  only  act  of 
part  performance  shown,  it  is  not  safe  to  lay  down  so  sweeping 
a  proposition  as  law.  On  the  one  hand,  acts  which  are  collat- 
eral to  the  contract  for  the  sale  of  realty,^  such  as  obtaining 
tenants,^  or  paying  taxes  on  the  realty  and  listing  it  for  sale 
with  real-estate  agents,*  do  not  constitute  part  performance. 

On  the  other  hand  there  are  many  cases  in  which  the  doctrine 
of  part  performance  has  been  applied  though  possession  of 
realty  was  not  taken  under  the  contract.  In  some  jurisdictions, 
at  least,  if  the  act  done  by  one  party  to  the  contract  as  part  per- 
formance thereof  is  of  such  a  kind  that  he  cannot  be  restored 
to  his  original  position  even  by  compensation  in  money,  such 
act  is  treated  as  part  performance,  taking  the  case  out  of  the 
statute,  and  the  other  party  may  be  compelled  in  equity  to  per- 
form the  oral  contract  on  his  part  specifically,  even  although 
the  act  which  he  has  undertaken  to  do  is  within  the  statute.^ 
Thus,  where  in  consideration  of  A's  promise  to  convey  realty,  B 
agrees  to  and  does  withdraw  exceptions  to  the  account  of  an 
administratrix  and  allow  the  account  to  be  confirmed,®  or  dis- 
misses a  divorce  suit  and  resumes  marital  relations  with  prom- 
isor,^ A's  promise  is  held  not  to  be  within  the  statute.  Thus, 
where  A,  the  vendor  of  certain  realty,  agreed  with  B,  the  pur- 
chaser thereof,  to  release  his  lien  in  two-thirds  of  the  realty  on 
consideration  of  B's  reconveying  the  other  third  of  the  realty 
and  paying  a  certain  sum  of  money,  and  in  reliance  on  this 
contract  C  lends  B  such  amount  of  money,  B  being  insolvent 
and  unable  to  repay  it,  such  part  performance  was  held  to  take 
the  case  out  of  the  statute  as  far  as  C's  rights  were  affected.* 

aColgrove   v.    Solomon,    34   Mich,  tate,    33    Wash.    63;    73    Pac.    768. 

494;   Nibert  v.   Baghurst.  47   N.   J.  6  Hancock  v.  Melloy,   187  Pa.  St. 

Eq.  201;  20  Atl.  252.  371;   41  Atl.  313. 

3  Russell    V.    Briggs,    165    N.    Y.  7  Barbour   v.    Barbour,    49    N.    J. 
500;   53  L.  R.  A.  556;  59  N.  E.  303  Eq.  429;   24  Atl.  227. 

(and  even  collecting  rents) .  « Johnson    v.    Portwood.    89    Tex. 

4  Harney    v.     Burhans,     91     Wis.  235;    34  S.  W.  596,   787    (citing  on 
949;  64  N.  W.  1031.  this   point  Malins   v.   Brown,    4    N. 

5  Spencer    v.    Spencer,    25    R.    I.  Y.  403 ) . 
?:'^;   55  Atl.  637;  In  re  Field's  Es- 


1108  PAGE    ON    CONTRACTS. 

An  extreme  examiDle  of  this  rule  is  found  in  a  case  in  which  A 
had  conveyed  realty  to  his  wife  in  reliance  on  her  promise  to 
reconvey  to  him,  and  it  was  held  by  a  divided  court  that  per- 
formance on  the  part  of  the  husband  took  the  case  out  of  the 
statute.*'  An  illustration  of  the  general  rule  that  change  of 
possession  of  realty  is  a  necessary  element  of  part  performance, 
and  of  the  qualification  thereto  already  discussed  is  found  in 
contracts  to  devise  realty.  If  the  consideration  for  the  promise 
to  devise  is  the  surrender  of  the  custody  of  a  child  to  the  prom- 
isor and  its  adoption  by  him,  the  weight  of  authority  is  that  full 
l>erformance  by  the  surrender  of  the  custody  of  the  child  and 
its  adoption,  whether  formal  or  informal  does  not  prevent  the 
statute  from  operating.^"  So  a  contract  between  two  sisters  to 
make  mutual  wills  is  not  withdrawn  from  the  operation  of  the 
statute  by  making  such  wills,  where  one  of  the  wills  is  revoked 
by  the  subsequent  marriage  of  the  testatrix.^^  So  performance 
of  personal  services  as  consideration  for  a  promise  to  devise 
realty  does  not  withdraw  the  contract  from  the  operation  of  the 
statute.^" 

On  the  other  hand  in  jurisdictions  which  recognize  the  quali- 
fication that  if  the  party  performing  cannot  be  restored  to  his 
former  condition  even  by  money  damages,  he  may  have  specific 

9  Haussman  V.  Burnham,  59  Conn.  Dicken  v.  McKinley,  163  111.  318; 
117;  21  Am.  St.  Rep.  74;  22  Atl.  54  Am.  St.  Rep.  471;  45  N.  E.  134; 
1065.  Such  contract  was  said  to  be  Pond  v.  Sheehan,  132  111.  312;  8  L. 
"fully  perform-id  by  the  other  con-  R.  A.  414;  23  N.  E.  1018;  Austin 
tracting  party  to  it  and  therefore  v.  Davis,  128  Ind.  472;  25  Am.  St. 
taken  out  of  its  operation."  This  Rep.  456;  12  L.  R.  A.  120;  26  N. 
case  is  clearly  contrary  to  the  weight  E.  890;  Shahan  v.  Swan,  48  O.  S. 
of  authority;  see  §  731.  It  cannot  25;  29  Am.  St.  Rep.  517;  26  N.  E. 
rest  on  any  doctrine  of  fraud  as  the  222. 

wife  had  made  a  conveyance  at  her  n  Hale  v.   Hale,   90  Va,   728;    19 

husband's  request,  which  was  defec-  S.  E.  739. 

tive  because  he  did  not  join  with  her  12  Sturges  v.  Taylor    (N.  J.  Eq.), 

in  the  deed,  and  accordingly  the  sole  20  Atl. ,  369 ;  Richardson  v.  Orth,  40 

reason   for  non-performance   on  her  Or.  252;  66  Pac.  925;  69  Pac.  455; 

part  was  his  ignorance  of  the  law  of  Kling  v.   Bordner,  65  O.   S.   86;   61 

conveyancing.  N.   E.   148;    Ellis  v.   Gary,   74   Wis. 

10  Grant  v.  Grant.  63  Conn.  530;  176:  17  Am.  St.  Rep.  125;  4  L.  R. 
38   Am.   St.   Rep.   379;    29   Atl.   15;  A.  55;  42  N.  W.  252. 


CONTKACTS    WHICH    MUST    BE    PEOVED    BY    WEITING.    1109 

performance  in  equity  even  of  an  oral  contract,  a  contract  to 
devise  realty  has  been  held  to  be  taken  out  of  the  statute  by  the 
performance  by  the  adversary  i>arty  of  his  agreement  to  live 
with  and  care  for  testator,  and  render  personal  services  to  him," 
or  by  his  performance  of  his  promise  to  surrender  the  custody 
of  a  child,^*  or  by  allowing  the  adversary  party  to  name  a 
child/^     On    the    same    principle   a    contract   between   several 
brothers  and  sisters  to  whom  land  descended  as  tenants  in  com- 
mon that  they  would  hold  it  as  joint  tenants,  that  on  the  death 
of  each  it  should  vest  in  the  survivors  and  that  on  the  death  of 
the  last  survivor  it  should  descend  to  the  child  of  the  only  one 
of  them  who  was  married,  was  held  to  be  withdrawn  from  the 
operation  of  the  statute  by  the  performance  of  the  contract  until 
invested  in  the  last  survivor/^     Many  of  the  cases  here  given 
are  cases  of  full  performance  on  one  side,  leaving  an  act  to  be 
done  on  the  other  side,  which  is  one  of  those  named  in  this  sec- 
tion of  the  statute.     While  in  one  sense  they  should  be  dis- 
cussed under  another  heading"  they  are  discussed  here  partly 
because  the  general  principles  that  control  them  are  in  cases 
like  this  the  same  in  full  performance  on  one  side  and  in  part 
performance ;  and  partly  because  the  courts  often  refer  to  them 
as  cases  of  part  performance. 

13  Owens  V.  McNally,  113  Cal.  31  L.  R.  A.  810;  34  S.  W.  489; 
444;  33  L.  R.  A.  369;  45  Pac.  710;  Wright  v.  Wright,  99  Mich.  170; 
Svanburg  V.  Fosseen,  75  Minn.  350;  23  L.  R.  A.  196;  58  N.  W.  54; 
74  Am.  St.  Rep.  490;  43  L.  R.  A.  Kofka  v.  Rosicky,  41  Neb.  328;  43 
427;  78  N.  W.  4;  Hiatt  v.  Williams,  Am.  St.  Rep.  685;  25  L.  R.  A.  207; 
72    Mo.    214;     37    Am.    Rep.    438;  59  N.  W.  788. 

Teske  v.  Dittberner,  —  Neb.  — ;  98  is  Daily  v.  Minnick,  117  la.  563; 

N.  W.  57;  modifying,  65  Neb.  167;  60    L.    R.   A.    840;    91    N.    W.    913. 

91   N.   W.   181;   which  reversed.   63  Under  a  statute  making  payment  of 

Neb.   607;    88  N.   W.   658;    Brinton  consideration    part    performance. 

V.  Van  Cott,   8  Utah  480;    33  Pac.  le  Murphy  v.  Whitney,   140  N.  Y. 

218.  541;  24  L.  R.  A.  123;  35  N.  E.  930. 

14  Jones   V.    Comer    (Ky.),    77    S.  Hence  the  child  to  whom  the  prop- 
W.   184;    denying   rehearing    (Ky.).  erty   is   to   descend   can   enforce   the 
76   S.   W.   392;    Nowack  v.   Berger,  contract  against  the  last  survivor. 
133  M*?    «4;  54  Am.  St.  Rep.  663;  i' See  §  714. 


1110  PAGE    ON    CONTEACTS. 

§731.     Payment  of  consideration. 

It  has  already  been  stated  that  full  payment  of  the  purchase 
price  alone  will  not  take  the  contract  out  of  the  statute.^  Still 
less  will  i^ayment  of  part  of  the  purchase  price  take  the  case 
out  of  the  statute."  Thus,  where  A  bought  standing  timber  on 
B's  land  and  paid  part  of  the  purchase  price,  such  payment  did 
not  take  the  case  out  of  the  statute.^  Even  under  a  contract  to 
exchange  realty,  conveyance  of  one  tract  is  not  part  perform- 
ance with  reference  to  the  contract  to  convey  the  other.* 

By  special  statute  in  some  states  as  in  Alabama  the  statute 
of  frauds  does  not  apply  to  contracts  for  the  sale  of  realty 
where  the  vendee  is  in  possession  and  has  paid  part  or  all  of 
the  purchase  price.^  jSTeither  possession  nor  payment  of  the 
purchase  price  will,  without  the  other,  prevent  the  application 
of  the  statute. "^  Under  such  statute,  however,  it  is  not  neces- 
sary to  take  the  case  out  of  the  statute  that  the  purchaser  take 
possession  under  the  contract.  If  he  is  in  possession  before  the 
contract  of  sale,  as  where  he  holds  under  a  lease^  and  pays  part 
of  the  purchase  price  under  the  contract,  the  statute  of  frauds 
does  not  apply.  It  is  not  necessary  that  the  purchase  price  be 
paid  at  the  same  time  that  possession  is  taken.*  Performance 
by  the  vendee  of  the  covenants  on  his  part  to  be  performed,  such 
as  conveying  realty**  or  personalty,"  or  giving  notes,"  or  per- 

1  See  §  716.  So.    565;    MeLure    v.    Tennille,    89 

2  Thompson  v.  Coal  Co.,   135  Ala.      Ala.  572;  8  So.  60. 

630;    93   Am.    St.   Rep.   49;    34    So.  s  McKinnon    v.    Mixon,    128    Ala. 

31;    Nelson    v.    Mfg.    Co.,    96    Ala.  612;    29    So.    690;    Nelson   v.    Mfg. 

515;    38  Am.  St.  Rep.   116;    11   So.  Co.,  96  Ala.  515;    38  Am.  St.  Rep. 

695;  Temple  v.  Johnson,  71  111.  13;  116;    11    So.   695;   Manning  v.  Pip- 

Felton  V.  Smith,  84  Ind.  485;  Leis  pen.  95  Ala.  537;  11  So.  56. 

V.  Potter,  —  Kan.  — ;  74  Pac.  622;  7  Franke  v.  Riggs,  93   Ala.  252; 

Nibert  v.   Baghurst.   47   N.   J.    Eq.  9  So.  359. 

201;  20  Atl.  252;  Bruley  v.  Garvin,  s  Louisville,  etc..  Ry.  v.  Philyaw, 

105  Wis.  625;  48  L.  R.  A.  8.39;   81  94  Ala.  463;  10  So.  83. 

N.  W.  1038;  Harney  v.  Burhans,  91  "Webb   v.   Ballard,   97   Ala.   584; 

Wis.  348;  64  N.  W."  1031.  12  So.  106. 

3  Bruley  v.  Garvin,  105  Wis.  625;  lo  Powell  v.  Higley,  90  Ala.   103; 
48  L.  R.  A.  839;  81  N.  W.  1038.  7  So.  440. 

4Riddell    v.    Riddell     (Xeb.),    97  n  Logerfelt    v.    McKie,    100    Ala. 

N.  W.  609.  430;    14  So.  281. 

5  Price    v.    Bell,    91    Ala.    180;    8 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1111 

forming  services^^  in  consideration  of  the  conveyance  of  the 
realty  bargained  for  is  such  part  performance  as  renders  the 
contract  enforceable. 

In  other  states,  as  in  Iowa,  the  statute  with  reference  to  con- 
tracts for  the  sale  of  realty  is  substantially  the  same  as  that  for 
sales  of  personalty^^  and  by  its  terms  the  statute  of  frauds  does 
not  apply  where  there  has  been  either  possession  of  realty  under 
the  contract  or  payment  of  part  or  all  of  the  "  purchase 
money."^*  In  the  meaning  of  the  statute  the  "  purchase 
money  "  may  consist  of  money,^^  of  notes,  and  a  mortgage  se- 
curing them,^''  of  allowing  the  promisor  to  name  a  child,^^  of 
the  rendition  of  services  as  of  an  attomey,^^  or  furnishing  board 
and  care.^^  Grantee's  payment  of  a  debt  of  an  intestate  ances- 
tor of  grantor,  as  the  purchase  price  of  realty  sold  under  oral 
contract,  which  payment  relieves  land  set  apart  to  another  heir 
of  incumbrances  thereon  has  been  held  to  be  part  performance.^" 
A  deposit  of  money  in  a  bank,  subject  to  the  order  of  vendor 
when  the  title  becomes  perfect,^^  or  an  advance  to  vendor  by  his 
own  agent  under  an  arrangement  with  the  vendee,^'  do  not  con- 
stitute payment  of  the  "  purchase  money  "  within  the  meaning 
of  the  statute. 

§732.     Omission  to  act,  as  part  performance. 

Mere  omission  to  act  cannot  amount  to  part  performance.'' 
Thus,  where-  a  vendor  who  has  reserved  the  right  of  taking 

12  East  Tennessee,  etc.,  Ry.  v.  is  Harlan  v.  Harlan,  102  la.  701; 
Davis,  91  Ala.  615;  8  So.  349.                72  N.  W.  286. 

13  See  §  706.  20  Oliver  v.  Powell,   114  Ga.  592; 
i4Pressley  v.  Roe,  83  la.  545;   50      40  S.  E.  826. 

N.  W.  44.  21  Query  v.  Liston,  92  la.  288 ;  60 

isNiles  v.  Welsh,  89  la.  491;   56  N.  W.  524.     So  where  such  deposit 

N.  W.  657;  Pressley  v.  Roe,  83  la.  was    made    without    the    knowledge 

545;   50  N.  W.  44.  or  assent  of  the  vendor.     Mathes  v. 


16  Devin  v.  Eagleson.  79  la.  269 
44  N.  W.  545. 

17  Daily  v.  Minnick,  117  la.  563 
60.  L.  R.  A.  840;   91  N.  W.  913. 

18  Mitchell  V.   Colby.   95   la.   202 


Bell,  121  la.  722;  96  N.  W.  1093. 

22  Benedict  v.  Bird,  103  la.  612; 
72  N.  W.  768. 

1  Augusta  Southern  R.  R.  v. 
Smith,  etc.,  Co.,  106  Ga.  864;  33  S. 


35  L.  R.  A.  379;   63  N.  W.  769.  E.  28. 


1112  PAGE   ON    CONTKACTS. 

gro-s\4ng  timber  off  the  land  sold  for  a  certain  time,  subsequently 
makes  an  oral  contract  with  his  vendee  for  an  extension  of  such 
time,  his  omission  to  take  the  timber  off  in  the  time  specified 
in  the  original  contract,  though  in  reliance  on  the  oral  contract 
is  not  part  performance.*  If,  however,  omission  to  act  amounts 
to  a  release  of  a  property  right,  as  where  a  widow  refrains  from 
claiming  any  interest  in  her  deceased  husband's  estate  under 
oral  contract  with  the  heirs,^  the  contract  price  of  such  interest 
thus  waived  may  be  recovered. 

§733.    Part  performance  as  applied  to  contracts  not  to  be  per- 
formed within  the  year. 

The  doctrine  of  part  performance  has  been  considered  thus 
far  solely  with  reference  to  contracts  for  an  interest  in  realty. 
Whether  the  doctrine  has  any  application  to  the  other  classes  of 
contracts  included  in  this  section  of  the  statute  is  a  question 
upon  which  there  is  some  diversity  of  opinion.  The  weight  of 
authority  is  that  part  performance  is  a  doctrine  of  equity  which 
applies  solely  to  contracts  for  the  sale  of  some  interest  in  realty.^ 
With  reference  to  contracts  which  cannot  be  performed  within 
a  year  from  the  date  of  the  making  thereof,  we  have  already 
seen  that  some  courts  hold  that  this  clause  of  the  statute  has  no 
application  to  contracts  which  are  to  be  performed  on  one  side 
^vithin  the  year  while  perfonnance  on  the  other  side  is  to  last 
beyond  the  year.^     Thus,  if  A  lends  B  money  to  be  re-paid  at 

2  Clark  V.  Guest,  54  0.  S.  298;  v.  Shultz,  92  111.  App.  84;  Smalley 
43  N.  E.  862.  v.  Greene,  52  la.  241;   35  Am.  Rep. 

3  Andrews  v.  Broughton,  84  Mo.  267;  3  N.  W.  78;  Atchison,  etc.,  R. 
App.  640.  But  neither  specific  per-  R.  v.  English,  38  Kan.  110;  16  Pac. 
formance  nor  damages  for  breach  82;  Dant  v.  Head,  90  Ky.  255;  29 
of  such  a  contract  could  be  had.  Am.  St.  Rep.  369;  13  S.  W.  1073; 
78  Mo.  App.  179.  Kendall   v.   Garneau,   55   Neb.   403; 

1  Maddison  v.  Alderson,  8  App.  75  N.  W.  852 ;  Perkins  v.  Clay.  54 
Cas.  467.  N.   H.    518;    Berry  v.   Dorenius.   30 

2  ililes  V.  Estate  Co.,  L.  R.  32  X.  J.  L.  399 ;  Towsley  v.  Moore,  30 
Ch.  Div.  266;  Donellan  v.  Read,  3  0.  S.  184;  27  Am.  Rep.  434;  Dur- 
Barn.  &  Ad.  899;  McDonald  v.  fee  v.  O'Brien,  16  R.  I.  213;  14  Atl. 
Crosby,  192  111.  283;  61  N.  E.  505;  857;  Seddon  v.  Rosenbaum,  85  Va. 
Curtis  V.  Sage,  35  111.  22;  Hodgens  928;   3  L.  R.  A.  337;   9  S.  E.  326; 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1113 

an  interval  greater  than  a  year,  A  is  allowed  to  enforce  the  con- 
tract.^ 

While  performance  by  one  party  within  the  year  removes 
such  contracts  from  the  operation  of  the  statute  in  jurisdictions 
where  this  theory  obtains,  and  while  such  performance  is  some- 
times explained  as  if  it  were  part  performance,*  it  is  jx3rhaps 
more  accurate  to  say  that  these  courts  look  on  such  contracts  as 
not  within  the  meaning  of  the  statute.  Performance  within 
the  year  makes  the  executory  part  of  the  contract  enforceable 
at  law;  an  effect  which  technical  part  performance  does  not 
have.  Thus,  where  A  promises  to  give  two  thousand  dollars  to 
his  granddaughter  when  she  comes  of  age  in  consideration  of 
her  parents'  relinquishing  a  defence  to  notes  signed  by  them  and 
held  by  A,  performance  by  the  parents  within  the  year  takes 
the  case  out  of  the  statute.^ 

Even  these  courts  hold  that  if  the  contract  is  not  to  be  per- 
formed by  either  party  w^ithin  the  year,  part  performance  does 
not  take  the  case  out  of  the  statute.^  Thus,  an  oral  contract 
made  on  February  15,  1895,  to  issue  a  fire  insurance  policy  for 
one  year  on  the  24th  of  the  next  June  and  annually  thereafter 
on  the  24th  of  each  June  until  otherAvise  ordered  by  the  insured 
is  not  taken  out  of  the  statute  by  issuance  of  such  policy  for 
two  consecutive  years.' 

It  must  be  remembered  that  some  courts  hold  that  full  per- 
formance on  one  side  within  the  year  does  not  withdraw  the 

Grace  v.  Lynch,  80  Wis.  166;  49  N.  Howell,  21  Ind.  App.  495;   52  N.  E. 

W.  751.  769;    Powell   v.    Cranipton,    102    la. 

3  McDonald  v.  Crosby,  192  111.  364;  71  N.  W.  579;  Burden  v. 
283;   61  N.  E.  505.  Knight,  82  la.  584;  48  N.  W.  985; 

4  Piper  V.  Fosher,  121  Ind.  407;  Thorp  v.  Bradley,  75  la.  50;  39  X. 
23    N.    E.    269;    Westfall    v.    Perry  W.    177;    Osborne    v.    Kimball,    41 

(Tex.  Civ.  App.),  23  S.  W.  740.  Kan.   187;    21   Pac.   163;   Thisler  v. 

5  Piper  V.  Fosher,  121  Ind.  407;  Mackey,  5  Kan.  App.  217;  47  Pac. 
23  N.  E.  269.  175;  Klein  v.  Ins.  Co.   (Ky.),  57  S. 

6  Shumate  v.  Farlow,  125  Ind.  W.  250;  Lally  v.  Lumber  Co..  85 
359 ;  25  N.  E.  432 ;  Lowman  v.  Minn.  257 ;  88  K  W.  846 ;  Hillhouse 
Sheets,  124  Ind.  416;  7  L.  R.  A.  v.  Jennings.  60  S.  C.  373;  38  S.  E. 
784;  24  N.  E.  351:  Wolke  v.  Flem-  ,599. 

ing.    103    Ind.    105;     53    Am.    Rep.  t  Klein  v.   Ins.   Co.    (Ky.),   57   S. 

495;  2  N".  E.  325;   Clark  County  v.      \Y.   250. 


1114:  PAGE    ON    CONTRACTS. 

contract  from  the  operation  of  the  statute  where  the  other  side 
has  agreed  to  perform  acts  which  cannot  be  performed  within 
the  jear.^  So  an  oral  agreement  by  A,  a  guarantor,  of  an  over- 
due note  with  B,  the  holder  thereof,  that  if  B  w^ould  bid  the 
property  in  and  hold  it  till  the  redemption  period  had  expired 
(which  would  carry  performance  past  the  year)  A  would  pay 
the  amount  due  on  the  notes  and  the  costs  of  foreclosure  if  the 
property  were  not  then  redeemed,  is  not  taken  out  of  the  statute 
by  performance  by  B.** 

If  a  contract  is  a  contract  for  some  interest  in  realty  and 
also  one  which  cannot  be  performed  within  the  year,  as  a  con- 
tract for  a  lease  for  more  than  one  year,  the  courts  are  divided 
as  to  whether  part  performance  can  take  it  out  of  the  statute. 
Some  courts  hold  that  part  performance  takes  such  contract  out 
of  the  statute  f'^  and  others  that  it  does  not.^^ 

§734.     Part  performance  as  applied  to  contracts  in  consideration 
of  marriage. 

A  contract  in  consideration  of  marriage  is  not  taken 
out  of  the  statute,  according  to  the  weight  of  authority, 
by  the  marriage  of  the  party  to  whom  the  promise  is  made 
in   reliance   on   such   promise.^     There   are   some   cases,   how- 

8  Jackson  Iron  Co.  v.  Concentrat-  i  Caton  v.  Caton,  L.  R.    1  Ch.  137; 

ing  Co.,   65  Fed.  298;    12   C.  C.  A.  Lloyd  v.  Fulton,  91  U.  S.  479;  Peek 

636;  De  Bord  v.  Holcomb,  13  Colo.  v.   Peek,    77   Cal.    106;    11   Am.    St. 

App.  161;  57  Pac.  548.  Rep.  244;    1  L.  R.  A.  185;   19  Pae. 

aVeazie  v.  Morse,  67  Minn.   100;  227;  Durham  v.  Taylor,  29  Ga.  166; 

69  N.  W.  637.  Richardson   v.    Richardson,    148    111. 

10  So  held  in  an  action  for  rent,  563;  26  L.  R.  A.  305;  36  X.  E.  608: 
Eubank  v.  Hardware  Co.,  105  Ala.  affirming,  45  111.  App.  362;  Keady 
629;  17  So.  109.  And  in  an  action  v.  White,  168  111.  76;  48  N.  E.  314; 
to  recover  the  realty,  Dahm  v.  Bar-  affirming,  69  111.  App.  405;  McAn- 
low,  93  Ala.  120;  9  So.  598.  nulty  v.  McAnnulty,  120  111.  26;  60 

11  Powell  V.  Crampton,  102  la.  Am.  Rep.  552;  11  N.  E.  397;  Flen- 
364;  71  N.  W.  579;  Burden  v.  ner  v.  Flenner,  29  Ind.  564;  Man- 
Knight,  82  la.  584;  48  N.  W.  985;  ning  v.  Riley.  52  N.  J.  Eq.  39:  27 
Thorp  V.  Bradley,  75  la.  50;  39  X.  Atl.  810;  Hunt  v.  Hunt,  171  X.  Y. 
W.   177.  390;  59  L.  R.  A.  306;  64  X.  E.  159; 

Henry    v.    Henry,    27     O.    S.     121 ; 


CONTKACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1115 

ever,     in     which     the     opposite     view     has     been     taken. ^ 

§735.    Part  performance  as  applied  to  contracts  to  answer  for  the 
debt  of  another. 

A  promise  to  answer  for  the  debt  of  another  is  not  taken  out 
of  the  statute  by  performance  by  the  party  to  whom  the  prom- 
ise is  made.^  While  some  cases  are  explained  on  the  theory  of 
part  performance"  they  may  as  well  be  explained  on  the  theory 
that  promisor  has  made  the  debt  his  own.  Thus,  where  A  de- 
sired to  get  control  of  a  soda-water  fountain  owned  by  B  and 
leased  to  C,  to  prevent  it  from  being  used  in  competition,  and 
to  do  this  A  agreed  to  pay  to  B  the  rent  due  him  on  the  foun- 
tain from  C,  and  B  in  consideration  of  A's  promise  to  release 
C  from  the  lease  and  from  payment  of  arrears  of  rent,  A's 
promise  was  held  not  within  the  statute.^ 

§736.     Evidence  of  oral  contract. 

If  part  performance  is  relied  upon  to  take  an  oral  con- 
tract out  of  the  statute  of  frauds  the  evidence  of  the  oral  contract 
must  be  clear,  unequivocal  and  definite.^  It  is  necessary  to 
offer  "  unequivocal  and  satisfactory  evidence  of  the  particular 
agreement  charged  in  the  bill  and  answer."^  Under  the  Iowa 
statute  it  has  been  held  sufficient  to  charge  the  jury  that  the 
plaintiff  must  "  satisfy  "  them  that  there  has  been  part  per- 

Finoh  V.  Finch,  10  O.  S.  501;  Stan-  635;    34    S.   E.    1002.     The   decision 

ley   V.   Madison,    11    Okla.    288;    66  was  clearly  correct  though  the  the- 

Pac.  280;   Adams  v.  Adams,   17  Or.  ory    of    part    performance    was    uh- 

247;  20  Pac.  633.  necessary. 

In  Missouri  marriage  and  cohabi-  i  Purcell    v.    Miner,    4    Wall.    (U. 

tation  are  treated  as  part  perform-  S.)  513;  Beall  v.  Clark,  71  Ga.  818; 

ance.     Nowack   v.   Berger,    133   Mo.  Sloniger  v.   Sloniger,    161   111.   270; 

24;  54  Am.  St.  Rep.  663;  31  L.  R,  43  N.  E.  1111;  Truman  v.  Truman, 

A.  810;  34  S.  W.  489.  79  la.  506;  44  N.  W.  721;   Bennett 

iMcGauhey    v.    Latham,    63    Ga.  v.  Dyer,  89  Me.   17;   35  Atl.   1004; 

67;  rehearing  denied,  147  Ind.  690;  Woodbury  v.   Gardner,   77   Me.   68; 

37  L.  R.  A.  245;  47  N.  E.  150.  Brown  v.  Brown,  47  Mich.  378;    11 

2  English    V.    Richards    Co.,     109  N.  W.  205. 

Ga.  635;   34  S.  E.  1002.  2  Williams    v.    Morris,    95    U.    S. 

3  English  V.  Richards  Co.,  109  Ga.      444,  457 ;    quoted   in   Buttz  v.  Col- 


IIIG  PAGE    ON    CONTEACTS. 

foriiiauce  before  he  can  recover.^  Whatever  the  phraseology 
employed  the  courts  usually  required  more  than  a  mere  pre- 
ponderance of  the  evidence  to  prove  such  contract. 

XII.     Effect  of  iSTon-Compliance  with  Statute. 

§737.     To  what  classes  of  contract  the  fourth  section  of  the  statute 
applies. 

The  fourth  section  of  the  statute  of  frauds  applies  to  certain 
types  of  "  special  promise,"  "  agreement  "  and  "  contract  or 
sale."  The  courts  have  in  some  cases  considered  to  what  classes 
of  contract  this  language  can  apply.  It  is  held  not  to  apply  to 
a  contract  of  record.^  Thus,  a  recognizance  to  answer  for  the 
default  of  another  is  enforceable  though  unsigned."  The 
statute  of  frauds  clearly  applies  to  express  simple  contracts. 
It  does  not  apply  to  quasi-contract.^  The  statute  by  its  terms 
applies  to  a  "  special  promise."  Accordingly  a  liability  inde- 
pendent of  a  special  j)romise  is  not  within  the  statute,  such  as 
an  implied  trust  in  realty,*  or  the  liability  of  a  party,  receiving 
a  benefit  under  an  oral  contract  which  by  its  terms  cannot  be 
performed  within  the  year,  to  recompense  the  adversary  party 
therefore.^  Thus,  even  in  oral  contracts  within  the  statute,  the 
party  who  has  performed  in  whole  or  in  part  may  often  recover 
on  a  quantum  meruit.^ 

On  the  same  principle  the  statute  of  frauds  has  no  applica- 
tion to  estoppel  in  pais.''  So  interests  in  realty  may  be  affected 
by  estoppel  in  pais  restmg  purely  in  oral  evidence.     The  owner 

ton,    6    Dak.    306,    320;    43    N.    W.  510;  Doolittle  v.  Dininny,  31  N.  Y. 

717.  350. 

3Hutton   V.   Doxsee,    116    la.    13;  4  Rayl  v.  Ravi,   58  Kan.   585;    50 

89  N.  W.  79.  Pac.  501. 

1 "  No  ease  can  be  found  where  a  s  City    of    Greenville    v.     Water- 
contract  of  record  has  been  held  to  works    Co.,    125    Ala.    625;    27    So. 
be    within   the    statute    of   frauds."  764. 
Huston  V.  Ry.,  21  0.  S.  235.     Con-  See  §§  749-751. 
tra,    Robinson   v.   Driver,    132    Ala.  e  See  §§  749-751. 
169;  31  So.  495.  t  Foster  v.  Irrigation  Co.,  65  Fed. 

2  See  §  552.  836. 

3  Goodwin    v.     Gilbert,     9     Mass. 


CONTRACTS    WHICH    MUST    BE    PEOVED    BY    WRITING.    1117 

may  be  estopped  to  deny  that  the  title  'to  realty  is  in  another 
where  such  other  has  been  misled  by  the  conduct  of  the  true 
owner.^  So  the  true  owner  may  be  estopped  to  allege  title  as 
to  third  persons  who  have  been  misled  by  api^earances ;  as  where 
the  holder  of  a  mechanic's  lieu,''  or  the  creditors  of  the  owner's 
husband,"  seek  to  enforce  their  claims  on  the  theory  that  the 
realty  in  question  belongs  to  such  other.  So  the  owner  of 
realty  may  be  estopped  to  deny  the  existence  of  a  lease,^^  or  to 
allege  the  forfeiture  of  a  lease.^^  So  he  may  be  estopped  to 
deny  the  existence  of  an  easement  in  his  realty  for  the  benefit 
of  another,^^  as  a  right  to  make  use  of  a  ditch, ^*  or  a  j'ight  of 
way,^®  as  a  right  of  way  belonging  to  a  railway.^''  All  these  sub- 
jects are  outside  of  the  operation  of  the  statute  of  frauds. 

§738.     Whether  contract  is  void. 

While  the  courts  not  infrequently  say  that  a  contract  within 
the  statute  of  frauds  and  not  complying  with  its  requirements 
is  void,^  this  is  simply  another  example  of  inaccuracy  in  the  use 

8  Wright  V.  McCord,  113  Ga.  881;  513;  86  Am.  St.  Eep.  209;  64  S.  W. 

39  S.  E.  510;   Cross  v.  Commission  277. 

Co.,  153  111.  499;  46  Am.  St.  Rep.  is  Mattes   v.   Frankel,    157   N.   Y. 

902;     38    N.    E.    1038;    Schafer    v.  603;  68  Am.  St.  Rep.  804;  52  N.  E. 

Wilson,  113  la.  475;  85  N.  W.  789;  585;  De  Herques  v.  Marti,  85  N.  Y. 

Springle  v.  Morrison,  3  Litt.   (Ky.)  609. 

52;    14   Am.   Dec.   41;    Redmond   v.  i*  Biggs    v.    Ditch    Co.,    —    Ariz. 

Loan  Association,  194  Pa.  St.  643;  — ;  64  Pae.  494. 

75  Am.  St.  Rep.  714;   45  Atl.  422;  is  Mattes   v.    Frankel,    157    N.   Y. 

Wampol  V.  Kountz,   14   S.   D.   334;  603;  68  Am.  St.  Rep.  804;  52  N.  E. 

86  Am.  St.  Rep.  765 ;  85  N.  W.  595 ;  585 ;   Grace  v.  Walker,   95  Tex.   39, 

Polk  V.  Gunther,   107  Tenn.   16;   64  43;   65  S.  W.  482;   affirming  on  re- 

S.  W.  25;  Murray  Mining  and  Mill  hearing,  95  Tex.  39;   64  S.  W.  930. 

Co.    V.    Havener,    24    Utah    73;    66  is  Hendrix  v.  Ry.,   130  Ala.   205; 

Pac.  762.  89   Am.    St.    Rep.   27;    30    So.   596; 

sRadant   v.    Mfg.    Co.,    106    Wis.  Louisville.  etc._.  Ry.  v.  Coal  Co.,  Ill 

600;  82  N.  W.  562.  Ky.   960;    55   L.   R.   A.   601;    64   S. 

loHauk    V.    Van    Ingen.    196    111.  W.  969. 

20;  63  N.  E.  705.  i  McKinnon    v.    Mixon,    128    Ala. 

11  Brown    v.     Baruch,    24    Wash.  612;   29  So.  690;   Bishop  v.  Martin 

572;  64  Pac.  789.  (Ky.),    65    S.    W.    807;    McDonald 

i2Conley    v.     Johnson,     69    Ark.  v.  Maltz,   78  Mich.  685;   44  N.  W. 


1118 


PAGE    ON    CONTRACTS. 


of  the  word  '^  void,"'  "  void  "  in  this  instance  being  confused 
with  "  unenforceable."  Such  contracts  are  not  void  in  the 
proper  use  of  the  term.^ 

Accordingly,  persons  who  are  not  parties  to  an  oral  contract 
and  who  do  not  represent  such  parties  cannot  attack  the  contract 
as  invalid  by  reason  of  the  statute  of  frauds.^  Thus,  in  con- 
tracts for  the  sale  of  some  interest  in  realty,*  third  persons,  such 
as  adverse  claimants  of  the  property,^  gratuitous  donees,®  per- 
sons having  subsequent  written  contracts  with  the  same  vendor 
for  the  same  realty,  where  the  vendor  conveys  to  the  vendee 
under  the  prior  oral  contract,^  creditors  of  the  vendor,*  even  if 
they  have  obtained  judgments  which  would  be  liens  on   the 


337;  Wardell  v.  Williams,  62  Mich, 
50;  4  Am.  St.  Rep.  814;  28  N.  W. 
796;  Raub  v.  Smith,  61  Mich.  543; 
1  Am.  St.  Rep.  619;  28  N.  W.  676; 
Cram  v.  Thompson,  87  Minn.  172; 
91  N".  W.  483;  Taylor  v.  Von 
Schraeder,  107  Mo.  206;  16  S.  W. 
675;  Bloomfield  State  Bank  v.  Mil- 
ler, 55  Neb.  243;  70  Am.  St.  Rep. 
381;  44  L.  R.  A.  387;  75  N.  W. 
569. 

2  Lowman    v.     Sheets,     124     Ind. 
416;  7  L.  R.  A.  784;  24  N.  E.  351 
Cochran  v.  Ward,  5  Ind.  App.   89 
51  Am.  St.  Rep.  229;  29  N.  E.  795 
31    N.    E.    581;    Weber    v.    Weber 
(Ky.),   76   S.   W.   507;   McCampbell 

V.  McCampbell,  5  Litt.  (Ky.)  92; 
15  Am.  Dec.  48;  Stone  v.  Dennison, 
13  Pick.  (Mass.)  1;  23  Am.  Dec. 
654;  Gordon  v.  Collett,  104  N.  C. 
381;   10  S.  E.  564. 

3  Bullion,  etc..  Bank  v.  Otto,  59 
Fed.  256;  Chicago  Dock  Co.  v.  Kin- 
zie,  49  III.  289;  Wright  v.  Jones, 
105  Ind.  17;  4  N.  E.  281;  Cowan  v. 
Adams,  10  Me.  374;  25  Am.  Dee. 
242;  Wood  V.  Lowney,  20  Mont. 
273;  50  Pae.  794;  Rickards  v.  Cun- 
ningham, 10  Neb.  417;  6  N.  W. 
475;    Simmons  v.  More,  100  N.  Y. 


140;  2  N.  E.  640;  Durham,  etc., 
Co.  V.  Guthrie,  116  N.  C.  381;  21 
S.  E.  952.  "  No  man  is  bound  to 
set  up  the  staute  of  frauds  as  a  de- 
fense, for  the  benefit  or  even  at  the 
requirement  of  another,  in  a  per- 
sonal action  against  him  upon  a 
claim,  the  obligation  of  which  he 
recognizes  as  found  in  good  faith 
and  right."  Bullard  v.  Smith,  139 
Mass.  492,  498;  citing,  Ames  v. 
Jackson,  115  Mass.  508;  Cahill  v. 
Bigelow,   18  Pick.    (Mass.)    369. 

4  As  in  a  sale  of  water  rights, 
Daum  V.  Conley,  27  Colo.  56;  59 
Pac.  753.  Mining  claims.  Book  v. 
Mining  Co.,  58  Fed.  106;  Murray 
Hill,  etc.^  Co.  V.  Havenor,  24  Utah 
73;  66  Pac.  762. 

.sMcManus  v.  Matthews  (Tex. 
Civ.  App.),  55  S.  W.  589. 

6  Hill  V.  Groesbeck,  29  Colo.  161; 
67  Pac.  167. 

TMagriire  v.  Heraty,  163  Pa.  St. 
381;  43  Am.  St.  Rep.  800;  30  Atl. 
151. 

8  Bell  V.  Beazley,  18  Tex.  Civ. 
App.  639;  45  S.  W.  401.  To  the 
same  effect  see  Kemp  v.  Bank,  109 
Fed.  48;  48  C.  C.  A.  213. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1119 

realty  contracted  for,  but  for  the  contract,"  an  assignee  for  the 
benefit  of  creditors,^"  or  an  insurer  of  the  interest  of  the  vendee 
under  the  oral  contract,"  can  none  of  them  avail  themselves  of 
the  fact  that  the  contract  did  not  comply  with  the  requirements 
of  the  statute.  So  one  who  has  made  an  oral  promise  to  answer 
for  the  debt,  default,  or  miscarriage  of  another  and  has  per- 
formed such  contract  can  compel  exoneration  from  the  principal 
debtor.^^  This  is  true  even  where  such  debtor  has  notified  such 
guarantor  not  to  perform/^  So  where  A  has  conveyed  to  B  as 
trustee,  A  cannot  avoid  the  deed  because  the  trust  was  an  oral 
one  to  secure  a  debt  from  A  to  C  if  B  admits  the  liability 
to  C/* 

So  if  C  induces  B  to  break  a  contract  between  B  and  A,^^  as 
a  contract  of  employment,^''  C  cannot  avoid  liability  on  the 
ground  that  the  contract  between  A  and  B  was  an  oral  contract 
which  was  not  to  be  performed  within  the  year. 

Further  proof  that  a  contract  within  the  statute  of  frauds 
and  not  complying  with  its  terms  is  not  void  may  be  found  in 
the  fact  that  such  contract  is  valid  unless  the  defence  of  the 
statute  is  properly  interposed,^^  and  in  the  fact  that  if  an  action 
on  such  a  contract  is  brought  in  a  jurisdiction  in  which  the 
statute  is  not  in  force,  such  contract  can  be  enforced  as  well  as 
any  other. ^^ 

Some  statutes  provide  that  such  contracts  are  void  and  some 

9  Minns  v.  Morse,  15  Ohio  568;  (Ky.)  200;  Cahill  v.  Bigelow,  18 
Butler    V.    Thompson,    45    W.    Va.      Pick.   (Mass.)    369. 

660;  72  Am.  St.  Rep.  838;  31  S.  E.  i5  Sneed     v.     Bradley,     4     Sneed 

960.     Contra,  Gary  v.   Newton,   201  (Tenn.)    301. 

111.  170;  66  N.  E.  267.  i6  Duckett  v.  Pool,  33  S.  C.  238; 

10  Walker's    Assignee    v.    Walker  11  S.  E.  689. 
(Ky.),  55  S.  W.  726.  i7  See  §  752. 

iiCowell  V.   Ins.   Co.,    126   N.   C.  isLercux  v.  Brown,  12  C.  B.  801; 

684;    36  S.  E.   184;   German- Ameri-  74  E.  C.  L.  801;   Pritchard  v.  Nor- 

can,  etc.,  Co.  v.  Surety  Co.,  190  Pa.  ton,   106  U.  S.  124:   Buhl  v.  Steph- 

St.  247;  42  Atl.  682.  ens,  84  Fed.  922;  Douver  v.  Chese- 

12  Simpson  v.  Hall.  47  Conn.  417.  brough,    36   Conn.   39;    4   Am.   Rep. 

13  Beal  V.  Brown,  13  All.  (Mass.)  29;  Kleeman  v.  Collins,  9  Bush. 
114.  (Ky.)   460;  Emery  v.  Burbank,  163 

i4Auten  V.  Ry.  Co.,  104  Fed.  Mass.  326;  47  Am.  St.  Rep.  456; 
395;    Crawford   v.    Woods,    6    Bush.      28    L.    R.    A.    57;    39    N.    E.    1026; 


1120  PAGE    ON    CONTRACTS. 

courts  construe  such  provisions  literally.^"  Whether  an  oral 
contract  within  the  statute  of  frauds  is  of  such  validity  that  its 
release  is  a  valuable  consideration  for  a  new  promise,  based 
thereon,  which  is  not  itself  within  the  statute  is  a  question  on 
which  authorities  are  in  conflict.  On  the  one  hand,  the  re- 
lease of  a  voidable  contract  is  a  valuable  consideration,^"  and  in 
analogy  a  release  of  rights  under  an  oral  contract  within  the 
statute  of  frauds  has  been  held  a  valuable  consideration  for  a 
new  contract."^  So  where  an  oral  contract  within  the  statute 
has  been  broken  and  a  note  has  been  given  in  payment  of  dam- 
ages caused  by  such  breach  the  note  has  been  held  to  be  on  val- 
uable consideration.^"  On  the  other  hand,  if  the  consideration 
of  the  new  contract  is  denied,  it  can  be  proved  only  by  oral  evi- 
dence of  the  original  contract ;  and  thus  the  original  contract 
would  be  indirectly  enforced  though  resting  in  parol.  Accord- 
ingly some  courts  hold  that  such  release  is  not  a  valuable  con- 
sideration, as  of  a  contract  to  answer  for  the  debt  of  another.^* 
If  such  new  contract  is  fully  performed  and  performance  is  ac 
cepted,  the  statute  does  not  apply.^* 

§739.     Whether  contract  is  voidable. 

Such  contracts  are  said  by  many  courts  to  be  voidable.^  This 
term  is  more  nearly  correct  than  "  void,"  but  it  may  be  doubted 
whether  it  is  the  correct  term  to  use,  at  least  in  many  jurisdic' 
tions  a  contract  is  "  voidable  "  in  the  proper  sense  from  some 

Third  National   Bank  v.   Steel,    129  22  Anderson  v.   Best,    176   Pa.   St. 

Mich.  434;   88  N.  W.  1050;   Heaton  498;   35  Atl.  194. 

V.   Eldridge,   56   O.    S.   87;    60   Am.  23  Hall    v.    Soule,    11    Mich.    494. 

St.  Rep.  737;   36  L.  R.  A.  817;   46  (But    in    this    state    oral    contracts 

N.  E.  638.  within   the    statute   are   held   to   be 

19 Pierce  V.  Clarke,  71  Minn.  114;  void.)     Sale     of    goods,     North    v. 

73  N.  W.  522    (overruling,  Hagelin  Forest,  15  Conn.  400. 

V.  Wacks,  61  Minn.  214;  63  N.  W.  24  Detroit,   etc.,   R.   R.   v.   Forbes, 

624).  30  Mich.   165. 

20  See  §  321.  ^  Thus  in  Lowman  v.  Sheets.   124 

21  Contract  not  to  be  performed  Ind.  416;  7  L.  R.  A.  784;  24  N.  E. 
within  one  year,  Stout  v.  Ennis,  28  351,  such  a  contract  is  said  to  be 
Kan.  706.  "  not  void  but  merely  voidable.'' 


CONTEACTS    WHICH    MUST    BE    PKOVED    BY    WKITING.    1121 

defect  in  its  formation,  and  as  we  shall  see  later/  the  better 
view  of  the  statute  of  frauds  is  that  it  has  nothing  to  do  with 
the  formation  of  the  contract,  but  merely  with  the  evidence  by 
which  the  contract  is  to  be  proved. 

§740.     Contract  unenforceable. 

If  the  statute  of  frauds  is  properly  interposed  as  a  defence 
to  a  contract  which  falls  within  its  terms  and  does  not  compl^> 
with  its  requirements,  such  contract  is  unenforceable.^  No 
action  at  law  can  be  maintained  to  recover  damages  for  its 
breach,^  nor  can  a  suit  in  equity  be  maintained  for  a  breach  of 
such  contract.^  Thus,  in  ease  of  a  breach  of  an  oral  contract 
for  the  sale  of  realty,  the  vendee  cannot  recover  the  value  of 
the  realty.* 

By  the  weight  of  authority  an  oral  contract  within  the  statute 
of  frauds  cannot  be  used  as  a  defence,  where  the  result  of  per- 


2  See  §  741. 

1  Sivell  V.  Hogan,  119  Ga.  167;  46 
6.  E.  07;  Lyons  v.  Bass,  108  Ga. 
573 :  34  S.  E.  721 ;  Peck  v.  Harvest- 
ing Co.,  196  111.  295;  63  N.  E.  731; 
Jackson  v.  Myers,  120  Ind.  504;  22 
N.  E.  90;  23  N.  E.  86;  Leis  v.  Pot- 
ter, —  Kan.  — ;  74  Pac.  622;  Town- 
send  V.  Hargreaves,  118  Mass.  325; 
Riddel!  v.  Piddell  (Neb.),  97  N.  W. 
609;  Vick  v.  Viek,  126  N.  C.  123; 
35  S.  E.  257;  Reed  v.  Adams,  172 
Pa.  St.  127;  33  Atl.  700;  Bowen  v. 
Sayles,  23  R.  I.  34;  49  Atl.  103; 
Cleveland  v.  Evans,  5  S.  D.  53;  58 
N.  W.  8;  Lombard  Investment  Co. 
V.  Carter,  7  Wash.  4;  38  Am.  St. 
Rep.  864;  34  Pac.  209.  The  statute 
*'  does  not  make  an  action  void  but 
prevents  bringing  an  action  for 
non-performance."  Trowbridge  v. 
Weatherbee,  11  All.    (Mass.)    361. 

2  Peck  v.  Machine  Co.,  94  111. 
App.     586;      Bromley     v.      Broyles 

(Ky.),   58   S.   W.   984;   McCampbell 
V.  McCampbell,   5   Litt.    (Ky.)    92; 

n 


15  Am.  Dec.  48;  Norton  v.  Preston, 
15  Me.  14;  32  Am.  Dec.  128;  Ham- 
ilton V.  Thirston,  93  Md.  213;  48 
Atl.  709;  Hallett  v.  Gordon,  122 
Mich.  567;  81  N.  W.  556;  82  N.  W. 
827;  Lydick  v.  Holland,  83  Mo. 
703;  Smith  v.  Phillips,  69  N.  H. 
470;  43  Atl.  183;  Rutan  v.  Hinch- 
man,  30  N.  J.  L.  255;  Baltzen  v. 
Nicolay,  53  N.  Y.  467;  Jordan  v. 
Furnace  Co.,  126  N.  C.  143;  78 
Am.  St.  Rep.  644;  35  S.  E.  247; 
McCracken  v.  McCracken,  88  N.  C. 
272;  Hillhouse  v.  Jennings,  60  S. 
C.  373;   38  S.  E.  599. 

sDunphy  v.  Ryan,  116  U.  S.  491; 
Andrews  Bros.  Co.  v.  Coke  Co.,  39 
Fed.  353;  Green  v.  Groves,  109 
Ind.  519;  10  N.  E.  401;  Bloomfield 
State  Bank  v.  Miller,  55  Neb.  243; 
70  Am.  St.  Rep.  381;  44  L.  R.  A. 
387;   75  N.  W.  569. 

4]McDonald  v.  Maltz,  78  Mich. 
685;  44  N.  W.  337;  Jordan  v.  Fur- 
nace Co.,  126  N.  C.  143;  78  Am. 
St.  Rep.  644;  35  S.  E.  247. 


1122  PAGE    ON    CONTRACTS. 

mitting  such  defence  will  be  to  enforce  such  contract.^  Thus, 
where  A  sues  B  in  equity  to  restrain  him  from  practicing  medi- 
cine  in  a  certain  town  contrary  to  a  written  contract  betweer 
A  and  B,  made  when  B  sold  his  practice  and  good-will  to  A,  E 
cannot  set  up  the  breach  of  a  contemporaneous  oral  contract 
between  A  and  B  whereby  A  agreed  to  buy  B's  house  and  lot.^ 

These  rules  apply,  however,  only  where  the  oral  contract  is 
sought  to  be  enforced  and  have  no  application  where  the  con- 
tract is  pleaded  for  some  other  purpose.  Thus,  where  A  let  B 
take  jx)ssession  of  certain  realty  under  an  oral  contract  of  pur- 
chase which  B  subsequently  refused  to  perform,  A  can  show 
such  contract  and  breach  in  an  action  of  forcible  entry  and  de- 
tainer to  recover-  such  realty,  for  the  possession  of  showing  that 
B  has  no  right  of  possession.'^  So  an  oral  lease  may  be  shoAvn 
in  order  to  interrupt  an  adverse  holding  of  realty  by  the  claim- 
ant who  accepts  the  lease.® 

§741.    Statute  of  frauds  a  rule  of  evidence. 

The  theory  of  the  statute  of  frauds  that  best  explains  the 
greatest  number  of  cases  is  that  it  is  essentially  a  rule  of  evi- 
dence, and  has  no  effect  of  any  kind  upon  the  formation  of  the 
contract,  but  solely  on  the  means  whereby  it  is  to  be  proved.^ 
It  is  not  strictly  correct  to  call  an  oral  contract  within  the  stat- 
ute either  void  or  voidable.  It  is,  indeed,  unenforceable,  but 
only  because  proof  is  impossible  for  want  of  proper  evidence; 
and  this,  only  if  the  statute  is  taken  advantage  of  at  the  trial  ii 
a  proper  manner.^  The  contracts  enumerated  in  the  fourth 
section  of  the  statute  of  frauds  are  not  required  by  the  Common 

5  Bernier  v.  Mfg.  Co.,  71  Me.  506;  i  Merchant  v.  O'Rourke,  111  la. 
36  Am.  Rep.  343;  King  v.  Welcome,  351;  82  X.  W.  759;  Townsend  v. 
5  Gray  (Mass.)  41;  Lemon  v.  Ran-  Hargieaves,  118  Mass.  325;  Stone 
dall,  124  Mich.  687;   83  N.  W.  994.  v.    Dennison,    13    Pick.    (Mass.)     1; 

6  Lemon  v,  Randall.  124  Mich.  23  Am.  Dec.  654;  Third  National 
687;   83  N.  W.  994.  Bank   v.    Steel,    129   Mich.   434;    88 

7  Leach  v.  Ritzke,.  86  111.  App.  N.  W.  1050;  Heaton  v.  Eldridge, 
483.  56  O.  S.  87;   60  Am.  St.  Rep.  737; 

sCampau    v.    Laflferty,    43    Mich.      36  L.  R.  A.  817;  46  N.  E.  638. 
429 ;  5  N".  W.  648.  2  See  §  752. 


CONTRACTS    WHICH    MUST    BE    PEOVED    BY    WKITING.    1123 

Law  to  be  in  writing  or  to  he  proved  by  writing.  Accordingly, 
in  jurisdictions  where  the  statute  is  not  in  force,  oral  contra(;ts 
of  these  classes  are  enforceable,'  such  as  oral  contracts  for 
the  sale  of  realty.*  Where  this  theory  of  the  statute  obtains  an 
oral  contract  within  the  statute  of  frauds  in  force  where  such 
contract  is  made  and  is  to  be  performed  may  be  enforced  in 
jinother  jurisdiction  where  such  statute  is  not  in  force.^  In 
some  jurisdictions,  however,  the  statute  of  frauds  is  said  to 
affect  the  contract  itself  and  not  merely  the  means  whereby  it 
is  to  be  proved.*' 

^742.     Effect  of  consideration  for  contract. 

Since  the  statute  of  frauds  takes  away  no  requisite  of  a  valid 
contract  but  merely  adds  a  requisite  as  to  the  means  of  proof,^ 
a  contract  on  valuable  consideration  for  the  conveyance  of  real- 
ty,^ as  in  return  for  a  contract  to  erect  a  party-wall,^  or  for  per- 
sonal services,*  or  for  promisee's  publishing  a  newspaper  in  the 


3  Wilson  V.  Owens,  86  Fed.  371; 
30  C.  C.  A.  257;  Myers  v.  Mathis 
(Ind.  'l"er.)  ,  46  S.  W.  178. 

*  Maxwell  Land  Grant  Co.  v. 
Dawson.  7  N.  M.  133;  34  Pae.  191 
(not  arfected  on  this  point  by  its 
reversal  in  151  U.  S.  586);  Me- 
Kennon  v.  Winn,  1  Okla.  327;  22 
L.  R.  A,  501;  33  Pae.  582. 

5  See  ^  752. 

6 "  The  courts  of  England  have 
declared  tnat  the  substance  of  con- 
tracts within  the  statute  is  not  af- 
fected by  the  statute,  but  that 
whetlier  they  are  to  be  enforced  or 
not  is  dependent  upon  the  enforce- 
ment of  a  rule  of  evidence,  and 
therefore  it  (s  necessary  in  order  to 
get  the  advantage  of  the  statute, 
that  it  should  be  properly  pleaded. 
Our  court,  however,  holds  that  the 
statute  affects  the  contract  itself, 
and  therefore  whenever  one  is  re- 
quired to  prove  the  contract  which 
he   seeks    to   enforce    (if   it    be   one 


within  the  purview  of  the  statute) 
he  must  show  that  it  has  been  exe- 
cuted in  contemplation  of  the  stat- 
ute, and  that  by  legal  evidence." 
Jordan   v.   Furnace   Co.,    126   N.    C. 


Am.    St.    Rep.    644; 


143.    146:    78 
35  S.  E.  247. 

1  See  §  741. 

2  Donahue's  Appeal,  62  Conn. 
370;  26  Atl.  399;  Wallace  v.  Long, 
105  Ind.  522;  55  Am.  Rep.  222;  5 
X.  E.  666;  Becker  v.  Mason.  30 
Kan.  697;  2  Pae.  850;  Dowling  v. 
]McKenney.  124  Mass.  478 ;  Kelley 
v.  Kelley.  54  Mich.  30;  19  N.  W. 
580;  Woods  v.  Ward,  48  W.  Va. 
652;  37  S.  E.  520;  Koch  v.  Williams, 
82  Wis.  186;  52  N.  W.  257;  Par- 
rish  V.  Williams  (Tex.  Civ.  App.), 
53  S.  W.  79;  Arnold  v.  Ellis,  20 
Tex.  Civ.  App.  262:  48  S.  W.  883. 

sTillis  V.  Treadwell,  117  Ala. 
445;  22  So.  983. 

*  Lesal  services.  Donahue's  Ap- 
peal.   62    Conn.    370;    26    Atl.    399; 


11:^4  PAGE    ON    CONTRACTS. 

town  in  which  the  land  is  situate,^  or  becoming  surety  on  an 
appeal  bond,  so  that  action  involving  title  to  the  land  in  ques- 
tion may  be  api)ealed/  are  all  of  them  within  the  statute/ 

§743.     Extrinsic  evidence  admissible  to  show  informal  memoran- 
dum incomplete. 

If  the  memorandum  is  so  incomplete  on  its  face  that  it  does 
not  purport  to  be  a  complete  contract,  extrinsic  evidence  may 
be  received  to  show  if  there  were  other  terms  of  the  contract,^ 
and  if  there  were  such  other  terms  the  memorandum  is  insuffi- 
cient." Thus,  a  memorandum  omitting  terms  of  the  verbal 
contract,  as  "  to  pay  net  cost  and  upon  delivery  "  and  that  the 
goods  sold  should  be  "  as  per  sample  delivered  or  equal  in  qual- 
ity to  sample  delivered,"^  or  omitting  terms  as  to  time  and 
place  of  delivery,*  are  each  insufficient.  So  a  letter  cannot 
ratify  an  unsigned  contract,^  nor  can  an  admission  in  the  answer 
validate  the  oral  contract  set  up  in  the  petition®  where  the  con- 
tract in  the  second  instrument  is  substantially  different  from 
that  in  the  first.  So  if  a  given  contract  is  alleged,  a  written 
memorandum  which  does  not  set  forth  all  the  terms  as  alleged 
is  insufficient  to  prove  such  contract.^  If  the  evidence  of  the 
party  seeking  to  enforce  the  contract  shows  a  contract  substan- 

Masterson   v.    Little,    75    Tex.    682;  2  Meux  v.  Hogue,  91  Cal.  442;  27 

13  S.  W.  154.    Services  as  architect,  Pac.  744;  Benedict  v.  Bird,  103  la. 

Koch  V,  Williams,  82  Wis.   186;   52  612;    72  N.  W.   768;   Fisher  v.  An- 

N.    W.    257.     Services    as   surveyor,  drews,  94  Md.  46;  50  Atl.  407. 

Perifield    v.    Boreing    (Ky.),    22    S.  3  Fisher  v.  Andrews,   94  Md.  46; 

\y.  440.  50  Atl.  407. 

5  Sanborn     v.     Murphy.     86     Tex.  4  Smith  v.  Shell,  82  Mo.  215;   52 
437;    25    S.    W.    610;    affirming,    5  Am.  Rep.  365. 

Tex.  Civ.  App.  509;   25  S.  W.  459.  5  Meux  v.  Hogue,  91  Cal.  442;  27 

6  W^oods  V.  Ward,  48  W.  Va.  652;      Pac.  744. 

37  S.  E.   520.  6  Benedict   v.   Bird,    103   la.   612; 

7  Indeed  if  no  valuable  considera-      72  N.  W.  768. 

tion  exists,  the  question  of  the  ap-  ^  Xesham   v.    Selby,   L.   R..    7   Ch. 

plicability  of  the   statute  is   imma-  App.    406;    Williams   v.   Morris,    95 

terial    as    the    agreement    is    unen-  U.  S.  444;  Littell  v.  Jones,  56  Ark. 

forceable.  139:  19  S.  W.  497;  Whiting  v.  But- 

1  See  §  1197  et  seq.  ler,  29  Mich.  122. 


COJSfTKACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1125 

tially  different  from  that  shown  by  the  memorandum  no  recov- 
ery can  be  had.^ 


§744.     Extrinsic  evidence  admissible  if  explanatory. 

The  statute  of  frauds  does  not  forbid  the  introduction  of  oral 
evidence.  It  merely  requires  a  written  note  or  memorandum 
of  the  contract.  In  certain  cases  where  extrinsic  evidence  is 
admissible  to  explain  an  ordinary  written  contract,  it  may  be 
introduced  to  explain  a  contract  under  the  statute  of  frauds.^ 
Extrinsic  evidence  is  admissible  to  show  the  facts  and  circum- 
stances surrounding  the  transaction,  so  as  to  put  the  court  in 
the  position  of  the  parties  thereto.^ 

Extrinsic  evidence  is  admissible  to  show  the  meaning  of  ab- 
breviations used  in  the  memorandum.^  Thus  extrinsic  evi- 
dence is  admissible  to  show  the  meaning  given  by  custom  or 
usage  to  such  expressions  as  "  O.  K.,"*  "  F.  C.  wool,"^  "  bought 
thirteen  at  eleven  five-eighths  net  you."® 


8  Smith  V,  Shell,  82  Mo.  215;  52 
Am.  Rep.  365. 

1  Brewer  v.  Horst  and  Lachmimd 
Co.,  127  Cal.  643;  50  L.  R.  A.  240; 
60  Pac.  418;  Lee  v.  Butler,  167 
Mass.  426;  57  Am.  St.  Rep.  466;  46 
N.  E.  52. 

aWylson  v.  Dimn,  34  Ch.  Div. 
569;  Haigh  v.  Brooks,  10  Ad.  &  El. 
309;  Brewer  v.  Horst  and  Lachmund 
Co.,  127  Cal.  643;  50  L.  R.  A.  240; 
60  Pac.  418;  Berry  v.  Kowalsky, 
95  Cal.  134;  29  Am.  St.  Rep.  101; 
30  Pac.  202;  Mann  v.  Higgins,  83 
Cal.  66;  23  Pac.  206;  Callahan  v. 
Stanley,  57  Cal.  476;  Towle  v.  Car- 
melo,  etc.,  Co.,  99  Cal.  397;  33  Pac. 
1126;  Preble  v.  Abrahams,  88  Cal. 
245;  26  Pac.  99;  New  England, 
etc.,  Co.  y.  Worsted  Co.,  165  Mass. 
.328;  52  Am.  St.  Rep.  516;  43  N. 
E.  112;  Ellis  V.  Bray,  79  Mo.  227; 
Regan  v.  Milby,  21  Tex.  Civ.  App. 
21 ;  50  S.  W.  587.  "  Parol  evidence 
may  be  introduced  to  show  the  sit- 


uation of  the  parties  and  the  cir- 
cumstances attendant  upon  the 
transaction  for  the  jDurpose  of  ap- 
plying the  contract  to  the  subject- 
matter  and  to  show  the  connection 
of  different  writings  constituting  the 
memorandum  with  one  another." 
Lee  V.  Butler,  167  Mass.  426,  428; 
57  Am.  St.  Rep.  466;  46  N.  E.  52. 

3  Brewer  v.  Horst  and  Lachmund 
Co.,  127  Cal.  643;  50  L.  R.  A.  240; 
60  Pac.  418;  New  England,  etc.,  Co. 
V.  Worsted  Co.,  165  Mass.  328;  52 
Am.  St.  Rep.  516;  43  N.  E.  112; 
Maurin  v.  Lyon,  69  Minn.  257;  65 
Am.   St.  Rep.   568;   72   N.  W.  72. 

4  Moore  v.  Eisaman,  201  Pa.  St. 
190;   50  Atl.  982. 

5  New  England,  etc.,  Co.  v. 
Worsted  Co.,  165  Mass.  328;  52 
Am.  St.  Rep.  516;  43  N.  E.  112. 

<5  Brewer  v.  Horst  and  Lachmund 
Co.,  127  Cal.  643;  50  L.  R.  A.  240  j 
00  Pac.  418. 


1126  PAGE    ON    CONTRACTS. 

§745.     Extrinsic  evidence  admissible  to  identify  writing. 

If  the  signed  memorandum  refers  to  another  written  instru- 
ment, extrinsic  evidence  is  admissible  to  identify  such  other 
instrument.^  If  written  contract  provides  for  the  division  of 
"  land  purchased  of  "  the  other  party  without  further  descrip- 
tion, and  a  deed  for  the  land  is  subsequently  given  without  ref- 
erence to  the  written  contract,  oral  evidence  is  admissible  to 
show  that  no  other  land  was  contracted  for  than  that  conveyed." 
The  reference  to  the  other  writing  must,  however,  either  he 
made  expressly,  or  must  apjjear  from  the  terms  of  the  two  in- 
struments when  compared.^ 

§746.     Admissibility  of  extrinsic  evidence  for  identification. 

If  the  subject-matter^  or  parties"  are  identified  by  the  con- 
tract with  reasonable  certainty,  oral  evidence  is  admissible  to 
show  the  persons  or  things  to  which  such  description  applies. 
So  where  certain  wrecked  steamboats  were  sold  by  description, 
location,  and  name,  oral  evidence  is  admissible  to  show  that  the 
names  of  two  boats  were  reversed  by  mistake,  and  that  the  loca- 
tion and  descriptions  were  correct.^  So  if  a  person  is  described 
as  one  to  whom  a  certain  obligation  is  owing,  oral  evidence  is 
admissible  to  show  Avho  such  creditor  is.* 

§747.     Extrinsic  evidence  inadmissible  to  show  collateral  contract. 

Parol  evidence  cannot  be  received  to  add  a  new  term  to  a 
written  contract  within  the  statute  of  frauds,  even  though  such 
Term  is  collateral  and  proper  thus  to  be*  proved  in  the  case  of 
the  ordinary  written  contract.^ 

iBeckwith    v.    Talbot,    95    U.    S.  2  ^McLeod  v.  Adams,  102  Ga.  53.3; 

289;  Lee  v.  Butler,   167  Mass.  426;  27  S.  E.  680. 

57  Am.  St.  Eep.  466;   46  K  E.  52;  3  Chouteau     v.     Goddin,     39     Mo. 

P.eck  V.   Vandemark,   99   N.   Y.   29;  201. 

1  N.  E.  41.  4McLeod  v.  Adams,  102  Ga.  533; 

2  White  V.  Core,  20  W.  Va.  272.  27  S.  E.  680. 

3  See   §   688.  1  McMullen    v.    Helberg.    6    L.    R. 
1  Chouteau     v.     Goddin.     39     Mo.  Ir.   463.     Contrart   in    consideration 

201 ;    McWhirter    v.    Allen.    1    Tex,      of  marriage.   Russell  v.   Russell,   60 
Civ.  App.  649;  20  S.  W.  1007.  X.  J.  Eq.  282;   47  Atl.  37. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1127 

§748.     Oral  modification  of  contract. 

A  contract  within  the  statute  of  frauds,  complying  with  its 
requirements,  cannot,  according  to  the  weight  of  authority,  be 
modified  subsequently  by  an  executory  oral  agreement  so  as  to 
make  a  new  contract  of  such  sort  that  it  would  itself  be  within 
the  statute;  since  this  would  leave  the  contract  part  in  writing 
and  part  oral.^  Thus  an  oral  extension  of  the  time  of  per- 
formance," as  of  a  contract  for  the  sale  of  realty,^  such  as  a  con- 
tract for  the  sale  of  growing  timber,*  or  an  oral  agreement  in- 
<2luding  a  new  subject-matter,^  or  a  modification  providing  for 
payment  for  realty  by  the  conveyance  of  other  realty  instead 
of  in  money  as  required  by  the  original  contract,*'  are  none  of 
them  enforceable.  But  an  oral  agreement  for  the  extension  of 
time  has  been  enforced  so  as  to  prevent  a  forfeiture  for  non- 
payment within  the  time  originally  limited.^  The  original 
contract  is  enforceable  disregarding  the  oral  modifications.^ 
On  the  other  hand  if  an  oral  modification  of  a  contract  within 
the  statute  is  completely  performed,  this  constitutes  a  discharge 
of  the  original  contract.®     Thus,  an  oral  modification  of  a  con- 

1  Hickman    v.    Haynes,    L.    R.     10  Atlee  v.  Bartholomew,  69  Wis.  43; 

C.    P.    598;    Marshall    v.    Lynn,    6  5  Am.  St.  Rep.  103;  33  N.  W.  110. 

Mees.  &  W.  109 ;  Swain  v.  Seamans,  -  McConathy   v.   Lanham,   —   Ky. 

9  Wall.    (U.  S.)   254;   Snow  v.  Nel-  — ;  76  S.  W.  535;  Bullis  v.  Mining 

son,  113  Fed.  353;   Lawyer  v.  Post,  Co.,  75  Tex.  540;   12  S.  W  397. 

109    Fed.    512;    47    C.    C.    A.    491;  s  Lawyer  v.   Post,    109   Fed.   512; 

Piatt  V.  Butcher,   112  Cal.  634;   44  47  C.  C.  A.  491;   Piatt  v.  Butcher, 

Pac.  1060;  Smith  v.  Taylor,  82  Cal.  112  Cal.  634;  44  Pac.  1060. 

533;    23   Pac.   217;   Augusta   South-  4  Clark   v.    Guest,    54    0.    S.   298; 

ern  R.  R.  Co.  v.  Kilby  Co.,  106  Ga.  43  N.  E.  862. 

864;   33   S.  E.  28;   Bradley  v.  Har-  5  Clark   v.    Fey,    121    N.    Y.    470; 

ter,    156   Ind.   499;    60   N.    E.    139;  24  N.  E.  703;   Saveland  v.  Ry.,  118 

Davis    V.    Parish,    Litt.     Sel.    Cas.  Wis.  267;  95  N.  W.  130. 

(Ky.)    153;   12  Am.  Dec.  287;  Wal-  6  Bradley     v.     Harter,     156     Ind. 

ter  V.  Bloede  Co.,  94  Md.  80;  50  Atl.  499;  60  N.  E.  139. 

433;     Whittier    v.    Dana,     10    All.  7  Scheerschmidt      v.      Smith,      74 

(Mass.)    326;    Abell  v.   Munson,    18  Minn.  224;  77  N.  W.  .34. 

Mich.  306;  100  Am.  Dec.  165;  War-  «  Sanderson   v.   Graves,   L.   R.     10 

ren  v.  Mfg.  Co.,  161  Mo.  112;  61  S.  Exch.   234. 

W.   644;    Bullis   v.    IMining   Co.,    75  o  Hickman    v.    Haynes,    L.    R.    10 

Tex.   540;    12   S.   W.   397 ;    Saveland  C.    P.    598;    Whittier    v.    Dana,    10 

V.  Ry.,  118  Wis.  267;  95  N.  W.  130.  All.    (Mass.)   326;  Cummings  v.  Ar- 


1128  PAGE    ON    CONTRACTS. 

tract  concerning  realty,  with  reference  to  the  number  of  lots 
to  be  sold,^*'  or  the  size  of  the  mill  to  be  constructed  on  the 
realtj,^^  if  fully  performed  and  performance  is  accepted,  is  it- 
self valid,  and  merges  the  prior  contract.  Some  cases  go  still 
farther  and,  on  the  theory  that  the  statute  does  not  affect  per- 
formance,^" allow  an  oral  executory  modification  of  that  part  of 
the  contract  wliich  does  not  bring  it  within  the  statute  of  frauds, 
to  have  full  validity  itself  and  to  ojDerate  as  a  bar  to  that  part 
of  the  original  contract/^  Thus,  an  oral  extension  of  the  time 
of  paying  the  purchase  price  of  realty  contracted  for  in  writing 
has  been  held  valid  if  made  before  the  expiration  of  the  time 
fixed  by  the  original  contract/^  This  rule  has  been  based  on 
the  doctrine  of  estoppel. 

§749.     Right  of  party  not  in  default  to  recover  a  reasonable  com- 
pensation. 

Wliile  in  case  of  a  breach  of  a  contract  which  falls  within  the 
statute  of  frauds  and  does  not  comply  with  its  requirements, 
no  recovery  can  be  had  for  damages  for  breach  of  the  executory 
part  thereof,  diiferent  considerations  exist  when  property  hag 
been  delivered  or  services  rendered  under  such  a  contract.  As 
will  be  considered  hereafter^  the  party  not  in  default  has,  in 
contracts  not  affected  by  the  statute  of  frauds,  the  right  to  ig- 
nore the  contract  and  sue  for  a  reasonable  compensation  for 
property  furnished  or  services  rendered  by  him  under  such 
contract,  whenever  such  facts  arise  as  amount  to  a  complete 
discharge  thereof.  Illegal  contracts  form  an  exception  to  this 
rule."  ]^ow  a  contract  is  in  no  proper  sense  illegal  because  it 
falls  within  the  terms  of  the  statute  of  frauds  and  does  not  com- 

nold,  3  Met.    (Mass.)    486;   37  Am.  is  Stearns      v.      Hall,      9      Cush. 

Dec.  15.5.  (Mass.)    31. 

10  Long  V.  Hartwell,  34  N.  J.  L.  i*  Brush-Swan  Electric  Light  Co. 
116.  V.      Electric     Co.,     41      Fed.      163; 

11  Swain  v.  Seamens,  9  Wall.  (U.  Stearns  v.  Hall,  9  Cush.  (Mass.) 
S.)   254.  31. 

12  Cummings    v.    Arnold,    3    Met.  i  See  Ch.  LXXIV. 
(Mass.)  486;  37  Am.  Dec.  155.                   2  gee  §  519. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1129 

plj  with  its  requirements.^  The  statute  of  frauds  was  intended 
solely  to  prevent  oral  proof  of  contracts  in  actions  based  thereon ; 
not  to  enable  a  party  to  a  contract  to  retain  benefits  received 
thereunder  without  liability  therefor.*  Accordingly,  if  A  and 
B  have  entered  into  such  a  contract  and  A  has  delivered  pro|> 
erty  to  B  in  performance  of  such  contract^  as  under  a  contract 
not  to  be  performed  within  the  year,®  or  has  paid  him  money,^ 
as  imder  a  contract  not  to  be  performed  within  the  year,*  or 
for  the  sale  of  realty,^  B  must  restore  such  property^"  or  make 
a  reasonable  compensation  for  such  property^^  if  B  seeks  to 
avoid  the  contract  on  the  ground  of  the  statute  of  frauds.  The 
right  to  recover  money  thus  paid  exists  even  if  the  right  to 


3  See  §  738  et  seq. 

4  Henderson  v.  Treadway,  69  111. 
App.  357;  Milkr  v.  Roberts,  169 
Mass.  134;  47  N.  E.  585;  Cadman 
V.  Markle,  76  Mich.  448;  5  L.  R.  A. 
707;  43  N.  W.  315;  Emery  v. 
Smith,  46  N.  H.  151;  Abbott  v. 
Draper,  4  Den.  (X.  Y.)  51;  Pierce 
V.  Paine,  28  Vt.  34. 

5  Peabody  v.  Fellows,  177  Mass, 
290;  58  N.  E.  1019;  Hawley  v. 
Moody,  24  Vt.  603.  Realty,  Pea- 
body  V.  Fellows,  177  Mass.  290;  58 
N,  E.  1019;  Andrews  v.  Broiighton, 
78  Mo.  App.  179.  Personalty,  Die- 
trich V.  Hoefelmeir,  128  Mich,  145; 
87  N.  W.  Ill, 

6  Roberts  v.  Tennell,  3  T.  B.  Mon, 
(Ky.)    246. 

7  Whyte  V.  Rosenerantz,  123  Cal. 
634;  69  Am,  St.  Rep.  90;  56  Pac. 
436;  Walker  v.  Walker  (Ky.),  55 
S.  W.  726;  Jellison  v.  Jordan,  68 
Me,  373;  Root  v,  Burt,  118  Mass, 
521;  Scott  V.  Bush,  26  Mich.  418; 
12  Am.  Rep.  311;  Moody  v.  Smith, 
70  N.  Y.  598;  Gottschalk  v.  Witter, 
25  0.  S.  76;  Love  v.  Burton  (Tenn. 
Ch.  App.),  61  S,  W.  91;  Taylor  v. 
Deseve,    81     Tex.    246;     16    S.     W. 


1008;  Moore  v.  Powell,  6  Tex.  Civ. 
App.  43;  25  S.  W.  472;  Hawley  v. 
Moody,  24  Vt.  603. 

8  Montague    v.    Garnett,    3    Bush. 
(Ky.)   297;  Weber  v.  Weber   (Ky.), 

7  S,  W.  507, 

9  Cook  V.  Doggett,  2  All.  (Mass,) 
439;  Wright  v.  Dickinson,  67  Mich. 
580:  11  Am,  St.  Rep.  602;  35  N. 
W.  164;  Pressnell  v.  Lundin,  44 
Minn.  551;  47  N.  W.  161;  Patter- 
son v.  Hawley.  33  Neb.  440;  50  N. 
W.  324;  Durham,  etc.,  Co.  v.  Guth- 
rie,  116  X.  C.  381;  21  S.  E.  952; 
Bedell  v.  Tracy,  65  Vt,  494;  26  Atl. 
1031;  Harney  v,  Burhans,  91  Wis. 
348;   64  X,  W,  1031, 

10  Dietrich  v,  Hoefelmeir.  128 
Mich.   145;   87  X.  W,   111, 

11  Wolke  V.  Fleming,  103  Ind. 
105;  53  Am.  Rep.  495;  2  X,  E.  325; 
Dowling  V.  McKenney,  124  Mass. 
478;  Dix  v,  Marcy,  116  Mass.  416; 
Williams  v.  Bemis,  108  Mass.  91; 
11  Am.  Rep.  318;  Luey  v.  Bundy, 
9  X.  H.  298;  32  Am.  Dec.  359; 
Smith  V.  Smith,  28  X.  J.  L.  208 ;  78 
Am.  Dec.  49;  Lockwood  v.  Barnes, 
3  Hill  (X.  Y.)  128;  38  Am.  Dec. 
620. 


1130 


PAGE    ON    CONTRACTS. 


specific  performance  exists/^  If  specific  personalty  has  been 
delivered  under  a  contract  to  exchange  such  j^ersonalty  for 
realty,  and  has  been  retained  by  the  vendor,  who  refuses  per- 
formance the  vendee  may  maintain  an  action  for  its  reason- 
able value  even  if  the  vendor  has  not  converted  it  into  money. 
He  is  not  obliged  to  resort  to  replevin  or  trover. ^^  So  if  A  has 
rendered  services  of  which  B  has  received  the  benefit/*  as 
if  services  were  rendered  under  a  contract  to  convey  realty  in 
recompense  therefor/^  or  under  a  contract  that  cannot  be  per- 
formed within  the  year,^^  especially  where  the  services  are  ren- 
dered by  an  infant/^  B  must  make  compensation  for  such  serv- 
ices.^* Thus,  if  A  renders  services  to  B  in  consideration  of  an 
oral  agreement  by  B  to  devise  certain  realty  to  A,  A  can  recover 
a  reasonable  compensation  from  B's  estate  for  services  thus  ren- 
dered.^^  If  A  furnishes  board  to  B  under  an  oral  contract 
whereby  B  agrees  to  devise  property  to  A's  child,  and  B  does 


12  Reynolds  v.  Reynolds,  74  Vt. 
463;   52  Atl.   1036. 

13  Booker  v.  Wolf,  195  111.  365; 
63  N.  E.  265 ;  reversing,  97  111.  App. 
139. 

i4Bucki  V.  McKinnon,  37  Fla. 
391;  20  So.  540;  Hudson  v.  Hud- 
son, 87  Ga.  67&;  27  Am.  St.  Rep. 
270;  13  S.  E.  583;  Schanzenbaeh  v. 
Brough,  58  111.  App.  526:  Miller  v. 
Eldridge,  126  Ind.  461;  27  N.  K 
132;  Schoonover  v.  Vachon,  121 
Ind.  3;  22  N.  E.  777;  Taggart  v. 
Tevanny,  1  Ind.  App.  339;  27  N.  E. 
511;  Smith  v.  Lotton,  5  Ind.  App. 
177;  31  N.  E.  816;  Aiken  v.  Nogle, 
47  Kan.  96;  27  Pac.  825;  Myers  v. 
Korb  (Ky.),  50  S.  W.  1108;  Ham- 
bell  V.  Hamilton,  3  Dana  (Ky.) 
501;  Hamilton  v.  Thirston,  93  Md. 
213;  48  Atl.  709;  Cadman  v.  Mar- 
kle,  76  Mich.  448;  5  L.  R.  A.  707; 
43  N.  W.  315;  Clowe  v.  Pine  Prod- 
uct Co.,  114  N.  C.  304;  19  S.  E. 
153;  Roberts  v.  Wood  Working  Co., 
Ill  X.  C.  432:  16  S.  E.  415:  Treece 
V.  Treece,  5  Lea   (Tenn.)   317;  Koch 


V.  Williams,  82  Wis.  186;  52  N.  W. 
257;  Tucker  v.  Grover,  60  Wis. 
240;  19  N.  W.  62;  Cohen  v.  Stein, 
61  Wis.  508;  21  N.  W.  514. 

15  Mills  V.  Joiner,  20  Fla.  479; 
Thomas  v.  McManus  (Ky.)  ;  64  S. 
W.  446;  Tucker  v.  Grover,  60  Wis. 
240;  19  N.  W.  62. 

16  Bethel    v.    Booth,    —   Ky.   — ; 

17  Meyers  v.  Korb  (Ky.)  ,  50  S. 
72  S.  W.  803;  Snyder  v.  Neal,  129 
Mich.  692;  89  N.  W.  588;  Cadman 
V.  Markle,  76  Mich.  448;  5  L.  R.  A. 
707;  43  N.  W.  315. 

W.  1108;  Towsley  v.  Moore,  30  0. 
S.  184;  27  Am.  Rep.  434. 

18  Clark  V.  Davidson.  53  Wis. 
317;   10  N.  W'.  384. 

19  Hudson  V.  Hudson,  87  Ga.  678; 
27  Am.  St.  Rep.  270;  13  S.  E.  583; 
Miller  v.  Eldridge,  126  Ind.  461; 
27  X.  E.  132;  Schoonover  v.  Vachon, 
121  Ind.  3;  22  X.  E  777;  Hamil- 
ton V.  Thirston,  93  Md.  213:  48  Atl. 
709;  Estate  of  Kessler,  87  Wis. 
600;  41  Am.  St.  Rep.  74;  59  N.  W- 
129. 


CONTRACTS    WHICH    MUST    BK    PROVED    BY    WRITING.    1131 

not  i3€rform  such  contract,  A  can  recover  a  reasonable  compen- 
sation for  such  board  and  lodging.-"  So  where  B,  the  owner  of 
realty,  makes  an  oral  contract  with  A  for  the  sale  thereof,  and 
A  takes  possession  and  make?  valuable  improvements  under  cir- 
cumstances which  make  specific  performance  impracticable,  A 
may  have  compensation  for  such  improvements,^^  in  equity  in 
some  jurisdictions,"-  and  in  other  jurisdictions  even  at  law.^^ 
So  compensation  has  been  allowed  at  law  for  work  in  preparing 
ground  and  putting  in  a  crop  under  an  oral  agreement  for  a 
lease.  ^* 

§750.     Right  of  party  in  default  to  recover  a  reasonable  compen- 
sation. 

In  case  of  a  contract  not  affected  by  the  statute  of  frauds, 
and  not  affected  either  by  defects  in  offer  and  acceptance  or  by 
peculiarities,  in  the  status  of  the  parties  thereto,  the  party  who 
has  broken  the  contract  and  is  in  default  cannot,  as  a  general 
rule,  recover  a  reasonable  compensation  for  what  he  has  done 
under  the  contract.^  The  question  then  to  be  considered  is 
whether  the  statute  of  frauds  affects  the  operation  of  this  gen- 
eral rule.  If  A,  the  party  who  has  furnished  property  or  ren- 
dered services  to  B  under  an  oral  contract  within  the  statute 
of  frauds  seeks  to  avoid  the  contract  and  recover  for  his  services 
or  property,  a  question  is  presented  on  which  there  is  a  conflict 
of  authority.     In  some  jurisdictions  it  is  held  that  he  cannot 

20  Gay  V.  Mooney,  67  N.  J.  L.  S.)  204;  McNamee  v.  Withers.  37 
27;  50  Atl.  596;  affirmed  in  67  N.  Md.  171;  Herring  v.  Pollard,  4 
J.  L.  687;  52  Atl.  1131,  on  reasons  Humph.  (Tenn.)  362;  40  Am.  Dec. 
given  in  opinion  below.  653.     Even    where    such    compensa- 

21  Deischer  v.  Stein,  34  Kan.  39 ;  tion  could  not  be  had  at  law.  Math- 
7  Pae.  608;  Findley  v.  Wilson,  3  ews  v.  Davis,  6  Humph.  (Tenn.) 
Litt.    (Ky.)    390;    14   Am.  Dec.  72;  324. 

Hannibal,  etc..  P.  P.  v.  Shortridge,  23  Luton    v.    Badham.    127    N.    C. 

86    Mo.    662;    Smith    v.    Smith,    28  96;   80  Am.  St.  Rep.  783;   53  L.  P. 

N.  J.  L.  208 ;  78  Am.  Dec.  49 ;  Har-  A.  337 ;  37  S.  E.  143 ;  Thouvenin  v. 

Tis  V.  Frink,  49  N.  Y.  24;    10  Am.  Lea,  26  Tex.  612. 

Rep.   318;    Pass   v.   Brooks,    125   N.  24  Thomas     v.     McManus     (Ky.), 

C.  129 ;  34  S.  E.  228.  64  S.  W.  446. 

22  King  v.  Thompson,  9  Pet.    (U.  i  See  §  1603. 


1132 


PAGE    ON    CONTEACTS. 


recover  since  he  is  basing  his  cause  of  action  upon  his  own  ^e^ 
fusal  to  carry  out  his  contract.^  Thus  a  vendee  of  realty  under 
an  oral  contract,  who  refuses  to  perforin,  cannot  recover  the 
purchase  money  paid  in  by  himself,^  even  in  equity,*  nor  can  he 
recover  for  improvements  on  such  realty.^  A  vendor  who  re- 
fuses performance  cannot  recover  for  use  and  occupation,®  and 
en  employee  under  an  oral  contract,  not  to  be  performed  within 
the  year  cannot  abandon  the  employment  with  cause  and  recover 
on  a  quantum  meruit? 

In  other  cases  the  party  refusing  performance  has  been  al- 
lowed to  recover  a  reasonable  compensation.*     Thus,  one  who 


2  Clark  V.  Terry,  25  Conn.  395; 
Day  V.  Wilson,  83  Ind.  463;  Gray 
V.  Gray,  2  J.  J.  Mar.  (Ky.)  21; 
Bacon  v.  Parker,  137  Mass.  309; 
Kriger  v.  Leppel,  42  Minn.  6;  43 
N.  W.  484;  Galvin  v.  Prentice,  45 
N.  Y.  162;  6  Am.  Rep.  58;  Durham, 
etc.,  Co.  V.  Guthrie,  116  N.  C.  381; 
21  S.  E.  952;  Mack  v.  Bragg,  30 
Vt.  571. 

3  Thomas  v.  Brown,  1  Q.  B.  D. 
714;  York  v.  Washburn,  118  Fed. 
316;  Venable  v.  Brown,  31  Ark. 
564;  Crabtree  v.  Welles,  19  111. 
55;  Day  v.  Wilson,  83  Ind.  463; 
43  Am.  Eep.  76;  Duncan  v.  Baird, 
8  Dana  (Ky.)  101;  33  Am.  Dec. 
479;  Gray  v.  Gray,  2  J.  J.  Mar. 
(Ky. )  21;  Plummer  v.  Bucknam, 
55  Me.  105;  Riley  v.  Williams,  123 
Mass.  506;  Kenniston  v.  Blakie, 
121  Mass.  552;  Coughlin  v. 
Knowles,  7  Mete.  (Mass.)  57;  39 
Am.  Dec.  759;  McKinney  v.  Har- 
vie,  38  Minn.  18;  8  Am.  St.  Rep. 
640;  35  N.  W.  668;  Sennett  v. 
Sheehan,  27  Minn.  328;  7  N.  W. 
266;  Lane  v.  Shackford.  5  X.  H. 
130;  Long  V.  Hartwell.  34  N.  J.  L. 
116;  Durham,  etc.,  Co.  v.  Guthrie, 
116  X.  C.  381;  21  S.  E.  952;  Synie 
V.    Smith,    92    N.   C.   338;    Cobb   v. 


Hall,  29  Vt.  510;  70  Am.  Dec.  432; 
Johnson  v.  Mill  Co.,  28  Wash.  515; 
68   Pac.   867. 

4Foust  V.  Shoffner,  Phil.  Eq.  (X. 
C.)   242. 

5  Young  V.  Pate,  3  J.  J.  Mar. 
(Ky.)  100;  Luckett  v.  Williamson, 
37  Mo.  388. 

6  Greton  v.  Smith.  33  X.  Y.  245. 

7  Swazey  v.  Moore,  22  111.  63 ;  74 
Am.  Dec.  134;  Kriger  v.  Leppel,  42 
Minn.  6;  43  N.  \N.  484;  Galvin  v. 
Prentice,  45  X.  Y.  162;  6  Am.  Rep. 
58;  Abbott  v.  Inskip,  29  O.  S.  59; 
Mack  V.  Bragg.  30  Vt.  571;  Phil- 
brook  V.  Belknap,  6  Vt.  383.  See 
as  to  other  contracts  not  to  be  per- 
formed within  the  'y^^^-  Clark  v. 
Terry,  25  Con.  395;  Gottschalk  v. 
Witter.  25  0.  S.  76. 

s  Swift  V.  Swift,  46  Cal.  266 ;  Da- 
venport V.  Gentry.  9  B.  Mon.  (Ky. ) 
427;  King  v.  Welcome,  5  Gray 
(Mass.)  41;  Scott  v.  Bush,  26  Mich. 
418;  12  Am.  Rep.  311;  s.  c,  29 
Mich.  523;  Crawford  v.  Parsons.  18 
X.  H.  293;  Mendelsohn  v.  Banov, 
57  S.  C.  147;  35  S.  E.  499;  Winters 
V.  Elliott.  1  Lea  (Tenn.)  676.  "The 
principle  (that  no  recovery  can  be 
had  if  the  other  party  is  willing  to 
perform)     has    never    prevailed    in 


CONTRACTS    WHICH    MUST    BE    PKOVED    BY    WRITIXG.    1133 

rendered  services  uiDon  a  contract  not  to  be  performed  within 
the  year,"  or  has  paid  money  under  a  contract  for  the  purchase 
of  realty/*^  has  been  allowed  to  recover  a  reasonable  compensa- 
tion therefor,  or  if  he  has  made  improvements  on  realty  benefit- 
ting the  vendor  he  has  been  allowed  to  recover.^^  However,  if 
services  have  been  rendered  under  such  a  contract  payable  in 
full  each  week,  and  such  payments  have  been  made  up  to  the 
time  of  discharge,  no  recovery  can  be  had  for  a  reasonable  com- 
l^ensation  therefor.^'  Three  separate  grounds  have  been  sug- 
gested for  such  holding:  (1)  that  such  contract  is  void,^^  (2) 
that  such  contract  is  voidable  at  the  election  of  either  party," 
and  (3)  that  to  allow  the  oral  contract  to  be  used  as  a  defense 
in  an  action  for  reasonable  comi^ensation  would  be  to  enforce 
indirectly  a  contract  that  could  not  be  enforced  directly/^  In 
Alabama  the  question  as  to  the  right  of  recovery  seems  to  tiirn 
on  the  question  of  whether  there  has  been  part  performance 
within  the  meaning  of  the  statute,  the  right  of  recovery  existing 
in  all  eases,  irrespective  of  the  question  of  who  breaks  the  con- 
tract, until  such  part  performance  occurs/^ 

this  state."     Nelson  v.  Improvement  \Yis.  631;  Brandeis  v.  Neustadtl,  13 

Co.,   96  Ala.   515,   526;    38   Am.   St.  Wis.   142). 

Eep.   116;   11   So.  695.  n  Masson     v.     Swan,     6     Heisk. 

9  Comes  V.  Lamos,   16  Conn.  246;  (Tenn.)   450. 

Benier  v.  Mfg.  Co.,  71  Me.  506;  36  12  Cohen  v.  Stein,  61  Wis.  508;  21 

Am.  Eep.  343;  King  v.  W^elcome,  5  N.  W.  514. 

Gray   (Mass.)  41;  Freeman  v.  Foss,  is  Tucker  v.  Grover,  60  Wis.  233; 

145  Mass.  361;  1  Am.  St.  Rep.  467;  19  N.  W.   92.     "If  he  has  the   im- 

14  X.  E.  141.  qualified  right  to  repudiate  the  con- 

10  Nelson  v.  Improvement  Co.,  96  tract  then  there  is  no  contract,  and 
Ala.  515;  38  Am.  St.  Rep.  116;  11  no  right  upon  which  he  can  retain 
So.  695;  Allen  v.  Booker,  2  Stew,  the  money."  Flinn  v.  Barber,  64 
(Ala.)   21;  19  Am.  Dec.  33;  Tucker  Ala.   193,   198;   quoted  in  Nelson  v. 

V.   Grover,   60  Wis.   233;    19   N.  W.  Improvement  Co.,  96  Ala.  515,  525; 

92    (citing  as  showing  the  right  of  38  Am.  St.  Rep.  116;   11  So.  695. 

one    paying    money    under    an    oral  i*  Winters      v.      Elliott,      1      Lea 

contract  to  recover  the  same,  though  (Tenn.)   676. 

the   other   party  is   willing  to   per-  is  King     v.     Welcome,     5     Gray 

form.     Clark  v.  Davidson,   53  Wis.  (Mass.)   41. 

317:  10  N.  W.  384;  North-Western.  ic  Nelson  v.  Improvement  Co.,  96 

etc.,  Co.  V.  Shaw,  37  Wis.   655;    19  Ala.  515;   38  Am.  St.  Rep.  116;    11 

Am.  Rep.  781 ;   Hooker  v.  Knab.  26  So.  695. 

Wis.    511;    Thomas   v.    Sowards,    25 


113i  PAGE    ON    CONTRACTS. 

§751.    Amount  of  recovery. 

This  right  of  recovery  is  in  the  nature  of  quasi-contract.^  It 
is  not  an  indirect  means  of  enforcing  the  contract.  It  may  be 
exercised  even  where  an  action  on  the  contract  has  failed,^ 
The  contract  itself  "  falls  out  of  view  as  a  ground  of  legal  rem- 
edy and  appears  only  to  give  color  to  the  conduct  of  the  parties 
in  furnishing  and  accepting  the  service  rendered.  It  affords 
the  means  of  determining  that  the  service  was  not  a  gift  but  a 
sale.^  .  .  ."  Accordingly  the  party  not  in  default  may  re- 
cover without  showing  performance  on  his  part.*  So  the  meas- 
ure of  recovery  is  the  benefit  which  the  defendant  has  received 
under  the  contract,  and  not  the  contract  price,  nor  what  plaintiff 
has  parted  with.  A's  right  to  recover  for  property  furnished  or 
services  rendered  under  an  oral  contract  which  falls  within  the 
statute  of  frauds  is  usually  limited  to  such  property  or  services 
as  enured  to  the  benefit  of  B.^  Hence,  if  money  is  advanced 
to  a  corporation  under  a  contract  with  the  stockholders  thereof, 
which  is  unenforceable  by  reason  of  the  statute  of  frauds,  such 
money  cannot  be  recovered  from  such  stockholders.*'  The  lia- 
bility of  the  party  repudiating  the  contract  to  make  compensa- 
tion to  the  adversary  party  for  loss  sustained  by  him  is  not 
always  thus  limited,  however.  So  where  B,  the  owner  of  realty, 
had  entered  into  an  oral  contract  with  A  for  mining  coal  on  B's 
realty,  and  B  repudiates  the  contract  after  A  has  done  some 
work  thereunder,  A  can  recover  from  B  the  actual  loss  sustained 
by  A  in  mining  for  coal.'^  So  where  B  agreed  to  convey  to  A 
certain  realty  not  then  owned  by  B,  and  A  entered  and  made 
valuable  improvements  and  B  did  not  get  title  to  such  realty 
and  hence  was  unable  to  convey,  A  was  allowed  to  recover  for 

iSee  Ch.  XXXVII.  4  Peabody   v.    Fellows,    181   Mass. 

2  Action  in  quasi-contract  success-      26;  62  N.  E.  1053. 


ful.  Wright  V.  Dickinson,  67  Mich 
580;  11  Am.  St.  Rep.  602;  35  N.  W 
164.  Action  on  contract  failed 
Dickinson  v.  Wright,   56  Mich.  42; 


5  Dovvling  V.  McKenney,  124  Mass. 
478;  Banker  v.  Henderson,  58  N.  J. 
L.  26;    32  Atl.  700. 

6  Gazzam    v.    Simpson,    114    Fed. 


22  N.  W.  312.  71 ;   52  C.  C.  A.  19. 

3  Gay  V.  Mooney,  67  N.  J.  L.  27,  "  Heilman    ▼.    Weinman,    139    Pa. 

29;  50  Atl.  596.  St.    143;    21    Atl.    29. 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WKITING.    1135 

such  improvements/  In  some  jurisdictions  the  party  who  has 
furnished  property  or  rendered  services  under  an  oral  contract, 
subsequently  repudiated  by  the  adversary  party  as  within  the 
statute  of  frauds  can  not  only  recover  a  reasonable  compensation 
for  what  he  has  done,  but  he  can  also  introduce  the  oral  con- 
tract in  evidence  for  the  purpose  of  showing  what  the  parties 
had  agreed  upon  as  a  reasonable  compensation.''  Thus,  where 
A  and  B  have  an  oral  contract  of  employment  which  cannot  be 
performed  within  the  year,  and  A  renders  services  thereunder 
and  B  repudiates  the  contract,  A  can  recover  for  services  ren- 
dered at  the  contract  rate/*'  A  reason  often  given  for  this 
holding  is  that  the  contract  is  not  void,  but  simply  unenforce- 
able, so  that  no  action  can  be  maintained  for  its  breach,  and 
valid  for  every  other  purpose.  This  principle  is  sometimes 
pushed  so  far  that  recovery  for  the  work  actually  done  may  be 
had  under  the  contract  on  the  theory  that  the  statute  does  not 
apply  to  the  executed  part  of  a  contract  but  only  to  the  executory 
part/^  This  principle  has  been  applied  to  a  lease,^"  and  to  a 
contract  to  furnish  water  supply  to  run  for  twenty-five  years.^^ 
This  view  is  repudiated  in  other  jurisdictions  on  the  ground 
that  it  amounts  to  a  substantial  repeal  of  the  statute  of  frauds." 
In  courts  taking  this  last  view,  a  reasonable  compensation  for 
property  furnished  or  work  done  under  an  oral  contract  within 
the  statute  must  be  determined  without  reference  to  the  terms 
of  the  oral  contract. 

8  Smith  V.  Smith,  28  N.  J.  L.  n  City  of  Greenville  v.  Water- 
208;   78  Am,  Dec.  49.  works    Co.,    125    Ala.    625;    27    So. 

9  Currier  v.  Barker,  2  Gray  7G4;  Murphy  v.  De  Haan,  116  la. 
(Mass.)  224;  Lally  v.  Lumber  Co.,  61;  89  N.  W.  100;  Sanger  v. 
85  Minn.  257;  88  N.  W.  846;  Spin-  French,  157  N.  Y.  213;  51  N.  E. 
ney  v.  Hill,  81  Minn.  316;  84  N.  W.  979. 

116;  Kriger  v.,  Leppel,  42  Minn.  6;  i2Lagerfelt    v.    McKee,    100    Ala. 

43  N.  W.  484.  430;    14   So.  281. 

10  Murphy  V.  De  Haan,  116  la.  61;  is  Graves  County  Water  Co.  v. 
89  N.  W.  100;  Lally  v.  Lumber  Co.,  Ligon,  112  Ky.  775;  66  S.  W.  725. 
85  Minn.  257;  88  N.  W.  846;  Spin-  Suit  by  property-owner  for  loss 
ney  v.  Hill,  81  Minn.  316;  84  N.  W.  caused  by  insufficient  supply. 

116;  Kriger  v.  Leppel,  42  Minn.  6;  "  Riif  v.  Riibe,  —  Neb.  — ;  94  N. 

43  N.  W.  484.  W.  517. 


1136 


PAGE    ON    CONTRACTS. 


§752.     Methods  of  taking  advantage  of  statute. 

If,  in  an  action  on  a  contract  within  the  statute  of  frauds  and 
not  complying  with  its  requirements,  the  statute  of  frauds  is  not 
taken  advantage  of  in  a  proper  manner  by  raising  the  question, 
on  the  pleadings  or  on  the  admission  of  oral  evidence,  the  de- 
fence of  the  statute  is  waived  and  the  contract  can  be  enforced 
though  oral,  and  though  proved  by  oral  evidence  only.^  If  the 
pleading  which  sets  up  the  oral  contract  does  not  show  affirma- 
tively that  it  is  oral,  a  demurrer  to  such  pleading  cannot  be 
sustained  because  of  the  statute  of  frauds.  If  the  contract  is 
pleaded  in  a  manner  sufficient  to  satisfy  the  common  law  rules 
before  the  statute  of  frauds,  and  if  it  does  not  appear  affirma- 
tively that  it  is  an  oral  contract,  it  is  pleaded  in  a  manner  suffi- 
cient to  satisfy  the  statute  and  the  adversary  party  must  raise 
the  question  of  the  statute  of  frauds  in  some  way  other  than 
by  demurrer."     While  in  most  of  these  cases  the  contract  is 


1  Carter  v.  Fischer,  127  Ala.  52; 
28  So.  376;  St.  Louis,  etc.,  Ry.  v. 
Hall  — Ark.— ;  74  S.  W.  293;  Burt 
V.  Wilson,  28  Cal.  632;  87  Am.  Dec. 
142;  Tift  V.  Weslosky  Co.,  113  Ga. 
681;  39  S.  E.  503;  Sanford  v.  Da- 
vis, 181  111.  570;  54  N.  E.  977; 
Walters  v.  Walters,  132  111.  467;  23 
N.  E.  1120;  Tarleton  v.  Vietes,  1 
Gil.  (111.)  470;  41  Am.  Dec.  193; 
Bryant  v.  Everly  (Ky.)  ,  57  S.  W. 
231;  Iverson  v.  Cirkel,  56  Minn. 
299;  57  N.  W.  800;  Missouri  Real 
Estate  Co.  v.  Sims  — Mo.— ;  78  S. 
W.  1006;  Maybee  v.  Moore,  90  Mo. 
340;  2  S.  W.  471;  Davis  v.  Green- 
wood, 2  Neb.  Unoff.  317;  96 
N.  W.  526;  Connor  v.  Hingtgen, 
19  Neb.  472;  27  N.  W.  443; 
Gough  V.  Williamson,  62  N.  J. 
Eq.  526;  50  Atl.  323;  Fee  v.  Shar- 
key, 60  N.  J.  Eq.  446;  45  Atl.  1091; 
affirming  .59  N.  J.  Eq.  284;  44  Atl. 
673;  Ashmore  v.  Evans,  11  N.  J. 
Eq.  151;  Hamer  v.  Sidway,  124  N. 
Y.  538;  21  Am.  St.  Rep.  693;  12  L. 


R.  A.  463;  27  N.  E.  256;  Duffy  v. 
O'Donovan,  46  N.  Y.  223;  Suber  v. 
Richards,  61  S.  C.  393;  39  S.  E.  540; 
Gregory  v.  Farris  (Tenn.  Ch.  App.)  , 
56  S.  W.  1059;  Smith  v.  Ruohg 
(Tenn.  Ch.  App.),  54  S.  W.  161; 
Abba  V.  Smyth,  21  Utah  109;  59 
Pac.  756 ;  Sartwell  v.  Sowles,  72  Vt. 
270;  82  Am.  St.  Rep.  943;  48  Atl. 
11;  Pike  v.  Pike,  69  Vt.  535;  38 
Atl.  265;  Battell  v.  Matot,  58  Vt. 
271;  5  Atl.  479;  Atkinson  v.  Wash- 
ington and  Jefferson  College  —  W^ 
Va.— ;  46  S.  E.  263;  Barrett  v.  Mc- 
Allister, 33  W.  Va.  738;  11  S.  E. 
220. 

2  Evans  v.  Ry.,  133  Ala.  482;  32 
So.  138;  Gale  v.  Harp,  64  Ark.  462; 
43  S.  W.  144;  Bradford  Investment. 
Co.  V.  Joost,  117  Cal.  204;  48  Pac. 
1083;  Curtiss  v.  Ins.  Co.,  90  Cal. 
245;  25  Am.  St.  Rep.  114;  27  Pac. 
211 ;  Baldwin  v.  Bank,  17  Colo.  App. 
7;  67  Pac.  179;  Taliaferro  v. 
Smiley,  112  Ga.  62;  37  S.  E.  106; 
Draper  v.  Dry  Goods  Co.,   103  Ga. 


CONTRACTS    WHICH    MUST    BE    PROVED    BY    WRITING.    1137 


pleaded  by  the  plaintiff  the  same  rule  applies  where  the  de- 
fendant pleads  it.^  But  where  by  statute  no  reply  is  necessary 
to  matter  of  defence  set  up  in  the  answer,  plaintiff  may  take 
advantage  of  the  statute  of  frauds  to  avoid  the  contract  alleged 
by  defendant  without  further  pleading.*  If  the  pleading  which 
sets  up  the  oral  contract  shows  affirmatively  that  it  is  oral,  some 
authorities  hold  that  such  pleading  is  not  demurrable,  on  the 
ground  that  a  demurrer  admits  the  existence  of  the  contract 
while  the  defence  of  the  statute  of  frauds  is  not  expressly  in- 
terposed.^ The  weight  of  authority,  however,  holds  that  such 
pleading  can  be  demurred  to,  on  the  ground  that  it  shows  affirm- 
atively the  existence  of  a  valid  defence  to  the  contract  alleged.* 


661;  68  Am.  St.  Rep.  136;  30  S.  E. 
566;  Speyer  v.  Desjaidiiis,  144  111. 
641;  36  Am.  St.  Rep.  473;  32  N.  E. 
283;  Switzer  v.  Skiles,  8  111.  529; 
44  Am.  Dec.  723;  Hamilton  v. 
Thurston,  93  Md.  213;  48  Atl.  709; 
Mullaly  V.  Holden,  123  Mass.  583; 
Stearns  v.  Ry.,  112  Mich.  651;  71 
N.  W.  148;  Harris  Photographic 
Co.  V.  Fisher,  81  Mich.  136;  45  N. 
W.  661 ;  Benton  v.  Schulte,  31  Minn. 
312;  17  N.  W.  621;  Stillwell  v. 
Hamm,  97  Mo.  579;  11  S.  W.  252; 
Sharkey  v.  McDermott,  91  Mo.  647; 
60  Am.  Rep.  270;  4  S.  W.  107; 
Reed  v.  Crane,  89  Mo.  App.  670; 
Whitehead  v.  Burgess,  61  N.  J.  L. 
75;  38  Atl.  802;  Hinehman  v.  Ru- 
tan,  31  N.  J.  L.  496;  Marston  v. 
Swett,  66  N.  Y.  206;  23  Am.  Rep. 
43;  Gladwell  v.  Hume,  18  Ohio  C.  C. 
845;  Cranston  v.  Smith,  6  R.  I. 
231;  Carroway  v.  Anderson,  1 
Humph.  (Tenn.)  61;  Horm  v.  Sham- 
blin,  57  Tex.  243;  Murphy  v.  Stell, 
43  Tex.  123;  Robbins  v.  DeA-erill.  20 
Wis.  142.  Contra,  in  Kentucky, 
where  it  is  said  to  be  "  well  settled 
that  a  contract  which  is  not  alleged 
to  be  in  writing  must  be  hekl  to  be 
by  parol."  Morgan  v.  Wiokliffe, 
110  Ky.  215;   61   S.  W.   13;   Hocker 

72 


V.  Gentry,  3  Met.  (Ky.)  463.  Sa 
by  statute  in  some  jurisdictions, 
Horner  v.  McConnell,  158  Ind.  280; 
63  N.  E.  472;  Windell  v.  Hudson, 
102  Ind.  521;  2  N.  E.  303;  lee  v. 
Ball,  102  Ind.  42;  1  N.  E.  66; 
Pulse  V.  Miller,  81  Ind.  190;  Wise- 
man V.  Thompson,  94  la.  607;  63 
N.  W.   346. 

3  Walker  v.  Edmundson,  111  Ga. 
454;  36  S.  E.  800;  Hurt  v.  Ford, 
142  Mo.  283;  41  L.  R.  A.  823;  44 
S.  W.  228. 

4  Steed  V.  Harvey,  18  Utah  367; 
72  Am.  St.  Rep.  789;  54  Pac.  1011. 

sHemings  v.  Doss,  125  N.  C.  400; 
34  S.  E.  511;  Williams  v.  Lumber 
Co.,  118  N.  C.  928;  24  S.  E.  800; 
Loughran  v.  Giles,  110  N.  C.  423; 
14  S.  E.  966. 

6  Thompson  v.  Coal  Co.,  135  Ala. 
630;  93  Am.  St.  Rep.  49;  34  So. 
31;  Gary  v.  Newton,  201  HI.  170; 
66  N.  E.  267;  Dicken  v.  IMcKinley, 
163  111.  318;  54  Am.  St.  Rep.  471; 
45  N.  E.  134;  Speyer  v.  Desjar 
dins,  144  111.  641;  36  Am.  St.  Rep. 
473;  32  N.  E.  283;  Burden  v. 
Knight,  82  la.  584;  48  N.  W.  985; 
Richards  v.  Richards,  9  Gray 
(Mass.)  313;  Howard  v.  Brower, 
37  0.  S.  402. 


1138 


PAGE    ON    CONTRACTS. 


The  question  really  turns  on  the  local  practice  concerning  plead- 
ings which  are  sufficient  in  themselves  but  which  go  farther  and 
show  a  valid  defence  or  reply  thereto  which  the  adversary  part^ 
may  or  may  not  take  advantage  of.  If  the  party  against  whon 
the  contract  is  sought  to  be  enforced  pleads,  denying  the  exist 
ence  of  such  contract  and,  at  the  trial,  objects  to  the  introduc- 
tion of  oral  evidence  to  prove  such  contract  the  statute  of  frauds 
is  properly  invoked.^  Under  such  pleadings,  the  defence  of  the 
statute  may  also  be  raised  by  a  motion  to  strike  out  oral  evi- 
dence of  the  contract  already  introduced,^  or  by  a  demurrer 
to  the  evidence.*^  If,  however,  no  objection  is  made  to  the  in- 
troduction of  oral  evidence  tending  to  prove  the  contract,  the 
defence  of  the  statute  is  thereby  waived.^**  Thus  an  objection 
that  there  was  no  written  memorandum  of  the  contract  cannot 
be  made  after  the  evidence  is  all  in  and  the  argument  to  the 
jury  has  begun,^^  nor  can  it  be  raised  for  the  first  time  in  error 


7  May  V.  Sloan,  101  U.  S.  231; 
Peeiiey  v.  Howard,  79  Cal.  525;  12 
Am.  St.  Rep.  162;  4  L.  R.  A.  826; 
21  Pac.  984;  Adams  &  Westlake  Co. 
V.  Westlake,  92  111.  App.  616;  Su- 
man  v.  Springate,  67  Ind.  115;  In- 
diana Trust  Co.  V.  Finitzer,  160  Ind. 
647;  67  N.  E.  520;  Thompson  v. 
Frakes,  112  la.  585;  84  N.  W.  703; 
Klein  v.  Ins.  Co.  (Ky.),  57  S.  W. 
250;  Hamilton  v.  Thirston,  93  Md. 
213;  48  Atl.  709;  Third  National 
Bank  v.  Steel,  129  Mich.  434;  88 
N.  W.  1050;  Bean  v.  Lamprey,  82 
Minn.  320;  84  N.  W.  1016;  Bam- 
brick  V.  Bambriek,  157  Mo.  423;  58 
S.  W.  8;  Hackett  v.  Watts,  138  Mo. 
502;  40  S.  W.  113;  Riif  v.  Riibe, 
—  Neb.—  ;  94  N.  W.  517;  Busick  v. 
Van  Ness,  44  N.  J.  Eq.  82;  12 
Atl.  609;  Browning  v.  Berry,  107 
N.  C.  231;  10  L.  R.  A.  726;  12 
S.  E.  195;  Holler  v.  Richards,  102 
N.  C.  545;  9  S.  E.  460;  Birchell  v. 
Neaster,  36  O.  S.  331 ;  Hillhouse  v. 
Jennings,   60   S.    C.    373;    38    S.    E.. 


599;  Moody  v.  Jones  (Tex.),  37 
S.  W.  379;  Williams-Hayward  Shoe 
Co.  V.  Brooks,  9  Wyom.  424;  64 
Pac.   342. 

8  Hillhouse  v.  Jennings,  60  S.  C. 
373;  38  S.  E.  599.  (The  court  say- 
ing that  such  a  motion  might  be 
treated  as  a  demurrer  to  the  *ivi- 
dence.) 

9  Bambriek  v.  Bambriek,  157  >lo. 
423;  58  S.  W.  8.  (In  this  case  a 
peremptory  instruction  to  the  jury 
was  held  proper.)  Apparently  con- 
tra, Neuvirth  v.  Engler,  83  Mo.  App. 
420;  Miller  v.  Harper,  63  Mo.  App. 
293;  Scharff  v.  Klein,  29  Mo.  App. 
549. 

10  Cosand  v.  Bunker,  2  S.  D.  294 ; 
50  N.  W.  84 ;  Sartwell  v.  Sowles,  72 
Vt.  270;  82  Am.  St.  Rep.  943;  48 
Atl.  11;  Pike  v.  Pike,  69  Vt.  535; 
38  Atl.  265;  Battell  v.  Matot,  58 
Vt.  271;   5  Atl.  479. 

11  Montgomery  v.  Edwards,  46  Vt. 
151;   14  Am.  Rep.  618. 


CONTRACTS    WHICH    MUST    BE    PKOVED    BY    WKITING.    1139 

proceedings/^  An  answer  whicli  does  not  specifically  deny  the 
existence  of  the  contract  alleged  but  does  so  in  effect  by  alleging 
another  and  a  different  contract,  is  such  a  denial  of  the  contract 
as  to  invoke  the  statute  of  frauds. ^^  However,  if  the  contract 
alleged  by  the  defendant  is  that  alleged  by  the  plaintiff  except 
that  it  does  not  cover  so  wide  a  subject-matter,  plaintiff  may 
have  the  contract,  though  oral,  enforced  as  far  as  admitted  by 
defendant/*  Some  authorities,  however,  hold  that  a  general 
denial  is  not  a  proper  method  of  invoking,  the  defence  of  the 
statute/^  In  Iowa  this  question  must  be  raised  by  demurrer 
if  it  appears  on  the  face  of  the  pleading,  and  is  waived  other- 
wise/® If  the  existence  of  the  contract  is  not  denied,  the 
statute  of  frauds  may  be  invoked  by  a  pleading  denying  that 
the  contract  alleged  or  any  note  or  memorandum  thereof  was  in 
writing  and  claiming  the  benefit  of  the  statute/^  A  pleading 
which  alleges  that  the  contract  alleged  by  the  adversary  party 
was  not  in  writing  and  is  "  contrary  to  the  statute  in  such  cases 
made  and  provided,"  contains  sufficient  allegations  to  interpose 
the  statute  of  frauds  as  a  defence/*  A  pleading  which  merely 
alleges  as  a  conclusion  that  defendant  is  not  equitably  or  mor- 
ally bound  to  carry  out  the  agreement,^^  or  that  the  contract  is 

i2Marr   v.   Ey.,    121    la.    117;    96  Am.  St.  Eep.  693;  12  L.  R.  A.  463; 

N.   W.    716;    Hart  v.   Garcia    (Tex.  27   N.  E.  256;    Barnes  v.  Coal   Co., 

Civ.  App.),  63  S.  W.  921.  101  Tenn.  354;  47  S.  W.  498;  Citty 

13  Barrett    v.    McAllister,    33    W.  v.  Mfg.  Co.,  93  Tenn.  276;   42  Am. 

Va.   738;    11    S.   E.   220.  St.  Rep.  919;   24  S.  W.  121. 

1*  Gough  V.  Williamson,  62  N.  J.  is  Wiseman   v.   Thompson,   94   la. 

Eq.  526;   50  Atl.   323.  607;    63   N.   W.   346;   Marr   v.   Ry., 

15  Martin    v.    Blanchett,    77    Ala.  121  la.  117;  96  N.  W.  716. 

288;    Guynn   v.   McCauley,    32   Ark.  i7  Burt    v.    Wilson,    28    Cal.    632; 

97;  McLure  v.  Koen,  25  Colo.  284;  87  Am.  Dec.  142;  Wright  v.  Raftree, 

53  Pac.  1058;   Wickham  v.  Associa-  181  111.  464;  54  N.  E.  998;  Thomas 

tion,  80  111.  App.  523;   Lawrence  v.  v.  Churchill,  48  Neb.  266;  67  X.  W. 

Chase,     54    Me.     196;     Graffam     v.  182;    Ashmore   v.    Evans,    11    N.    J. 

Pierce,  143  Mass.  386;  9  N.  E.  8J9;  Eq.   151. 

Matthews   v.   Matthews,    154   N.   Y.  is  Wright  v.  Raftree,  181  111.  464; 

288 ;  48  N.  E.  531 ;  Crane  v.  Powell,  54  N.  E.  998. 

139  N.  Y.  379;.  34  N.  E.  911;  Ha-  i9  Battell  v.  Matot,   58   Vt.   271; 

mer  v.  Sidway,   124  N.  Y.   538;   21  5  Atl.  479. 


1140  PAGE    ON    CONTKACTS. 

barred  by  the  statute, "°  without  alleging  the  fact  that  neither 
the  contract  nor  any  note  or  memorandum  thereof  was  in  writ^ 
ing  is  insufficient.^ 

XIII.     Pkomises  Consisting  of  Moke  than  One  Covenant. 

§753.     Severable  and  inseverable  contracts. 

The  enforceability  of  a  contract  for  the  sale  of  chattels  when 
affected  by  the  statute  of  frauds  often  depends  on  whether  it  is 
several  or  inseverable.  This  question  may  arise  in  two  ways. 
First,  the  separate  chattels  may  each  sell  at  a  price  below  the 
limit  fixed  by  statute,  but  the  sum  total  of  the  price  of  all  the 
chattels. sold  may  exceed  such  limit.  In  this  case,  if  the  sales 
are  separate,  each  sale  for  a  price  below  the  statutory  limit  is 
not  affected  by  the  statute.^  If,  however,  the  transaction  is  one 
entire  sale  and  the  price  exceeds  the  statutory  limit  the  statute 
applies,  though  separate  chattels  are  sold,^  and  though  delivery 
is  to  be  made  in  installments,^  and  though  the  price  of  each 
chattel  is  estimated  separately.'*  This  is  not  the  rule  for  test- 
ing the  severability  of  contracts  for  other  purposes,  such  as 
illegality.^  Second,  part  of  one  lot  of  chattels  sold  may  be  re- 
ceived and  accepted,  or  they  may  be  paid  for  in  part.  Does 
this  satisfy  the  statute  as  to  other  chattels  sold  between  the 
same  parties  ?  The  answer  depends  on  whether  the  sales 
amount  to  one  transaction  or  not.  If  separate  chattels  are  sold 
under  one  contract,  any  act  of  receipt  and  acceptance  or  part 
payment  which  satisfies  the  statute  as  to  one  chattel,  satisfies 
it  as  to  all.*'     This  is  true  even  though  by  the  terms  of  the  con- 

20Dinkel  v.  Gimdelfinger,  35  Mo.  6  Garfield  v.  Paris,  96  U.  S.  557; 

172.  Kaufman  Bros.  v.  Mfg.  Co.,  78  la. 

i.Tolinson  v.   Buchanan,   29   X.   S.  679;     16    Am.     St.     Eep.     462;     43 

27.  X.   W.   612;   Weeks  v.  Crie,  94  Me. 

sJenness    v.    Wendell,    51    N.    H.  458;   80  Am.  St.  Rep.  410;   48  Atl. 

63;    12  Am.  Rep.   48.  107;    French    v.    Bank,    179    Mass. 

3  Standard     Wall     Paper     Co.     v.  404 ;  00  X.  E.  793 ;  C4ilbert  v.  Lich- 

Towns,  —  X.  H.  — ;  56  Atl.  744.  tenberg,    98    Mich.    417;    57    X.    W. 

4Allard  v.  Greasert,  61   N.  Y.   1.  259;    Earl   Fruit   Co.   v.   McKinney, 

5  See  §  509.  65  ]Mo.  App.  220 ;   Farmer  v.  Gray, 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WEITING.    1141 

tract  delivery  is  to  be  made  in  installments/  Thus,  where  A 
agreed  to  sell  goods  to  B  in  a  given  district  as  long  as  B  orders 
such  goods  and  has  a  sale  for  them,  one  order  under  such  a 
contract  if  received  and  accepted  takes  the  entire  contract  out 
')f  the  statute.^ 

If  there  are  separate  contracts  of  sale,  acts  of  receipt  and 
acceptance  or  of  part  payment  which  satisfy  the  statute  as  to 
one  contract,  do  not  satisfy  it  as  to  the  others.^  So  a  contract 
to  sell  stock  owned  by  several  persons,  made  by  one  purporting, 
without  authority,  to  act  on  their  behalf,  and  performed  by 
jome  of  the  owners,  is  not  taken  out  of  the  statute  as  to  an 
owner  who  ratified  the  sale  orally  but  did  nothing  further/*' 

Contracts,  as  to  the  effect  of  receipt  and  acceptance  or  part 
payment,  may  be  separate  though  entered  into  at  the  same 
time/^  On  the  other  hand,  successive  negotiations  for  the  sale 
of  different  chattels  may  result  at  one  contract  of  sale/"  The 
question  whether  there  is  one  contract  or  more  than  one  is  a 
question  for  the  jury/^  Thus  a  finding  by  the  jury  that  where 
orders  were  given  at  the  same  time  on  two  separate  lists,  the 
contracts  were  separate,  was  not  disturbed,  though  it  appeared 
that  th(^  orders  were  placed  on  two  lists  instead  of  one,  chiefly 
for  convenience  in  writing  the  order/* 

16     Neb      401;      20     N.     W.     276.  n  Brown  v.  Snider,  126  Mich.  198; 

7  Gilbert  V.  Lichtenberg,   98  Mich.      85  N,   W.  570. 

417;    57   N.   W.   259;    Beyerstedt  v.  12  Weeks  v.  Crie,  94  Me.  458;   80 

Mill  Co..  49  Minn.  1;  51  N.  W.  619.  Am.  St.  Rep.  410;  48  Atl.  107. 

8  "  Eacii  order  was  not  a  new  con-  i3  Weeks  v.  Crie,  94  Me.  458 ;  80 
tract,  but  in  fulfillment  of  the  old  Am.  St.  Rep.  410;  48  Atl.  107; 
one."  Kaufman  Bros.  v.  Mfg.  Co.,  Brown  v.  Snider,  126  Mich.  198;  85 
78  la.  679,  686;  16  Am.  St.  Rep.  N.  W^  570.  "Whether  negotiations 
462;  43  N.  W.  612.  for   separate   articles   result    in   one 

9  Browu  V.  Snider,  126  Mich.  198 ;  entire  contract  for  the  whole,  or 
85  N.  W.  570;  McCormick  Harvest-  whether  the  contract  for  each  re- 
ing  Machine  Co.  v.  Cusack,  116  mains  separate  and  distinct,  may 
Mich.  647;  74  N.  W.  1005;  Hershey  depend  upon  many  circumstances. 
Lumber  Co.  v.  Lumber  Co.,  66  Minn.  It  raises  a  question  of  fact,  properly 
449;  69  N.  W.  215;  Tompkins  v.  to  be  passed  upon  by  a  jury."  Weeks 
Sheehan,  158  N.  Y.  617;  53  N.  E.  v.  Crie,  94  Me.  458.  464;  8a  Am.  St. 
502.  Rep.  410;  48  Atl.  107. 

10  Tompkins  V.  Sheehan,  158  N.  Y.  i*  Brown  v.  Snider,  126  Mich. 
617;   53  N.  E.  502.                                     198;    85   N.   W.   570    (one   order   in 


1142  PAGE    ON    CONTKACTS. 

If  A  and  B  enter  into  an  oral  contract  for  the  sale  of  distinct 
parcels  of  realty,  at  separate  prices  for  each,  and  the  purchaser 
takes  possession  of  one  parcel,  such  possession  takes  the  contract 
out  of  the  statute  as  to  the  realty  taken  possession  of,  but  not  as 
to  the  remaining  parcels.^^  Still  less  is  a  contract  taken  out 
of  the  statute  by  possession  of  other  parcels  of  realty  taken  by 
other  vendees  under  separate  contracts  Avith  the  same  vendor/* 
On  the  other  hand,  a  contract  for  conveying  several  parcels  at 
one  time  for  a  gross  consideration  is  taken  out  ef  the  statute  by 
a  delivery  of  the  possession  of  one  parcel.^^ 

§754.     Conjunctive  promises. 

If  A  and  B  make  an  oral  contract  whereby  A  agrees  to  do 
two  things,  one  of  which  is  within  the  statute  of  frauds  and 
the  other  of  which  is  not,  B's  right  to  enforce  such  oral  con- 
tract if  A  interposes  the  statute  of  frauds  as  a  defense,  de- 
pends on  whether  the  two  promises  are  severable  or  not.  If 
they  are  unseverable,  B  cannot  recover  for  breach  of  either 
covenant.^  Thus  an  oral  contract  to  dispose  of  both  real  and 
personal  property  by  will  is  unenforceable  as  to  either.^  So  an 
oral  contract  to  reconvey  realty  and  to  pay  interest  on  a  prior 
mortgage  thereon  is  inseverable,  and  an  action  cannot  be  main- 

this    case    was    not    signed   by   ven-  Rep.  40;   Becker  v.  Mason,  30  Kan. 

dee).  697;    2    Pac.    850;    Bowling  v.   Mc- 

15  Cochran  v.  Ward,  5  Ind.  App.  Kenney,  124  Mass.  478;  Martin  v. 
89,  97;  51  Am.  St.  Rep.  229;  29  Martin's  Estate,  108  Wis.  284;  81 
N.  E.  795;  31  N.  E.  581;  Myers  Am.  St.  Rep.  895;  84  N.  W.  439; 
V.  Croswell,  45  O.  S.  543;  15  N.  E.  Ellis  v.  Gary,  74  Wis.  176;  17  Am. 
866.  St.  Rep.  125;  4  L.  R.  A.  55;  42  N. 

16  Graves  v.  Goldthwait,  153  Mass.  W.  252. 

268:   10  L.  R.  A.  763;  26  N.  E.  860.  2  Dicken    v.    McKinley,     163     111. 

IT  Miller   v.   Ball,   64   N.   Y.   286;  318;  54  Am.  St.  Rep.  471;  45  N.  E. 

Smith  V.  Underdunek,  1  Sandf.  Ch.  134;   Pond  v.  Sheean,   132  111.  312; 

(N.  Y.)    579.  8   L.   R.    A.    414;    23    N.    E.    1018; 

1  Haviland  v.    Sammis,    62   Conn.  Kling  v.  Bordner,  65  O.  S.  86 ;   61 

44;    36   Am.   St.  Rep.   330;    25   Atl.  N.  E.  148;  Shahan  v.  Swan,  48  O.  S. 

394;    Dicken   v.   McKinley,    163    111.  25;  29  Am.  St.  Rep.  517;  26  N.  E. 

318;  54  Am.  St.  Rep.  471:  45  N.  E.  222;  Martin  v.  Martin's  Estate,  108 

134;  Pond  v.  Sheean.  132  Til.  312;  8  Wis.  284:   81  Am.  St.  Rep.  895;   84 

L.  R.  A.  414;  23  N.  E.  1018:   Rain-  N.   W.   439. 
bolt  V.  East,   56  Ind.   538;   26  Am. 


COJS'TKACTS    WHICH    MUST    BE    PKOVED    BY    WRITING.    11-13 

tained  for  failure  to  pay  interest.^  However,  an  entire  prom- 
ise to  pay  in  part  one's  own  debt  and  in  part  the  debt  of  another 
has  been  held  enforceable  as  to  the  first  part  of  the  contract 
though  not  as  to  the  second.* 

If,  on  the  other  hand,  the  promises  are  severable,  an  action 
can  be  maintained  for  breach  of  the  promise  not  within  the 
statute  of  frauds,  but  not  for  breach  of  the  promise  within  the 
statute.^  Thus  an  oral  contract  to  buy  real  and  personal  prop- 
erty can  be  enforced  as  to  the  personal  proj)erty,  not  falling 
within  the  statute  of  frauds  as  to  such  property  where  separate 
prices  were  fixed  on  the  two  kinds  of  property  and  they  were 
treated  in  the  contract  as  separate  subjects  of  sale.^  So  a  ver- 
bal contract  for  the  sale  of  personalty  is  not  made  invalid  be- 
cause a  leasehold  was  surrendered  as  part  of  the  same  trans- 
action.^ So  A's  promise  to  B  to  pay  C's  debt  to  B  for  board 
already  incurred  and  to  be  thereafter  incurred  is  severable.^ 

§755.     Alternative  promises. 

If  A  and  B  enter  into  an  oral  contract  by  the  terms  of  which 
A  agrees  either  to  perform  an  act  which  is  not  within  the  stat- 
ute of  frauds  or  at  his  election  to  perform  a  different  act  which 
is  within  the  statute,  and  A  interposes  the  statute  of  frauds  to 
B's  action  on  such  contract,  B  cannot  recover  since  he  cannot 
show  a  breach  of  the  contract  without  establishing  by  oral  evi- 
dence a  contract  within  the  statute  of  frauds  and  showing  a 
breach  thereof. '^     Thus  an  oral  contract  to  pay  money  or  con- 

8  Hurley    v.    Donovan,    182    Mass.  351;  Haynes  v.  Nice,  100  Mass.  327; 

64;  64  N.  E.  685.  1  Am.  Rep.  109;  Rand  v.  Mather,  11 

4  A  promise 'to  a  contractor  by  a  Cush.  (Mass.)  1;  59  Am.  Dec.  131; 
third  person  to  pay  the  entire  con-  Wooten  v.  Walters,  110  N.  C.  251; 
tract  price  if  he  completed  his  con-  14  S.  E.  734,  736. 

tract  after  default  by  the  adversary  6  Wooten    v.    Walters.    110   N.    C. 

party.     Rand   v.   Mather,    11    Cush.  251;  14  S.  E.  734.  736. 

(Mass.)    1;   59  Am.  Dec.  131;  over-  ^  Adams  v.  Weaver,   117  Cal.  42; 

ruling  Loomis  v.  Newhall.   15  Pick.  48   Pac.   972. 

(Mass.)    159.  8  Haynes  v.  Nice,   100  Mass.  327; 

5  Adams  v.  Weaver,   117   Cal.  42;  1   Am.   Rep.   100. 

48  Pac.  972 ;  Lowman  v.  Sheets,  124  i  Patterson     v.     Cunningham.     12 

Ind.  416;   7  L.  R.  A.  784;  24  N.  E.      Me.  506;  Andrews  v.  Broughton,  79- 


1144  PAGE    ON    CONTRACTS. 

vey  realty  is  unenforceable,^  as  a  contract  to  devise  land  or  be- 
queath personalty.^ 

XIV.     Special  Statutes. 

§756.    Types  of  special  statutes. 

Local  statutes  have  required  other  classes  of  contracts  to  be 
in  writing  or  to  be  proved  by  writing.  Thus  contracts  of  cor- 
porations exceeding  a  certain  amount/  or  contracts  of  a  married 
woman  affecting  the  body  of  her  estate/  come  within  the  pro- 
visions of  some  statutes.  Part  performance  of  such  a  contract 
does  not  make  it  enforceable  against  a  married  woman,  since 
she  has  no  capacity  in  these  jurisdictions  to  bind  herself  except 
as  indicated  by  statute/  but  under  some  statutes  the  married 
woman  may  enforce  an  oral  contract  though  it  cannot  be  en- 
forced against  her.'*  Other  contracts  are  required  to  be  in 
writing  only  where  the  interests  of  third  persons  are  concerned. 
Thus  a  contract  whereby  a  vendor  reserves  title  to  the  property 
sold  and  delivered  to  the  vendee  until  the  purchase  price  is  paid 
is  required  by  some  statutes  to  be  in  writing  when  the  interests 
of  a  third  person  is  to  be  affected  thereby.^  The  statutes  of  the 
United  States  require  assignments  of  patents  to  be  in  writing^ 


Mo.    App.    179;    Russell    v.    Briggs,  apply  to  foreign  corporations.   Rum- 

165  N.  Y.  500;  53  L.  R.  A.  556;   59  bough  v.  Improvement  Co.,  106  N.  C. 

X.   E.   303;    Howard   v.   Brower,   37  461;  11  S.  E.  528. 

O.  S.  402.  2Sydnor  v.  Boyd,  119  N.  C.  481; 

2  Dyer  v.  Graves,  37  Vt.  369;  37  L.  R.  A.  734;  26  S.  E.  92.  (In- 
Clark  V.  Davidson,  53  Wis.  317;  10  eluding  her  interest  in  a  life  insur- 
N.  W.  384;  Patterson  v.  Cunning-  ance  policy,  taken  out  on  her  hus- 
ham,  12  Me.  506;  Andrews  v.  band's  life  for  her  benefit.) 
Broughton,  78  Mo.  App.  179;  Rus-  3  Percifield  v.  Black,  132  Ind.  384; 
sell   V.   Briggs,    165   N.   Y.    500;    53  31   N.  E.  955. 

L.  R.  A.  556;   59  N.  E.  30.3.  4  Lister  v.  Vowell,   122  Ala.  264; 

3  Howard  v.  Brower,  37  O.  S.  402.  25  So.  564. 

1  Curtis  V.  Mining  Co.,  113  N.  C.  s  Harp  v.  Guano  Co.,  99  Ga.  752; 

417;    18   S.  E.   705.     A  contract  in  27   S.   E.   181;   Mann  v.  Thompson, 

excess  of  such  amount  is  void  in  toto  86  Ga.  347;  12  S.  E.  746. 

and   not   merely   as   to   the    excess.  «  Gates  Iron  Works  v.  Eraser,  153 

Citizens'  Savings  Bank  v.  Vaughan,  U.  S.  332 ;  Baldwin  v.  Sibley,  1  Cliff. 

115  Mich.  156;  73  N.  W.  143.    Such  (U.  S.)    150. 
statute  in  North  Carolina  does  not 


CONTEACTS    WHICH    MUST    BE    PROVED    BY    WKITING.    1145 

and  signed  by  the  assignor/  Such  assignment  need  not  be 
recorded  as  between  the  parties,^  though  it  must  be  recorded  as 
against  a  subsequent  bona  fide  assignee  from  the  same  assignor.® 
An  oral  contract  to  convey  a  patent  right  has  been  enforced 
in  equity/"  This  statute  does  not  include  contracts  for  the 
sale  of  the  right  to  secure  a  patent  not  yet  issued/^  nor  to  a 
contract  to  share  in  the  proceeds  of  the  sale  of  a  patented  art- 
icle,^^  nor  to  a  license  to  make  use  of  a  patent/^ 

A  Federal  statute^*  requires  contracts  with  the  United  States 
to  be  "  reduced  to  writing  and  signed  by  the  contracting  parties 
with  their  names  at  the  end  thereof."  Such  contract  not  thus 
executed  is  unenforceable.^^  The  scope  of  these  statutes  is 
often  different  from  the  statute  of  frauds,  as  they  affect  the 
capacity  of  the  parties  or  the  form  of  the  contract.  Logically 
they  do  not  belong  here,  but  rather  in  the  following  chapter. 
Their  general  similarity  to  the  statute  of  frauds  has  caused 
mention  of  them  in  this  connection.  Another  class  of  statutes 
concerns  contracts  of  public  corporations.  This  is  probably 
the  class  most  frequently  met  with  in  litigation.  From  its 
connection  with  the  subject  of  the  capacity  of  public  corpora- 
tions to  make  contracts,  a  discussion  of  it  is  postponed.^® 

7  Gordon  v.  Anthony,  16  Blatch.  nolds,  120  N.  Y.  213;  24  N.  E.  279. 
(U.S.)   234.  i2Blakeney    v.    Goode,    30    O.    S. 

8  Case  V.  Redfield,  4  McLean    (U.       351. 

S.)   526;  Hildreth  v.  Turner,  17  111.  i3  Jones  v.  Berger,  58  Fed.  1006; 

184;  McKernan  v.  Hite,  6  Ind.  428.       Nichols  v.  Marsh,  61  Mich.  509;  28 

9  Perry  v.  Corning,  7  Blatchf.   (U.       N.  W.  699. 

S.)    195;    Harrison  v.   Ingersoll,  50           i*R.  S.  of  U.  S.,  §  3744. 

Mich.  36 ;  22  N.  W.  268.  is  St.  Louis  Hay,  etc.,  Co.  v.  United 

10  Burke  v.  Partridge,  58  N.  H.  States,  191  U.  S.  159;  Monroe  v. 
349.  United  States,  184  U.  S.  524;  South 

"Dalzell  V.  Mfg.  Co.,   149  U.   S.  Boston   Iron    Co.   v.   United    States, 

315;     Harrigan    v.     Smith,     57     N".  118  U.  S.  37 ;  Clark  v.  United  States 

J.    Eq.    635;    42    Atl.    579;    revers-  95  U.  S.  539. 

ing    40    Atl,     13;     Jones    v.    Key-  is  See  §  692. 


1146  PAGE    ON    CONTitACTS. 


CHAPTER  XXXVI. 

CONTRACTS  WHICH  MUST  BE  IN  WRITING. 

§757.     General  scope  of  this  class. 

In  considering  the  contracts  which  must  be  in  writing  as  dis- 
tinguished from  those  which  merely  must  be  proved  by  writing 
and  which  were  considered  in  the  preceding  chapter/  it  must  be 
noted  that  these  contracts  are  of  two  general  classes.  One  class 
consists  of  those  contracts  which  are  required  by  statute  to  be  in 
writing.  For  the  most  part  these  are  contracts  of  persons  of 
abnormal  status,  including,  in  some  states,  contracts  of  married 
women ;  in  others  contracts  of  private  corporations  and  in  many 
states  contracts  of  public  corporations.  This  class  of  contracts 
was  referred  to  in  the  preceding  chapter  f  and  since  it  is  closely 
connected  with  questions  of  status,  further  discussion  is  deferred 
until  the  subject  of  parties  has  been  considered.^  The  other 
class  of  contracts  which  must  be  in  writing  consists  of  those  con- 
tracts in  which  writing  was  required  by  the  law-merchant. 
This  part  of  the  law-merchant  has  been  thoroughly  incorporated 
into  Common  Law  and  Equity.  The  negotiable  contract  has 
two  aspects :  first,  the  elements  which  such  contracts  must  pos- 
sess in  order  to  be  negotiable,  including  the  extent  to  which  the 
oral  contract  under  which  such  negotiable  contract  is  given  is  to 
be  regarded  as  a  part  thereof :  and  second,  the  effect  of  negotia- 
bility as  distinguished  from  assigiiability.  While  it  may  seem 
to  break  one  subject  in  two,  the  first  of  these  aspects  will  be  con- 
sidered here,  leaving  the  second  to  be  discussed  under  the  gen- 
eral division  of  operation  in  connection  with  assignability.* 

1  See  Ch.  XXXV.  3  See  Ch.   XLVIII. 

2  See  §  756.  4  See  Ch.  LIX. 


CONTKACTS    WHICH    MUST    BE    IN    WRITING.  1147 

§758.     Elements  of  negotiable  contracts  —  must  be  in  writing. 

In  order  to  be  negotiable  a  contract  must  possess  certain  ele- 
ments.^ It  must  be  in  writing.  If  in  writing,  lead- pencil  is 
sufficient  though  not  to  be  commended.^  Since  a  negotiable 
contract  must  pass  either  by  delivery  or  by  indorsement  and 
delivery,  an  oral  negotiable  contract  is  an  impossibility.^  As 
will  be  shown  in  the  following  sections,  no  part  of  a  negotiable 
contract  can  be  oral.  Whatever  validity  an  incomplete  written 
contract  may  have,  it  is  impossible  that  it  be  negotiable.*  How- 
ever, it  has  been  held  that  where  a  bill  or  note  does  not  show 
where  it  is  to  be  paid,  an  oral  agreement  fixing  the  place  of  pay- 
ment may  be  shown  for  the  purpose  of  proving  such  demand  as 
will  bind  the  drawer  and  the  indorser.^  The  surrounding  cir- 
cumstances may,  however,  serve  to  explain  words  which  would 
otherwise  be  indefinite.  Thus  where  a  note  is  made  payable 
"  twenty  five  after  date,"  the  surrounding  circumstances  may  be 
resorted  to  in  order  to  show  that  "  days  "  is  the  word  omitted.^ 

§759.     Execution. 

The  requisites  of  a  valid  execution  of  a  contract  which  by 
law  must  be  in  writing  are  in  some  respects  like  those  of  or- 
dinary written  contracts  and  in  some  respects  quite  different. 
A  contract  which  is  required  by  law  to  be  in  writing,  such  as  a 
negotiable  instrument,  must  be  signed  by  the  promisor.^     Ex- 

1  A  negotiable  instrument  is  one  3  Accordingly,  in  such  contracts 
"  which  runs  to  order  or  bearer,  is  extrinsic  evidence  is  inadmissible 
payable  in  money,  for  a  certain,  which  would  be  admissible  under 
definite  sum,  on  demand,  at  sight,  or  ordinary  contracts  in  writing.  See 
in  a  certain  time,  or  upon  the  hap-  §  1197. 

pening  of  an  event  which  must  oc-  4  gee       §§       761        1107.       Other 

cur.  and  payable  absolutely  and  not  branches    of   this  'subject    are    best 

on  a  contingency. '     Hatch  v.  Bank,  . ,       ,    .                  . .            .^,      ., 

94  Me.  348;   80  Am.  St.  Rep.  401;  considered    m    connection    with    the 

47     Atl.     908.       (Citing    Roads    v.  parol  evidence  rule. 

Webb,   91    Me.   406,   410;    64   Am.  5  Pearson  v.  Bank,  1  Pet.   (U.  S.) 

St.  Rep    246;   40  Atl.   128)  ;   Sivils  §9;  Mever  v.  Hibsher,  47  N.  Y.  265. 

V.    Taylor,    12    Okla.    47;    69    Pac.  ^ -n,    \  •          x.     i     ^o   ai      na.-y 

gg-r  6  Boykm  v.  Bank.  72  Ala.  262. 

2  Reed  v.  Roark,  14  Tex.  329;  65  ^  May  v.  Miller.  27  Ala.  515;  Te- 
Am.  Dec.  127,                                              vis  v.  Young,  1  Met.   (Ky.)    197;  71 

Am.    Dec.    474;    Lewis   v.    Bank,    1 


1148  PAGE    ON    CONTRiVCTS. 

trinsic  evidence  is  inadmissible  to  show  the  assent  to  an  instru^ 
nient  of  this  character  of  a  party  who  has  not  signed  his  naniG 
thereto."  Xo  special  form  of  signature  is  required,  however. 
On  this  point  the  law  of  the  negotiable  contract  seems  to  be  the 
same  as  that  of  the  ordinary  written  contract.'  It  seems  that 
a  signature  by  mark/  or  by  initials,^  or  by  printed  signature  in 
fac-simile,®  are  each  sufficient  if  intended  as  signatures.  De- 
livery is  essential  to  the  validity  of  a  negotiable  instrument,' 
If  taken  from  the  custody  of  the  maker,  without  his  assent,  it 
has  no  validity  even  in  the  hands  of  a  bona  fide  holder  in  the  ab- 
sence of  negligence  on  the  part  of  the  maker  or  circumstances 
creating  an  estoppel.*  Delivery  does  not,  however,  require 
physical  transfer  to  the  f»ayee.  Leaving  a  note  with  the  father 
of  the  payee  is  a  sufficient  delivery.^ 

§760.     Definite  parties. 

The  parties  to  the  contract  must  be  clearly  described  therein.^ 
Thus  a  promise  to  an  alternative  payee  is  not  negotiable.^  How- 
ever, if  the  alternative  payees  are  united  in  interest  so  that  a 
payment  to  one  is  in  legal  effect  a  payment  to  the  other,  the  in- 
strument may  be  negotiable ;  as  where  it  is  payable  to  certain 


Neb.     (Un.)     177;    95    X.    W.    355.  i  Tevis  v.  Young,   1  Mete.    (Ky.) 

2  See  §  761.  197;   71  Am.  Dec.  474;  Mcintosh  v. 

3  See  §§   571-575.  Lytle,  26  Minn.   336;    37  Am.  Rep. 
4Handyside   v.    Cameron,    21    111.  410;  3  N.  W.  983;  Randolph  v.  Hud- 

588;    74    Am.    Dee.    119;    Shank   v.  son.  12  Okl.  516;  74  Pac.  946;  Seay 

Butsch,  28  Ind.  19 ;  Lyons  V.  Holmes,  v.   Bank,   3  Sneed    (Tenn.)    558;    67 

11  S.  C.  429;  32  Am.  Rep.  483.  Am.   Dec.   579. 

5  Weston  V.  Myers,  33  111.  424.  -  Carpenter    v.     Farnsworth,     106 

6  Pennington  v,  Baehr,  48  Cal.  Mass.  561 ;  8  Am.  Rep.  360.  Con- 
565.  tra,  on  the  theory  that  "  or  "  means 

7  Lally  V.  Terrell,  95  Me.  553 ;  "  and  "  in  such  connection.  Quinby 
85  Am.  St.  Rep.  433;  55  L.  R.  A.  v.  Merritt,  11  Humph.  (Tenn.)  439. 
730;  50  Atl.  896;  Harnett  v.  Hoi-  So  a  note  to  "  Chas.  R.  Whitesell 
drege  (Neb.),  97  N.  W.  443.  See  et  al.  or  order"  is  non-negotiable. 
§  577,  et  seq.  Gordon  v.  Anderson,  83  la.  224;   32 

8  See  §  1297.             •  Am.  St.  Rep.  302;   12  L.  R.  A.  483; 
sEnneking    v.    Woebkenberg.    —  49  N.  W.  86. 

Wis.  — ;    92  N.  W.  932. 


CONTKACTS    WHICH    MUST    BE    IN    WEITING.  1149 

trustees  or  their  treasurer/  or  where,  at  Common  Law,  it  was 
payable  to  a  man  or  his  wife.* 

It  is  sufficient  if  the  payee  be  jx)inted  out  by  the  instrument 
without  being  named.  A  note  payable  "  to  the  estate  of  "  A  is 
negotiable.^  The  addition  of  the  word  "  trustee,"  to  the  name 
of  the  payee,  does  not  make  the  payee  uncertain.*^  A  note  pay- 
able to  "  bearer  "  is  negotiable.'^  A  blank  for  the  name  of  the 
payee  may  be  filled  by  a  bona  fide  holder  with  his  own  name,* 
or  the  instrument  may  be  enforced  without  filling  the  blank,  as 
payable  to  the  order  of  the  person  for  whom  it  was  delivered." 
Other  courts  treat  a  negotiable  instrument  having  the  name  of 
the  payee  blank  as  payable  to  bearer.^"  If,  however,  the  name 
of  a  specific  payee  has  been  inserted  in  a  check  and  then  crossed 
out,  such  check  is  non-negotiable.^^ 

§761.     Adding  party  to  negotiable  instrument  by  extrinsic  evi- 
dence. 

A  contract  may  be  signed  by  A  with  his  own  name,  but  en- 
tered into  by  him  on  behalf  of  his  real  principal  X,  with  the  ad- 
versary party  B.  If  the  contract  is  one  which  the  law  requires 
to  be  in  writing,  B  cannot  use  extrinsic  evidence  to  show  that 
X  is  the  real  principal  and  to  hold  him  liable  on  the  contract. 
The  chief  example  under  this  rule  is  the  negotiable  instrument.'- 
This  is  not  because  of  the  parol  evidence  rule,  but  because  such 


3  Holmes   v.   Jacques,   L.   R.   1    Q.  Institution  v.  Bank,  170  N.  Y.  58; 

B.   376.  88    Am.    St.    Rep.    640;    62    N.    E. 

i  Young  V.  Ward,  21  111.  223.  1079. 

5  Stern  v.  Eichberg,   83   111.   App.  o  Rich  v.  Starbuck,   51  Ind.  87. 
442;  Shaw  v.  Smith,  150  Mass.  166;  lo  Manhattan    Savings    Institution 
6  L.  R.  A.  348;  22  N.  E.  887.  v.  Bank,  170  N.  Y.  58;   88  Am.  St. 

6  Central   State   Bank   v.    Spurlin,  Rep.  640;   62  N.  E.   1079. 

Ill  la,   187;   82  Am.  St.  Rep.  511;  n  Gordon  v.   Bank,   —  Mich.  — ; 

49  N.  W.  661;   82  N.  W.  493;   Pox  94  N.  W.  741. 

V.  Trust  Co.    (Tenn.  Ch.   App.),   35  i  Cragin  v.  Lovell,  109  U.  S.  194; 

L.  R.  A.  678;   37  S.  W.   1102.  Merrell  v.  Witherby,   120  Ala.  418; 

7  New   V.   Walker,    108   Ind.    365;  74  Am.  St.  Rep.  39;  23  So.  994;  26 
5.8  Am.  Rep.  40;  9  N.  E.  386.  So.   974;    Heaton  v.   Myers,   4  Colo. 

8  Cox  V.   Alexander,    30   Or.   438;  50;    Pease  v.   Pease,   35   Conn.   131; 
46    Pac.    794;    Manhattan    Savings  95  Am.  Dec.  225;  Bickford  v.  Bank, 


1150 


PAGE    ON    CONTEACTS. 


contracts  must  consist  entirely  of  the  writing,  and  parties  cannot 
be  added  by  parol.  Thus  if  a  check  is  signed  "  A,  agent/'  the 
real  j^rincipal  cannot  be  held  liable  on  the  check."  The  same 
rule  applies  to  a  note  signed  by  "  A,  agent,"^  The  principal,  if 
unknown  when  the  note  was  given,  may  be  held  liable  on  the 
original  debt  ;*  but  if  the  principal  is  known,  taking  such  note  is 
an  election  to  hold  the  agent.^  Holding  the  principal  on  such 
debt  is  in  the  nature  of  quasi-contract.*'  Even  in  negotiable  in- 
struments, however,  one  who  does  business  in  the  name  of  an- 
other or  in  a  fictitious  name  and  signs  negotiable  instruments 
by  that  name  may  be  held  liable  thereon.'^  Thus  where  A  did 
business  under  the  name  "  Pompton  Iron  Works,"  and  signed 
notes  by  such  name,  he  may  be  held  liable  thereon.^     However, 


42  111.  238;  89  Am.  Dec.  436;  Wing 
V.  Glick,  56  la.  473;  41  Am.  Rep. 
118;  Kansas  National  Bank  v.  Bay, 
62  Kan.  692;  84  Am.  St.  Rep.  417; 
54  L.  R.  A.  408;  64  Pac.  596; 
Trask  v.  Roberts,  1  B.  Mon.  (Ky.) 
201 ;  Bedford  Commercial  Ins.  Co. 
V.  Covell,  8  Met.  (Mass.)  442;  Wil- 
liams V.  Bobbins,  16  Gray  (Mass.) 
77;  77  Am.  Dec.  396;  Stackpole  v. 
V.  Arnold,  11  Mass.  27;  6  Am.  Dee. 
150;  Lewis  v.  Bank,  1  Neb.  (Un.) 
177;  95  N.  W.  355;  Webster  v, 
Wray,  19  Neb.  558;  56  Am.  Rep. 
754;  27  N.  W.  644;  Bank  v.  Cook, 
38  O.  S.  442;  Anderton  v.  Shoup,  17 
O.  S.  125;  Manufacturers',  etc.,  Bank 
v.  Follett,  11  R.  I.  92;  23  Am.  Rep. 
418;  Tarver  v.  Garlington,  27  S.  C. 
107;  13  Am.  St.  Rep.  628;  2  S.  E. 
846;  Arnold  v.  Sprague,  34  Vt.  402. 
"  It  is  well  settled  that  any  person 
taking  a  negotiable  promissory  note 
contracts  with  those  only  whose 
names  are  signed  to  it  as  parties, 
and  cannot,  therefore,  maintain  an 
action  upon  the  note  against  any 
other  person."  Bartlett  v.  Tucker, 
104  Mass.  336,  339;  6  Am.  Rep. 
240;  quoted  in  Kansas  National 
Bank  v.  Bay,  62  Kan.  692,  695;   84 


Am.  St.  Rep.  417;  54  L.  R.  A.  408; 
64  Pac.  596.  Contra,  Mechanics' 
Bank  v.  Bank,  5  Wheat.  (U.  S.) 
326;  Hancock  Bank  v.  Joy,  41  Me, 
568;  Sharpe  v.  Bellis,  61  Pa.  St. 
69;   100  Am.  Dec.  618. 

2  Anderton  v.  Shoup,  17  0.  S., 
125. 

3Shuey  v.  Adair,  18  Wash.  188; 
39  L.  R.  A.  473 ;  51  Pac.  388.  Coti- 
tra,  Kenyon  v.  Williams,  19  Ind.  44, 

4  Chemical  National  Bank  v. 
Bank,  156  111.  149;  40  N.  E.  328; 
Lovell  V.  Williams,  125  Mass.  439; 
Harper  v.  Bank.  54  0.  S.  425 ;  44 
N.  E.  97. 

sMerrell  v.  Witherby,  120  Ala. 
418;  74  Am.  St.  Rep.  39;  23  So. 
994;  26  So.  974;  Bank  v.  Hooper, 
5  Gray  (Mass.)  567;  66  Am.  Dee. 
390. 

c  See  §  789  et  seq. 

7  Pease  v.  Pease,  35  Conn.  131; 
95  Am.  Dec.  225;  Melledge  v.  Iron 
Co.,  5  Cush.  (Mass.)  158;  51  Am. 
Dec.  59;  Tarver  v.  Garlington,  27 
S.  C.  107;  13  Am.  St.  Rep.  628;  2 
S.  E.  846.  See  obiter  in  Chandler 
V.  Coe,  54  N.  H.  561. 

8  Fuller  V.  Hooper,  3  Gray 
(Mass.)   334. 


CONTEACTS    WHICH    MUST    BE    IN    WEITING.  1151 

where  a  note  was  signed  "  H.  R.  Sloan  by  C.  M.  Bay,  Attorney 
in  Fact,"  and  the  payee  knew  that  Bay  had  no  authority  to  sign 
Sloan's  name,  it  was  held  that  Bay  was  not  liable  on  the  note 
even  if  he  did  business  under  Sloan's  name.®  In  the  absence 
of  estoppel,  one  who  signs  an  assumed  name  to  a  contract  re- 
quired by  law  to  be  in  writing  is  liable  on  the  contract  only  when 
such  assumed  name  is  used  by  him  as  his  trade  name  under 
which  he  does  business/*'  Otherwise  his  liability  is  in  tort.  If 
A  signs  a  name  not  his  own  to  a  note,  either  a  fictitious  name 
or  the  name  of  a  real  person  which  he  has  no  right  to  use,  and 
does  not  hold  such  name  out  as  his  own,  and  it  is  not  the  name 
under  which  he  does  business,  he  cannot  be  held  on  such  note.^^ 
If  the  instrument  is  executed  in  such  a  way  as  to  show  affirma- 
tively that  B  is  making  the  contract  through  his  agent  A,  ex- 
trinsic evidence  that  A  was  really  acting  for  himself  is  inad- 
missible,^^ as  where  A  signs  a  non-negotiable  contract  "  X  per 
A,"^^  or  where  A  signs  a  promissory  note  "  X  by  A,  Atty.  in 
Fact."^*  A  warehouse  receipt,  even  if  made  negotiable  by  stat- 
ute,^^  is  not  a  negotiable  instrument  within  the  meaning  of  this 
rule,  A  party  cannot  be  added  to  a  negotiable  contract  by  oral 
evidence,  even  where  no  liability  is  sought  to  be  enforced  against 
him.  Thus  in  an  action  by  indorsee  against  indorser  on  non- 
payment of  the  note,  such  evidence  cannot  be  used  to  show  that 
one  who  signed  as  agent  was  in  fact  principal,  and  hence  that 
as  no  demand  had  been  made  on  him  the  indorser  was  dis- 
charged.^® 

9  Kansas   National    Bank   v.    Bay,  62  Kan.  692;  84  Am.  St.  Rep.  417; 

62  Kan.  692;  84  Am.  St.  Eep.  417;  54  L.  R.  A.  408,   64  Pac.   596.     To 

54  L.  R.  A.  408;  64  Pac.  596.  the    same    effect,    see    Liebscher    v, 

loBartlett   v.    Tucker,    104    Mass.  Kraus,    74    Wis.    387;    17    Am.    St. 

336;  6  Am.  Rep.  240.  Rep.  171;  5  L.  R.  A.  496;  43  N.  W. 

11  Bartlett   v.    Tucker,    104   Mass.  166. 
336;  6  Am.  Rep.  240.  is  Anderson  v.  Flouring  Mills.  37 

i2Heffron  v.  Pollard,  73  Tex.  96;  Or.  483;    82   Am.   St.   Rep.   771;    50 

15  Am.  St.  Rep.  764;  11  S.  W.  165.  L.  R.  A.  235;   60  Pac.  839. 

isHeffron  v.  Pollard,  73  Tex.  96;  le  Reeve  v.  Bank,  54  N.  J.  L.  208; 

15  Am.  St.  Rep.  764;  11  S.  W.  165.  33  Am.   St.  Rep.  675;    16  L.  R.  A. 

14  Kansas  National  Bank  v.  Bay,  143;  23  Atl.  853. 


1152  PAGE    ON    COivTKACTS. 

§762.     Discharging  party  to  negotiable  instrument  by  extrinsic 
evidence. 

If  a  party  to  a  negotiable  instrument  who  has  signed  in  such 
a  way  as  to  assume  a  personal  liability,  attempts  to  show  that 
the  oral  understanding  of  the  parties  was  that  he  was  signing 
merely  as  agent  on  behalf  and  thus  to  relieve  himself  from  lia- 
bility on  the  instrument,  such  attempt  violates  two  rules  at 
once  —  the  rule  requiring  a  negotiable  instrument  to  consist 
entirely  of  writing,  and  the  parol  evidence  rule  which  forbids 
the  contradiction  of  any  complete  written  contract  by  a  prior 
or  contemporaneous  oral  contract.''  Accordingly,  such  oral 
agreements  are  without  effect  and  the  party  bound  by  the  terms 
of  the  instrument  cannot  relieve  himself  from  liability  thereon 
by  this  means.^  This  rule  applies  even  though  the  agent  thus 
executing  the  instrument  adds  the  word  "  agent  "  or  some  word 
of  equivalent  import  to  his  signature,  as  long  as  the  form  of  the 
signature  is  such  that  the  word  thus  added  is  regarded  as  a  mere 
descriptio  personae  and  does  not  affect  the  nature  of  the  liability 
assumed.^  The  conflict  that  exists  as  to  the  nature  of  personal 
liability  arises  out  of  a  difference  in  judicial  opinion  as  to  what 
is  a  mere  descriptio  personae  and  what  shows  an  intent  not  to  as- 
sume personal  liability.*  Even  if  the  maker  describes  himself 
in  the  body  of  the  negotiable  instrument  as  an  agent,  but  signs 
his  individual  name  without  the  addition  of  any  designation. of 
agency,  such  contract  is  held  in  many  jurisdictions  to  impose  an 
individual  liability  upon  the  agent,  and  to  be  so  free  from  am- 
biguity that  oral  evidence  is  inadmissible  to  discharge  the  agent.^ 
Thus  a  note  whereby  "  We  or  either  of  us  as  directors  "  of  a 
certain  corporation  promise  to  pay,  signed  by  individual  names, 
cannot  be  shown  to  be  the  note  of  the  corporation  for  the  pur- 

1  See  Ch.  LVI.  scher  v.  Kraus.  74  Wis.  387;  17  Am. 

2  Nash  V.  Towne,  5  Wall.   (U.  S.)       St.   Rep.    171;    5   L.   R.   A.   496;    43 
689;   Hypes  v.   Griffin,   89   111.   134;       N.   W.   166. 

31   Am.  Rep.   71 ;   Alathews  v.  Mat-  3  See  §   1233  et  seq. 

tress   Co.,   8/    la.   246;    sub   nomine,  *  See  Ch.  LIII. 

Matthews  v.  Mattress  Co.,  19  L.  R.  s  Nash  v.  Towne,  5  Wall.   (U.  S.) 

A.    676;    54    N.   W.    225;    Morell    v.  689;    Hypei?  v.   Griffin,    89   111.    135; 

Codding,  4  All.    (Mass.)   403;  Lieh-  31  Am.  Rep.  71. 


CONTKACTS    WHICH    MUST    BE    IIS"    WRITING.  1153 

pose  of  relieving  the  makers  from  liability.^  In  some  jurisdic- 
tions the  addition  of  some  word  denoting  agency  to  the  names 
of  the  promisors  in  a  negotiable  instrument  in  the  body  of  the 
instrument,  and  to  their  signatures  still  leaves  them  liable  indi- 
vidually and  extrinsic  evidence  is  inadmissible  to  relieve  them 
from  liability.  Thus  a  note  whereby  "  We,  the  Trustees,"  of  a 
certain  cemetery  association  promise  to  pay,  signed  by  their  indi- 
vidual names,  with  the  addition  of  the  word  "  Trustee,"  im- 
poses personal  liability  so  clearly  that  oral  evidence  is  inad- 
missible to  disprove  it.^  In  some  jurisdictions  it  is  held  that 
when  the  form  of  signature  is  ambiguous  the  real  understanding 
of  the  parties  may  be  shown  for  the  purpose  of  determining  the 
character  of  the  liability  assumed.* 

§763.     Promise  or  order. 

The  contract  must  be  either  a  promise  to  pay  or  an  order  com- 
manding another  to  pay.^  The  former  is  a  promissory  note  or 
bond :  the  latter  a  bill  of  exchange  or  check.  So  a  promise  by  A 
to  B  to  accept  an  order  from  C,  with  C's  name  indorsed  thereon, 
is  not  a  bill  of  exchange,  the  order  not  having  been  drawn. ^  Ac- 
cordingly a  mere  acknowledgment  of  a  debt,^  such  as  an  I.  O. 
U.,*  is  not  negotiable.  The  difficulty  and  cause  of  disagreement 
among  the  courts  is  to  determine  when  such  an  instrument 
amounts  to  a  promise  to  pay.  If  a  receipt  contains  an  express 
promise  to  repay  it  may  be  a  promissory  note,  as  a  receipt 
containing  the  words,  "  Which  we  promise  to  replace  ...  on  de- 


6  Titus  V.  Kyle,  10  0.  S.  444.  68  N.  E.  223;  Hitchcock  v.  Cloutier^ 

TReiff    V.    Mulholland,    65    0.    S.  7  Vt.  22. 

178;    62   N.   E.   124.      (In  this   ease  2  Allen  v.  Leavens,  26  Or.  164;  4f. 

reformation     had     lieen     sought     in  Am.  St.  Eep.  613;  26  L.  R.  A.  620; 

equity  and  refused.     On  trial  at  law  37  Pac.  488. 

oral     evidence     was     admitted     and  3  Currier   v.   Lockwood,   40    Conn 

judgment    rendered    for    defendants.  349;  16  Am.  Rep.  40;  Gay  v.  P  jake, 

The    Supreme    Court    reversed    this  151    Mass.    115;    21    Am.    St.    Rep, 

judgment  and  entered  judgment  for  434;  7  L.  R.  A.  392;  2S  W.  E    835; 

plaintiff  on  the  conceded  facts.)  Brenzter   v.   Wightman,  V   V,'.    &   S. 

8  Kean  V.  Davis,  21  N.  J.  L.  683.  (Pa.)    264. 

iTorpey  v.  Tebo,  184  Mass.  307;  *  Gay   v.    Roake,    151    Ww,     115; 
73 


1154  PAGE    ON    CONTRACTS. 

maiid."^  If  a  receipt  provides  for  repayment,  it  is  a  promissor;^ 
note,  though  it  contains  no  express  promise  to  pay."  Thus  the 
words  "payable,"^  or  "to  be  paid,"*  make  the  instrument  in 
which  they  are  contained  a  note  instead  of  a  mere  receipt.  So 
a  statement  of  time  at  which  the  debt  is  due,**  as  "  due  ...  on 
demand,"  ^'^  may  import  a  promise.  Some  authorities,  how- 
ever, go  farther  and  treat  all  due-bills  as  promissory  not'^3,  on 
the  theory  that  they  contain  an  implied  promise  to  pay.^^  An 
acknowledgment  of  a  debt  evidenced  by  a  lost  note  and  a  re- 
newal of  such  note  is  in  effect  a  promise  to  pay  such  debt,  and 
may  itself  be  negotiable.^^ 

§764.     For  money  only.     * 

The  contract  must  be  one  for  the  payment  ol  montdy  only. 
Accordingly,  a  promise  to  pay  in  work,  as  a  railroad  ticket,^  or 
in  property  other  than  money,"  even  if  such  other  property  is 
itself  negotiable  as  bills  of  exchange,^  checks,"*  notes/  or  United 
States  bonds,"  is  not  negotiable.  But  a  promise  to  pay  in  "  cur- 
rent funds  "  has  been  held  to  mean  current  money,  and  hence 
to  be  negotiable  f  and  so  of  "  current  funds  of  the  state  of 

21   Am.   St.   Rep.   434;    7   L.   R.   A.  12  WoodLridge  v.  D/Might,  118  Ga. 

392;   23  N.  E.   835.  671;    45   S.   E.   266. 

5  Moore  v.  Gano,  12  Ohio  300.  1  Frank  v.  Ingalls,  41  O.  S.  560. 

6  Messmore  v.  Morrison,  172  Pa.  2  May  v.  Lansdovvn^  6  J  J.  Mar. 
St.   300;    34  Atl.  45.  (Ky.)  165;  Gushee  v.  Eddy,  11  Gray 

7. Johnson     School     Township     v.  (Mass.)     502;     71    Am.    Dee.    728; 

Bank,     81     Ind.     515;     Kimball     v.  Rhodes   ^     Lindly,    3    Ohio    51;    17 

Huntington,  10  Wend.   (N.  Y.)   675;  Am.  Dec.  580;   Hyland  v.  Blodgett. 

25  Am.  Dec.  590.  9  Or.  166;  42  Am.  "Rep.  799. 

8  Ubsdell  V.  Cunningham,  22  Mo.  3  First  National  Bank  v.  Slette. 
124.  67    Minn.    425;    64    Am.    St.    Rep. 

9  Cowan  V.  Halleck,   9  Colo.   572;  429;   69  N.  W.   1148. 

13  Pac.  700.  *  National    Bank   of    Farmersville 

10  Smith  V.  Allen,  5  Day  (Conn.)  v.  Bank,  84  Tex.  40;  19  S.  "W.  334. 
337.  Contra,  Brown  v.  Oilman,  13  s  Williams  v.  Sims,  22  Ala.  512. 
Mass.  158.  c  Easton  v.  Hyde,   13  Minn.  90. 

11  Stewart  v.  Smith,  28  111.  397;  ^  Bull  v.  Bank,  123  U.  S.  105; 
Longv.  Straus,  107  Ind.  94;  57  Am.  Telford  v.  Patton,  144  111.  611;  33 
Rep.  87;  6  N.  E.  123;  7  N.  E.  763;  N.  E.  1119;  Hatch  v.  Bank,  94 
Cummings  v.  Freeman,  2  Humph.  Me.  348;  80  Am.  St.  Rep.  401; 
(Tenn.)    143.  47    Atl     908;    Kirkwood    v.    Bank, 


CONTKACTS    WHICH    MUST    BE    IX    WKITIXG. 


1155 


Ohio/'®  or  "  currency.""  A  note  payable  in  notes  of  a  specific 
bank/"  or  in  bank-notes  generally,"  is  not  negotiable.  A  prom- 
ise to  pay  foreign  money  is  negotiable.^"  A  reference  to  col- 
lateral security  does  not  destroy  negotiability.^^  A  power  of 
attorney  to  confess  judgment  is  held  in  some  jurisdictions  to  de- 
stroy negotiability  /*  in  others  not  to  do  so.^^  However,  a 
power  to  confess  judgment  at  any  time  after  its  date,  whether 
it  is  due  or  not,  makes  the  date  of  its  maturity  in  effect  uncer- 
tain, and  for  that  reason  destroys  negotiability.^^ 

§765.     For  a  sum  certain. 

The  promise  or  order  must  be  for  a  sum  certain.  li  the 
amount  to  be  paid  cannot  be  determined  from  the  face  of  the 
contract  itself,  the  contract  is  not  negotiable.^  A  note  ex- 
pressing  the   amount   in    figures    in   one    corner,    the    ainL/unt 


40  Neb.  484;  42  Am.  St.  Rep.  683; 
24  L.  R.  A.  444;  58  N.  W.  1016; 
Citizens'  National  Bank  v.  Brown, 
45  O.  S.  39;  4  Am.  St.  Rep.  526;  11 
N.  E.  799.  Contra,  Johnson  v.  Hen- 
derson, 76  N.  C.  227  J  Texas,  etc.  Co. 
V.  Carroll,  63  Tex.  48. 

8  White  V.  Richmond,  16  Ohio  5. 
So  Ehle  V.  Bank,  24  N.  Y.  548. 
Contra,  Chambers  v.  George,  5  Litt. 

(Ky.)    335. 

9  Howe  V.  Hartness,  11  0.  S.  449; 
78  Am.  Dec.  312. 

10  Irvine  v.  Lowry,  14  Pet.  (U.  S.) 
293;  Shamokin  Bank  v.  Street,  16 
O.  S.  1. 

11  Kirkpatrick  v.  McCulIough,  3 
Humph.  (T<enn.)  171;  39  Am.  Dec. 
158.  Contra,  if  payable  in  "cur- 
rent Ohio  bank-notes."  Swetland  v. 
Creigh,  15  Ohio  118. 

12  Canada  currency.  Black  v. 
Ward,  27  Mich.  191;  15  Am.  Rep. 
162.  Mexican  dollars.  Hogue  v. 
Williamson.  85  Tex.  553 ;  34  Am.  St. 
Rep.  823;  20  L.  R.  A.  481:  22  S.  W. 
580.       Contra,        Canada        money, 


Thompson  v.   Sloan,   23   Wend,    (N, 
Y.)   71;  35  Am.  Dec.  546. 

13  Roblee  v.  Bank,  —  Neb.  —  ;  93 
N.  W.  61 ;  (citing  Fleckner  v.  Lank, 
8  Wheat.  (U.  S.)  338;  Knippei  v. 
Chase,  7  la.  145 ;  Towne  v.  Rice,  122 
Mass.  67;  Blumenthal  v.  Jassoy,  29 
Minn.  177;   12  N.  W.  517). 

14  Richards  v.  Barlow^  140  Mass. 
218;  0  N.  E.  68;  Conrad  Seipp 
Brewing  Co.  v.  McKittrick,  86  Mich. 
191;  48  N.  W.  1086;  Sweeney  v. 
Thickstun,  77   Pa.   St.   131. 

15  Tolman  v.  Janson,  106  la.  455; 
76  N.  W.  732;  Gilmore  v.  Hirst,  56 
Kan.  626:  44  Pac.  603;  Osborn  v. 
Hawley,    19   Ohio   130. 

16  Wisconsin  Yearly  ]\Ieeting,  etc., 
V.  Babler,  115  Wis.  289;  91  N.  W. 
678. 

1 "  An  instnmient  for  a  specified 
sum  of  money,  and  also  for  the  pay- 
ment of  something  else  the  value 
of  which  is  not  ascertainable,  but  de- 
pends upon  extrinsic  evidence,  is  not 
a  note."  Lowe  v.  Bliss,  24  111. 
IfiS.  170;  76  Am.  Dec.  742. 


1156  PAGE    ON    CONTKACTS. 

being  omitted  in  the  body  of  the  note  is  for  a  sum  cer- 
tain." A  note  for  "  eight  hundred  and  sixty-eight/'  the  word 
dollars  being  omitted,  is  made  certain  by  the  figures  $868.^ 
A  promise  to  pay  whatever  amount  might  be  collected*  or  to  pay 
a  certain  sum  of  money  and  whatever  premiums  might  be  due 
upon  a  certain  policy,^  or  to  pay  a  certain  sum  and  all  taxes  as- 
sessed against  the  realty  mortgaged  to  secure  such  debt,**  or  to 
pay  interest  and  taxes  on  the  note  itself/  or  a  promise  to  pay 
a  "  bill  of  two  hundred  sixty-five  50-100  dollars  "^  are  none  of 
them  for  a  sum  certain.  A  clause  giving  the  payee  bank  the 
right  to  appropriate  to  the  payment  of  the  note,  before  or  after 
maturity,  the  amount  on  deposit  by  the  makers  or  either  of 
them,  does  not  make  the  amount  due  uncertain.^  But  a  clause 
giving  the  holder  power  to  sell  certain  collateral  security  before 
maturity  and  apply  the  proceeds  to  the  note  has  been  held  to 
make  the  amount  uncertain.^*'  So  provision  for  the  payment  of 
uncertain  sums  at  uncertain  times  before  maturity,  leaving  un- 
certain the  amount  due  at  maturity,  destroys  negotiability^* 
since  it  leaves  the  amount  to  be  paid  at  maturity  uncertain.  A 
provision  in  a  mortgage  for  the  payment  of  taxes,*"  does  not 
destroy  the  negotiability  of  the  note  secured  thereby.  But  if  re- 
ferred to  in  the  note,  and  if  by  statute  the  mortgagee's  interest 
is  to  be  taxed  separate  from  the  mortgagor's,  a  clause  in  a  mort- 
gage requiring  the  mortgagor  to  pay  all  taxes  on  the  realty  de- 

2  Witty  V.  Ins.  Co.,  123  Ind.  411;  9  Louisville  Banking  Co.  v.  Gray, 
18  Am.  St.  Eep.  327;  8  L.  R.  A.  123  Ala.  251;  82  Am.  St.  Rep. 
365;  24  N.  E.  141.  Contra,  Vinson  120;  26  So.  205  (citing  Hodges  v. 
V.  Palmer,  —  Fla.  — ;  34  So.  276.  Shuler,  22  N.  Y.  114). 

3  McCoy  V.  Gilmore,  7  Ohio  (1st  lo  Smith  v.  Marland,  59  la.  645; 
Part)    268.  13  N.  W.  852. 

4Legro  V.  Staples,  16  Me.  252.  n  Roblee  v.  Bank,  —  Neb.  — ;  95 

5  Palmer  v.  AVard,  6  Gray  (Mass.)  X.  W.   61. 

340.  i2Garnett  v.  Myers,  65  Xeb.  280; 

«  \Yalker  v.  Thompson.   108  Mich.  91  X.  W.  400.   As  where  such  provi- 

686;  66  N.  W.  584.  sion  is   substantially  what   the   law 

7  Smith  V.  Myers,  207  111.  126;  69  imposes.     Bradbury   v.    Kinney,    63 

N.  E.   858;   affirming   107   111.   App.  Xeb.  754;   89  X.  W.  257.     And   see 

410.  Wilson  V.  Campbell,  110  Mich.  580; 

sBradt  v.  Krnnk,  164  X.  Y.  515;  35  L.  R.  A.  544;  68  X.  W.  278. 
79  Am.  St.  Rep.  662;  58  X.  E.  657. 


.CONTRACTS    WHICH    MUST    BE    IN    WEITING. 


1157 


stroys  negotiability/^  A  promise  to  pay  attorney's  fees/*  either 
a  certain  per  cent  of  the  amount  of  the  note/^  or  to  pay  reason- 
able attorney's  fees/**  does  not  make  the  instrument  non- 
negotiable.  One  reason  for  this  is  that  such  provisions  do  not 
operate  ujiless  the  note  is  dishonored,  when  it  ceases  to  be  nego- 
tiable." Another  reason  suggested  in  other  jurisdictions  is  that 
such  clause  is  void.^*  In  other  jurisdictions  a  promise 
to  pay  attorney's  fees  destroys  negotiability^^  since  the  amount 
due  is  rendered  uncertain.  Statutes  providing  that  a  negotiable 
instrument  must  not  contain  any  other  contract  make  such  notes 
non-negotiable/"  whether  such  contract  provides  for  a  fixed  per 
cent,^^  as  an  attorney's  fee,  or  merely  such  sum  as  the  court 
should  hold  to  be  reasonable.^^     A  contract  to  pay  a  certain 


13  Brooke  v.  Struthers,  110  Mich. 
562;  35  L.  R.  A.  536;  68  N.  W.  272. 

14  Gaar  v.  Banking  Co.,  11  Bush. 
(Ky.)   180;  21  Am.  Rep.  209;  Stark 

V.  Olsen,  44  Neb.  646;  63  N.  W.  37; 
Clifton  V.  Bank,  75  Miss.  929;  23 
So.  394;  Bank  v.  Fuqua,  11  Mont. 
285;  28  Am.  St.  Rep.  461;  14  L.  R. 
A.  588;  28  Pac.  291. 

15  Montgomery  First  National 
Bank  v.  Slaughter,  98  Ala.  602;  39 
Am.  St.  Rep.  88;  14  So.  545;  Dor- 
sey  V.  Wolff,  142  III.  589;  34  Am. 
St.  Rep.  99;  18  L.  R.  A.  428;  32 
N.  E.  495  i  Shenandoah  National 
Bank  v.  Marsh,  89  la.  273;  48  Am. 
St.   Rep.    381;    56   N.   W.   458. 

16  Oppenheimer  v.  Bank,  97  Tenn. 
19;  56  Am.  St.  Rep.  778;  33  L.  R. 
A.  767;  36  S.  W.  705. 

17  Farmers'  National  Bank  v. 
Mfg.  Co.,  52  Fed.  191;  17  L.  R.  A. 
595;  Hunter  v.  Clarke,  184  111.  158; 
75  Am.  St.  Rep.  160;  56  N.  E.  297; 
Salisbury  v.  Stewart,  15  Utah 
308;  62  Am.  St.  Rep.  934;  49  Pac. 
777. 

isMaynard  v.  Mier,  85  Ind.  317; 
Witherspoon  v.  Musselman,  14  Bush. 
(Ky.)  214;  29  Am.  Rep.  404; 
Chandler  v.  Kennedy,  8  S.  D.  56 ;  65 


N.  W.  439.  So  where  by  statute 
such  clause  is  void  unless  defend- 
ant files  a  plea  in  action  on  note. 
Jones  V.  Crawford,  107  Ga.  318;  45 
L.  R.  A.  105;   33  S.  E.  51. 

19  Roads    V.    Webb,    91    Me.    406; 

64  Am.  St.  Rep.  246;  40  Atl.  128; 
Altman  v.  Rittershofer,  68  Mich. 
287;  13  Am.  St.  Rep.  341;  36  N. 
W.  74;  Sylvester  Bleckley  Co.  v. 
Alewine,  48  S.  C.  308;  37  L.  R.  A. 
86;  26  S.  E.  609;  Baird  v.  Vines, 
—  S.  D.  — ;   99  N.  W.  89. 

20  Meyer  v.  Weber,  133  Cal.  681; 

65  Pac.  1110;  Findlay  v.  Pott,  131 
Cal.  385;  63  Pac.  694;  Adams  v. 
Seaman,  82  Cal.  636,  7  L.  R.  A. 
224;  23  Pac.  53;  Stadler  v.  Bank, 
22  Mont.  190;  74  Am.  St.  Rep.  582; 
56  Pac.  111.  (Contrary  rule  before 
statute.  Bank  v.  Fuqua,  11  Mont. 
285;  28  Am.  St.  Rep.  461;  11  L.  R. 
A.  588;  28  Pac.  291.)  Lippincott  v. 
Rich,  22  Utah  196;  61  Pac.  526. 
Contrary  rule  before  statute.  Salis- 
bury V.  Stewart,  15  Utah  308;  62 
Am.  St.  Rep.  934;  49  Pac.  777. 

21  First  National  Bank  v.  Bab- 
eock.  94  Cal.  96;  28  Am.  St.  Rep. 
94;  28  L.  R.  A.  94;  29  Pac.  415. 

22  Kendall  v.  Parker,  103  Cal.  319; 


1158  PAGE    ON    CONTRACTS. 

amount  "  with  exchange  "  is  non-negotiable  by  the  weight  of 
authority.'"^  The  reason  generally  given  for  this  rule  is  that  it 
is  impossible  to  determine  in  advance  what  the  rate  of  exchange 
will  be,  and  that  the  amount  due  at  maturity  cannot  therefore 
be  determined.  But  if  such  provision  is  merely  inserted  to 
make  it  clear  that  the  promisor  is  to  bear,  the  expense  of  having 
the  money  transmitted  to  the  place  of  payment,  it  does  not  im- 
pose any  greater  burden  upon  the  promisor  than  the  same  note 
would  have  done  had  this  provision  been  omitted."*  If  such 
clause  makes  the  note  non-negotiable  then  every  note  payable  at  a 
certain  place  should  on  the  same  principle  be  non-negotiable. 
Accordingly,  some  courts  hold  that  such  a  clause  does  not  destroy 
negotiability."^  A  provision  that  the  rate  of  interest  shall  be 
higher  after  maturity  does  not  make  the  contract  non-nego- 
tiable,"'' nor  does  a  provision  that  interest  on  a  debt  due  on  de- 
mand shall  be  paid  only  if  demand  is  not  made  within  a  certain 
time."  In  some  jurisdictions  a  provision  that  default  at  ma- 
turity should  increase  the  rate  from  the  date  of  the  instrument 
has  been  held  not  make  it  non-negotiable."^     In  others  a  provi- 

42  Am.  St.  Rep.  117;   37   Pac.  401.  26  De  Hass  v.  Dibert,  70  Fed.  227; 

23  Windsor  Savings  Bank  v.Mc-  30  L.  R.  A.  189;  Towne  v.  Rice,  122 
Mahon,  38  Fed.  283;  3  L.  R.  A.  192;  Mass.  67;  Hollinshead  v.  Stuart,  8 
Lowe  V.  Bliss,  24  111.  168;  76  Am.  N.  D.  35;  42  L.  R.  A.  659;  77  N. 
Dec.  742;  Nicely  v.  Bank.  15  Ind.  W.  89;  Merrill  v.  Hurler,  6  S.  D. 
App.  563;  57  Am.  St.  Rep.  245;  44  592;  55  Am.  St.  Rep.  859;  62  N.  W. 
N.  E.  572;  Culbertson  v.  Xelson,  93  958. 

la.   187;    57   Am.   St.  Rep.   266;   27  27  Certificate    of    deposit:     Hatch 

L.  R.  A.  222;  61  N.  W.  854;  Flagg  v.     Bank,     94     Me.     348;     80    Am. 

V.   School  District,  4  N.  D.   30;   25  St.    .Rep.    401;     47    Atl.     908.     As 

L.  R.  A.  363 ;  58  N.  W.  499.  where  the  deposit  was  to  bear  inter- 

24  Bullock  V.  Taylor,  39  Mich.  est  if  left  six  months:  no  interest 
137;  33  Am.  Rep.  356.  after  six  months.  Kirkwood  v.  Bank, 

25Claik  V.   Skeen,   61   Kan.   526:  40  Xeb.  484;  42  Am.  St.  Rep.  683; 

78  Am.  St.  Rep.   337;   49  L.  R.   A.  24  L.  R.  A.  444;  58  N,  W.  1016. 

190;  60  Pac.  327;  Smith  V.  Kendall.  28  Crump    v.     Berdan,     97     Mich. 

9  Mich.  ^41;  80  Am.  Dec.  83;  Hast-  293;    37   Am.   St.   Rep.   345;    56   N. 

inpcs   V.   Thompson,    54   Minn.    184;  W.  559;   Smith  v.  Crane,   33  Minn. 

40  At»,   SL  Rep.  315;   21  L.  R.   A.  144;    53    Am.    Rep.    20;    22    N.   W. 

17>i;    55    N.    W.    968;    Haslack    v.  633;  Hope  v.  Barker.  112  Mo.  338; 

Wolt  —  Neb.  — ;  60  L.  R.  A.  434;  34  Am.  St.  Rep.  387;  20  S.  W.  567. 
9?-  N.  W.  574. 


CONTRACTS    WHICH    MUST    BE    IN    WRITING. 


liryj 


sion  for  a  reduction  in  the  rate  of  interest  if  paid  at  inaturitv 
makes  the  contract  non-negotiable.""  A  provision  for  increasing 
the  rate  of  interest  in  the  event  of  certain  specified  defaults  is 
held  to  be  void  and  hence  not  to  destroy  negotiability.^"  A  con- 
tract to  pay  costs  of  collection  does  not  destroy  negotiability, 
since  if  it  adds  any  legal  liability  it  is  for  attorney's  fees  only.'^^ 

§766.     Contract  must  be  absolute. 

The  payment  must  be  unconditional.  If  some  event  which 
may  or  may  not  happen  is  a  condition  precedent  to  the  pay- 
ment, the  contract  is  not  negotiable.^  Thus  payment  out  of  a 
particular  fund,"  when  certain  work  is  done,^  within  a  year  after 
certain  work  is  done,^  if  the  maker  enjoyed  the  use  of  certain 
premises  under  his  lease,^  or  six  months  after  date  "  if  elected 
county  commissioner,"^  or  if  the  payee  satisfies  a  certain  mort- 


29Hegeler  v.  Comstock.  1  S.  D. 
138;  8  L.  R.  A.  393;  45  N.  W.  331. 
So  of  a  provision  "  This  note  to  be 
discounted  at  12  per  cent.,  if  paid 
before  maturity."  National  Bank  v. 
Feeney,  9  S.  D.  550;  46  L.  E.  A. 
732;  70  N.  W.  874;  affirmed  on  re- 
hearing, 11  S.  D.  109;  75  N.  W. 
896 ;  affirmed  on  sect)nd  rehearing, 
12  S.  D.  156;  76  Am.  St.  Rep.  594; 
80  N.  W.   186. 

30  Kendall  v.  Selby,  —  Neb.  — ; 
92  N.  W.   178. 

31  Nicely  v.  Bank^  15  Ind.  App. 
563;  57  Am.  St.  Rep.  245;  44  N.  E. 
572.  Where  held  to  mean  attorney's 
fees.  Montgomery  v.  Crossthwait, 
90  Ala.  553;  24  Am.  St.  Rep.  832; 
12  L.  R.  A.  140;  8  So.  498.  Contra, 
of  a  provision  for  the  payment  of 
"  other  costs  "  in  addition  to  attor- 
ney's fees.  Johnson  v.  Sehar,  9  S. 
D.  536;  70  N.  W.  838;  Baird  v. 
Vines.  —  S.  D.  — ;   99  N.  W.  89. 

1  National  Savings  Bank  v.  Cable, 
73  Conn.  568:  48  Atl.  428;  White  v. 
Smith.  77  111.  351;  20  Am.  Rep. 
251:    Jackman    v.    Bowker,    4    Met, 


(Mass.)  235;  Shaver  v.  Telegraph 
Co.,  57  N.  Y.  459;  Iron  City  Na- 
tional Bank  v.  McCord,  139  Pa.  St. 
52;  23  Am.  St.  Rep.  166;  11  L.  R. 
A.  559;  21  Atl.  143. 

2  National  Savings  Bank  v.  Cable, 
73  Conn.  568;  48  Atl.  428;  Hoag- 
land  V.  Erck,  11  Neb.  580;  10  N.  W. 
498;  Harriman  v.  Sanborn,  43  N. 
H.  128;  Munger  v.  Shannon,  61 
N.  Y.  251;  Woodward  v.  Smith,  104 
Wis.  365;  80  N.  W.  440;  Thompson 
V.  Mercantile  Co.,  10  Wyom.  86;  66 
Pac.  595. 

3  Chandler  v.  Carey,  64  Mich.  237; 
8  Am.  St.  Rep.  814;  31  N.  W.  309; 
Fletcher  v.  Thompson,  55  N.  H. 
308;  Home  Bank  v.  Drumgoole,  109 
N.  Y.  63 ;  15  N.  E.  747. 

4  Chicago,  etc.,  Bank  v.  Trust  Co., 
190  111.  404;  83  Am.  St.  Rep.  138; 
60  N.  E.  586. 

5  Jennings  v.  Bank.  13  Colo.  417; 
16  Am.  St.  Rep.  210;  22  Pac.  777. 

6  Specht  V.  Beindorf.  56  Neb.  553 ; 
42   L.   R.   A.   429:    76   N.   W.    1059. 

(This  is  also  illegal.     See  §  410.) 


1160  PAGE    ON    CONTRACTS. 

gage,^  or  in  case  a  given  contract  is  not  performed,^  is  in  eacli 
case  conditional  and  the  instrument  is  non-negotiable.  A  pro- 
vision for  payment  on  return  of  the  instrument  properly  en- 
dorsed requires  nothing  more  than  the  law  imposes  and  does  not 
destroy  negotiability.^ 

§767.     Time  of  Payment. 

Closely  connected  with  the  last  element  is  the  rule  that  a  cer- 
tain time  of  payment  must  be  fixed.  This  does  not  mean  that 
the  exact  date  of  payment  is  ascertainable  from  the  contract 
itself.  An  instrument  payable  on  some  event  which  is  bound  to 
come  to  pass  is  negotiable  even  if  the  exact  date  cannot  be  de- 
termined in  advance.  Thus  a  note  payable  on  demand/  or  at  the 
death  of  a  given  person,^  is  negotiable.  If  no  time  of  payment 
is  given  in  the  note,  it  is  in  legal  effect  payable  on  demand  and 
is  negotiable.^  So  a  clause  providing  that  default  in  the  in- 
terest may,  at  the  option  of  the  payee,  make  the  principal  fall 
due  at  a  time  earlier  than  that  fixed  by  the  instrument,  does  not 
prevent  the  contract  from  being  negotiable.*   A  note  due  on  or 

7  Hayes  v.  Gwin,  19  Ind.  19.  24  Am.  St.  Rep.  424;    12  L.  R.  A. 

sCostelo    V.    Crowell,    127    Mass.  845;   27  N.  E.  835. 
293;   34  Am.  Rep.  367.  3  Swatts  v.  Bowen,   141  Ind.  322; 

9  Miller  v.   Austen,    13   How.    (U.  40  N.   E,   1057;    Palmer  v.   Palmer, 

S.)    218;   Drake  v.  Markle,  21   Ind.  36    Mich.    487;    24    Am.    Rep.    605; 

433;    83    Am.   Dec.    358;    Hatch    v.  Jones  v.  Brown,   11  O.  S.  601. 
Bank,  94  Me.  348 ;   80  Am.  St.  Rep.  4  De  Hass  v.  Dibert,  70  Fed.  227 ; 

401;  47  Atl.  908;  Kirkwood  v.  Bank,  30  L.  R.  A.  189;  Hunter  v.  Clarke, 

40  Neb.  484;  42  Am.  St.  Rep.  683;  184  111.  158;   75  Am.  St.  Rep.  160; 

24  L.   R.   A.  444;    58   N.  W.   1016;  56   N.   E.   297;    Clark   v.   Skeen,   61 

Frank    v.    Wessels,    64    N.    Y.    155.  Kan.    526;    78    Am.    St.    Rep.    337; 

Contra,  Hubbard  v.  Mosely,  11  Gray  49  L.  R.  A.  190;  60  Pac.  327;  Mar- 

(Mass.)   170;  71  Am.  Dec.  698.  key    v.    Corey,    108    Mich.    184;    62 

1  White  V.  Smith,  77  111.  351;   20  Am.  St.  Rep.  698;  36  L.  R.  A.  117; 

Am.  Rep.  251.  66  N.  W.  493;  Hollinshead  v.  Stuart, 

2Crider   v.   Shelby,   95   Fed.   212;  8   N.   D.   35;    42   L.   R.   A.   659;    77 

Bristol  V.  Warner,  19  Conn.  7;  Beat-  N.   W.   89;    United   States   National 

ty  V.  College,   177  HI.  280;   69  Am.  Bank  v.   Floss,   38   Or.  68;    84  Am. 

St.  Rep.  242;   42  L.  R.  A.   797;   52  St.  Rep.  752;   62  Pac.   751;   Merrill 

N.  E.  432;  Price  v.  Jones.  105  Ind.  v.  Hurley,  6  S.  D.  592;  55  Am.  St. 

543;  55  Am.  Rep.  230;  5  N.  E.  683;  Rep.  859;   62  N.  W.  958.     So  with 

Carnwright  v.  Gray,  127  N.  Y.  92;  a    contract    that    if   the    mortgagor 


CONTKACTS    WHICH    MUST    BE    IN    WRITING.  1161 

before  a  certain  date/  or  within  a  certain  period/  or  in  a  certain 
time,  tlie  payee  to  have  the  option  of  paying  in  a  shorter  period/ 
is  negotiable.  In  all  these  cases  the  time  of  payment,  though  not 
ascertainable  when  the  instrument  is  given,  is  bound  to  arrive 
eventually.  Some  authorities,  however,  treat  contracts  for  the 
payment  of  money  on  or  before  a  certain  date  as  non-negotiable.* 
A  clause  in  a  mortgage,  referred  to  in  a  note,  making  the  note 
due  on  failure  to  pay  taxes  and  assessments  for  thirty  days  after 
they  were  due,  was  held  to  make  the  note  non-negotiable.'*  A 
similar  clause  giving  the  holder  of  the  note  the  option  of  de- 
claring it  due  on  default  in  paying  taxes  and  assessments  does 
not  destroy  negotiability.^"  A  clause  in  a  mortgage  not  referred 
to  in  the  note  giving  the  mortgagee  the  option  of  declaring  the 
whole  debt  due  on  any  default  was  held  not  to  affect  the  note 
and  hence  to  leave  it  negotiable.^^  An  instrument  payable  on 
the  happening  of  an  event  which  may  not  happen  is  conditional 
and  therefore  non-negotiable,  as  a  note  payable  when  a  certain 
suit  is  settled,^"  or  an  estate  is  settled,^^  or  when  a  canal  is  com- 

does   not   pay   insurance   premiums.  First  National  Bank  of  Port  Huron 

the  mortgagee  may  declare  the  debt  v.  Carson^  60  Mich.  432;   27  N.  W. 

due.     Consterdine  v.  Moore,  65  Neb.  589. 

291;   91  N.  W.  399.  6  Leader  v.  Plante,  95  Me.  339;  85 

5  Hunter  v.  Clarke,   184  HI.   158;  Am.  St.  Rep.  415;  50  Atl.  54. 
75  Am.  St.  Rep.  160;  56  N.  E.  207;  7  American  National  Bank  v.  Pa- 
First  National  Bank  v.  Skeen,   101  per  Co.,   19  R.  I.   149;   61   Am.   St. 
Mo.  683;  11  L.  R.  A.  748;  14  S.  W.  Rep.  746;  29  L.  R.  A.  103;  32  Atl. 
732;  Jordan  v.  Tate,   19  O.  S.  586;  305. 

AlbeTtson  v.  Laughlin,   173   Pa.   St.  8  Mahoney     v.     Fitzpatrick,      133 

525;   51  Am.  St.  Rep.  777;   34  Atl.  Mass.  151;  43  Am.  Rep.  502. 

216.     So    a    clause    making    a    note  » Brooke  v.   Struthers,    110  Mich, 

due  in  four  years  payable  on  sale  or  562 ;  35  L.  R.  A.  536 ;  68  N.  W.  272. 

removal  of  timber  on  the  land  for  lo  Wilson  v.  Campbell,   110  Mich, 

which   such   note   was   given,   before  580;  35  L.  R.  A.  544;  68  N.  W.  278. 

the  end  of  such  time  does  not  de-  n  White  v.  Miller,  52  Minn.  367; 

Stroy    negotiability.      Joergenson    v.  19  L.  R.  A.  673;  54  N.  W.  736. 

Joergenson,  28  Wash.  477;   92  Am.  12  Burgess   v.    Fairbanks,    83    Cal. 

St.  Rep.  888;   68  Pac.  913.     See  to  215;   17  Am.  St.  Rep.  230;  23  Pac. 

the   same   effect,    Charlton   v.   Reed,  292;     Shelton    v.     Bruce,     9     Yerg. 

61    la.    166;    47   Am.   Rep.   808;    16  (Tenn.)    24. 

N.   W.   64;    Walker  v.   Woollen,   54  is  Husband  v.  Epling,  81  111.  172  j 

Ind.  164;  23  Am.  Rep.  639.    Contra,  25   Am.  Rep.   273. 


1162  PAGE    ON    CONTRACTS. 

pleted/*  A  clause  providing  for  an  extension  of  time  for  a 
definite  period  at  the  ojDtion  of  the  maker  does  not  make  the  con- 
tract non-negotiable.^^  A  provision  making  the  right  to  renewal 
contingent  on  some  specific  event  has  been  held  to  make  the  con- 
tract non-negotiable.^®  A  general  provision  for  renewal,  not  for 
a  specific  time/^  or  a  clause  giving  a  majority  of  bond-holders 
the  right  to  waive  default  in  payment/*  makes  the  time  of  pay- 
ment uncertain  and  destroys  negotiability. 

§768.     Words  of  negotiability. 

A  negotiable  contract  must  contain  words  of  negotiability.^ 
The  customary  words  of  negotiability  are :  "  or  order/'  or  "  or 
bearer,"  but  other  Avords  showing  an  intent  that  the  contract 
might  be  transferred,  such  as  "  or  assigns,""  are  sufficient. 

§769.    Recital  of  consideration  unnecessary. 

It  is  customary  for  a  negotiable  instrument  containing  a  re- 
cital of  a  consideration,  as  by  the  use  of  the  words  "  for  value 
received."     This,  however,  is  not  essential.^     Thus  a  check  is 

i4Weidler   v.  Kauflfman,   14   Ohio  963;     Citizens'    National     Bank    v. 

455.  Piollet,    126   Pa.    St.    194;    12   Am. 

15  Anniston  Loan  and  Trust  Co.  V.  St.  Rep.  860;  4  L.  E.  A.  190;  17 
Stickney,  108  Ala.  146;  31  L.  R.  A.  Atl.  603.  Contra,  Witty  v.  Ins. 
234;   19  So.  63.  Co.,  123  Ind.  411;   18  Am.  St.  Rep. 

16  Miller  v.  Poage,  56  la.  96;   41  327;  8  L,  R.  A.  365;  24  N.  E.  141. 
Am.  Rep.  82;  8  K  W.  799.     Contra,  is  McClelland  v.  R.  R.,  110  N.  Y. 
Capron  V.  Capron,  44  Vt.  410.  469;   6  Am.  St.  Rep.  397;    1   L.  R. 

17  Glidden  v.  Henry,  104  Ind.  278;  A.  299;  18  N.  E.  237. 

54    Am.    Rep.    316;    1    N.    E.    369;  i  Graves   v.    Mining   Co.,   81    Cal. 

Matehett  V.  Machine  Works,  29  Ind.  303;    22    Pae.    665;    Carnwright   v. 

App.  207;  94  Am.  St.  Rep.  272;  64  Gray,  127  N.  Y.  92;  24  Am.  St.  Rep. 

N.  E.  229;   Rosenthal  v.  Rambo.  28  424;    12   L.   R.    A.    845;    27    N.    E. 

Ind.  App.  265;  62  N.  E.  637;  Mer-  835;  Smurr  v.  Forman,  1  Ohio  272. 

chants',  etc..  Bank  v.  Fraze,  9  Ind.  Contra,    under    Mississippi    statute, 

App.  161 ;  53  Am.  St.  Rep.  341 ;  36  where  a  contract  containing  restric- 

N.   E.   378;    Oyler   v.  McMurray.   7  tions  on  assignability  was  held  nego- 

Ind.    App.    645;    34    N.    E.    1004;  tiable.     Greenwood   Lodge    v.   Prie- 

Woodbury  v.  Roberts,  59  la.  348;  44  batsch.  —  Miss.  — ;  35  So.  427. 

Am,  Rep.  685;   13  N.  W.  312;   Sec-  2  Murphy  v.  Improvement  Co.,  97 

ond  National  Bank  of  Richmond  v.  Fed.   723. 

Wheeler,   75   Mich.   546;    42   N.   W.  i  Bristol  v.  Warner,  19  Conn.   7; 


CONTKACTS    WHICH    MUST    BE    i:\^    WRITING.  1103 

negotiable  without  the  words  "value  received,"  though  by 
statute  such  words  are  necessary  in  a  note.^  So  a  recital  of  any 
valuable  consideration  is  sufficient.^  On  the  other  hand,  the  re- 
cital of  a  consideration  does  not  operate,  as  notice  to  the  indorsee 
of  failure  of  consideration,  or  other  defense  arising  thereon 
which  might  operate  as  a  defense  against  the  payee.*  A  provi- 
sion in  a  note  that  title  to  the  property  for  which  it  is  given  shall 
revest  in  the  vendor  if  the  note  is  not  paid  at  maturity  destroys 
its  negotiability,^  while  a  provision  that  title  shall  not  pass  until 
the  note  is  paid  does  not.^ 

§770.     Contracts  under  seal. 

The  law  of  negotiable  instruments  is  derived  from  the  Law 
Merchant.  The  Seal  is  derived  from  the  common  law.  Accord- 
ingly, at  common  law  a  sealed  instrument  could  not  be  nego- 
tiable.^ Thus  if  two  guarantors  sign,  and  A  adds  a  seal  while 
B  does  not,  the  note  is  negotiable  as  to  B  but  not  as  to  A.^  This 
rule,  however,  is  no  longer  in  force  in  many  jurisdictions.^  A 
corporate  seal  does  not  destroy  negotiability  since  it  is  merely 
the  common-law  form  whereby  the  corporation  indicates  its 
assent.  To  hold  that  it  destroyed  negotiability  would  be  to  hold 
that  a  corporation  could  not  issue  negotiable  paper.*    "  The  at- 

Archer  v.  Claflin,  31  111.  306;  Dean  386;  3  L.  R.  A.  414;  11  S.  W.  93. 

V.   Carruth,    108  Mass.   242;    Clarke  5  Wright  v.  Taver,  73  Mich.  493; 

V.   Marlow;   20  Mont.   249;    50   Pac.  3  L.  R.  A.  50;  41  N.  W.  517. 

713;    Hubbell    v.    Fogartie,    3    Rich.  6  Choate  v.  Stevens,  116  Mich.  28; 

L.    (S.  C.)   413;  45  Am.  Dec.  775.  43  L.  R.  A.  277;  74  N.  W.  289. 

2  Famous  Shoe  Co.  v.  Crosswhite,  i  Conine  v.  Ry.,  3  Houst.    (Del.) 

124  Mo.  34;   46  Am.  St.  Rep.  424;  288;    89   Am.    Dec.    230;    Brown   v. 

26  L.  R.  A.  568;  27  S.  W.  397.  Jordhal,  32  Minn.  135;  50  Am.  Rep. 

3Garrigus  v.  Missionary   Society,  560;  19  N.  W.  650;  Osborn  v.  Kist- 

3    Ind.   App.   91;    50   Am.    St.    Rep.  ler,    35    O.    S.    99;    McLaughlin    v. 

262;   28  N.   E.   1009.      (A  note  "to  Braddy,  63   S.  C.  433;    90  Am.   St. 

advance  the   cause   of  missions   and  Rep.  681;  41  S.  E.  523. 

to  induce  others  to  contribute.")  2  McLaughlin  v.  Braddy,  63  S.  C. 

4Siegel  V.  Bank,  131  111.  569;   19  433;  90  Am.  St.  Rep.  681;  41  S.  E. 

Am.  St.  Rep.  51;  7  L.  R.  A.  537;  23  523. 

N.   E.  417;    Clanin  v.  Machine  Co.,  3  Porter  v.  McCollum,  15  Ga.  528. 

118  Ind.   372;   3  L.   R.   A.   863;    21  *  Kneeland  v.  Lawrence,  140  U.  S. 

N.  E.  35;  Ferris  v.  Tavel,  87  Tenn.  209;  Chicago,  etc.,  Co.  v.  Bank,  136 


116-i 


PAGE    ON    CONTRACTS. 


tacbing  of  a  corporate  seal  bears  a  strong  analogy  to  tbe  signa- 
ture of  a  natural  person  and  is  its  substantial  equivalent."'^  A 
seal  wbicb  may  be  treated  as  surplusage  does  not  destroy  nego- 
tiability. **  Some  authorities,  however,  hold  that  a  corporation 
seal  makes  the  instrument  a  specialty  and  destroys  negotiability.^ 


U.  S.  268 ;  Mercer  County  v.  Hacket, 
1  Wall.  (U.  S.)  83;  Reid  v.  Bank, 
70  Ala.  199;  Chase  National  Bank 
V,  Faurat,  149  N.  Y.  532;  35  L.  R. 
A.  605;  44  N.  E.  164;  Pittsburgh, 
etc.,  Ry.  V.  Lynde,  55  O.  S.  23;  44 
N.  E.  596;  American  National  Bank 
V.  Paper  Co.,  19  R,  I.  149;  61  Am. 
St.  Rep.  746;  29  L.  R.  A.  103;  32 
Atl.  305;  Laudauer  v.  Improvement 


Co.,   10   S.  D.  205;    72  N.  W.  467. 

5  Pittsburgh,  etc.,  Ry.  v.  Lynde, 
55  0.  S.  23,  49;  44  N.  E.  596. 

6  Stevens  v.  Ball  Club,  142  Pa.  St. 
52;  11  L.  R.  A.  860;  21  Atl.  797; 
Maekay  v.  Church,  15  R.  I.  121;  2 
Am.  St.  Rep.  881;  23  Atl.  108. 

7Coe  V.  Ry.,  8  Fed.  534;  Frevall 
v.  Fitch,  5  Whart.  (Pa.)  325;  34 
Am.  Dec.  558. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1165 


CHAPTER  XXXVII. 

IMPLIED  CONTRACTS  AND  QUASI-CONTRACTS. 
I.     General  Nature. 

§771.     Nature  of  implied  contract. 

As  has  been  said  before,^  the  tenn  "  contract "  as  used  at 
Common  Law  included  all  rights  which  could  be  enforced  by  one 
of  the  actions  ex  contractu.  By  the  Common-Law  classification 
every  contract  was  either  express  or  implied,  as  these  two  classes 
exhausted  the  entire  general  class  of  contracts.  If  from  all  the 
rights  of  action  which  at  Common  Law  could  be  enforced  by 
actions  ex  contractu  we  subtract  the  rights  arising  out  of  express 
contract  we  have  left  a  miscellaneous  group  of  rights  which  the 
Common  Law  in  its  later  and  classic  form  grouped  under  the 
head  of  implied  contracts.  With  the  abolition  of  Common-Law 
forms  of  action  in  many  jurisdictions,  and  its  reconstruction  on 
a  rational  basis  in  others,  the  necessity  of  defining  such  legal 
ideas  as  contract  and  tort  without  reference  to  the  rigid  form  of 
action  by  which  only  it  once  was  enforceable,  has  become  appar- 
ent. Substantive  law  has  been  arranged  and  classified  as  the 
main  division  of  the  law,  to  which,  in  theory  at  least,  the  ad- 
jective law  of  pleading,  practice,  evidence,  remedies,  and  pro- 
cedure, is  supplemental,  whereas  under  the  Common  Law  ideas 
substantive  law  was  in  reality  a  mere  appendix  and  supplement 
to  the  law  of  procedure.  The  modern  law,  as  has  been  said 
before,-  has  treated  the  term  "  contract "  as  including  all  agree- 
ments which  are  enforceable  at  law.  When  we  analyze  the  com- 
mon law  class  of  implied  contracts  and  apply  to  it  the  modern 
test  of  what  a  contract  is,  we  find  that  the  Common  Law  class  of 

iSee   §   11.  2  See  §§  10-12,  14. 


11G6  PAGE    ON    CONTRACTS. 

implied  contracts  is  made  up  of  two  distinct  classes  of  rights. 
One  class  consists  of  rights  arising  out  of  an  agreement  enforce- 
able at  law,  and  therefore  just  as  truly  a  contract  at  modern 
modern  law  as  the  express  contract.  It  differs  from  the  express 
contract  only  in  this :  that  while  in  express  contract  the  parties 
arrive  at  their  agreement  by  words,  whether  oral  or  written, 
sealed  or  unsealed,  in  implied  contracts  of  this  type  they  have 
arrived  at  their  agreement  by  their  acts  and  conduct.  This  type 
of  contract  is  known  as  the  genuine  implied  contract,  the  con- 
tract implied  as  of  fact,  or  simply,  the  implied  contract.  The 
other  class  of  rights  includes  all  the  classes  of  rights  in  the  Com- 
mon Law  class  of  implied  contracts  left  after  deducting  all  the 
rights  which  originate  in  a  genuine  .agreement  between  the 
parties.  To  state  the  same  fact  in  another  way,  it  consists  of 
all  rights  which  the  common  law  enforced  by  an  action  ex  con- 
tractu., but  which  do  not  originate  in  a  genuine  agreement  of  the 
parties.  This  last  class  has  been  called  contract  implied  in  law, 
a  contract  created  by  law,^  constructive  contract  or  quasi-con- 
tract. This  type  of  liability  is  merely  "  an  implication  of  law 
that  arises  from  the  facts  and  circumstances  indejiendent  of 
agreement  or  presumed  intention."  *     The  term  quasi-contract, 

3  Bishop  on   Contracts,   Ch.  VIII.  fraud.     Here  it  is  said  the  law  im- 

4Pracht  V.  Daniels,  20  Colo.  100,  plies  a  promise  to  repay  the  money, 

103 ;   36  Pac.  845.     '"  There  is  some  when   it   was   well   understood   that 

confusion   in   the   statement   of   the  the  promise  was  a  mere  fiction,  and 

law    applicable    to    what    are    fre--  in  most  cases  without  any  founda- 

quently     called     implied     contracts,  tion    whatever    in    fact.     The    same 

arising   from   the    fact   that   obliga-  practice   was    adopted   where   neces- 

tions   generally  different  have   been  saries  had  been  furnished  an  insane 

classed  as  such,  not  because  of  any  person  or  a  neglected  wife  or  child, 

real  analogy,  but  because  where  the  In   all  these  cases  no  true  contract 

procedure  of  the  Common  Law  pre-  exists.     They  are,  by  many  authors, 

vails,  by  the  adoption  of  a  fiction  in  termed  quasi  contracts,  a  term  bor- 

pleading  —  that  of  a  promise  where  rowed   from   the    civil   law.     In    all 

none  in  fact  exists  or  can  in  reason  these   cases  no  more  is  meant  than 

be  supposed  to  exist  —  the  favorite  that  the  law  imposes  a  civil  obliga- 

remedy  of  implied  assumpsit  could  tion    on    the    defendant    to    restore 

be   adopted.     This   was   so   in  that  money  so  obtained,  or  to  compensate 

large   class   of   cases,   where   suit   is  one  who  has  furnished  necessaries  to 

brought   to   recover   money  paid  by  his    wife    or    child,    where    he    has 

mistake    or    has    been    obtained    by  neglected    his    duty    to    provide    for 


IMPLIED    CONTEACTS    AND    QUASI-C0:NTEACTS. 


1167 


while  but  little  used  in  law  is  a  term  of  considerable  antiquity 
in  English  law.  The  term  ''quasi  ex  contractu "  is  used  in 
Bracton"  to  include  "  agency,  wardship,  the  division  of  a  com- 
mon property,  the  distribution  of  an  inheritance,  an  action  aris- 
ing out  of  a  testament,  a  suit  to  recover  a  sum  paid  and  not  due, 


them,  or,  by  reason  of  mental  in- 
firmity, is  unable  to  obtain  them  for 
himself.  But  contracts  that  are  true 
contracts  are  frequently  termed  im- 
plied contracts,  as^  where  from  the 
facts  and  circumstances,  a  court  or 
jury  may  fairly  infer,  as  a  matter 
of  fact,  that  a  contract  existed  be- 
tween the  parties,  explanatory  of 
the  relation  existing  between  them. 
Such  implied  contracts  are  not 
generically  diflFerent  from  express 
contracts;  the  difference  exists  sim- 
ply in  the  mode  of  proof.  Express 
contracts  are  proved  by  showing 
that  the  terms  were  expressly  agreed 
on  by  the  parties,  whilst  in  the  other 
case  the  terms  are  inferred  as  a 
matter  of  fact  from  the  evidence  of- 
fered of  the  circumstances  surround- 
ing the  parties,  making  it  reasonable 
that  a  contract  existed  between  them 
by  tacit  understanding.  In  such 
cases  no  fictions  are,  or  can  be,  in- 
dulged. The  evidence  must  satisfy 
the  court  and  jury,  that  the  parties 
understood  that  each  sustained  to 
the  other  a  contractual  relation; 
and  that  by  reason  of  this  relation 
the  defendant  is  indebted  to  the 
plaintiff  for  services  performed  or 
for  goods  sold  and  delivered.  In  the 
leading  case  of  Hertzog  v.  Hertzog, 
29  Pa.  St.  465,  the  distinction  is 
clearly  stated  by  Judge  Lowrie. 
After  quoting  from  Blackstone,  and 
observing  that  his  language  is  open 
to  criticism,  he  says :  '  There  is 
some  looseness  of  thought  in  suppos- 
ing that  reason  and  justice  ever  dic- 


tate any  contracts  between  parties, 
or  impose  such  upon  them.  All  true 
contracts  grow  out  of  the  intentions 
of  parties  to  transactions,  and  are 
dictated  only  by  their  natural  and 
accordant  wills.  When  the  inten- 
tion is  expressed,  we  call  the  con- 
tract an  express  one.  When  it  13 
not  expressed,  it  may  be  inferred, 
implied,  or  presumed,  from  circum- 
stances really  existing,  and  then  the 
contract  thus  ascertained,  is  called 
an  implied  one.  .  .  .  It  is  quite 
apparent,  therefore,  that  radically 
dffTerent  relations  are  classified  un- 
der the  same  term,  and  this  often 
gives  rise  to  indistinctness  of 
thought.  And  this  was  not  at  all 
necessary;  for  we  have  another  well 
authorized  technical  term  exactly 
adapted  to  the  office  of  making  the 
true  distinction.  The  latter  class 
are  merely  constructive  contracts, 
while  the  former  are  only  implied 
ones.  In  one  case  the  contract  is  a 
mere  fiction,  a  form  imposed  in  or- 
der to  adapt  the  case  to  a  given 
remedy;  in  the  other  it  is  a  fact 
legitimately  inferred.  In  one  the  in- 
tention is  disregarded;  in  the  other 
it  is  ascertained  and  enforced.  In 
one  the  duty  defines  the  contract;  in 
the  other  the  contract  defines  the 
duty,'  "  Columbus,  etc,  Ry.  v.  Gaff- 
ney,  65  0.  S.  104,  113;  61  N.  E. 
152;  quoting  Hertzog  v.  Hertzog,  29 
Pa.  St.  468. 

5  Bracton  f.  100b,  Twiss's  edition. 
Vol.  II.,  118. 


1168  PAGE    ON    CONTRACTS. 

and  such  like."  We  thus  see  that  Bracton's  classes  of  quasi-con- 
tract were  much  the  same  as  those  of  modern  law.  It  is  classed 
with  contract  for  the  historical  reasons  already  given  even  if 
the  facts  show  affirmatively  that  there  was  no  real  agreement  be- 
tween the  i^arties.*'  There  is  still  confusion  of  thought  as  to 
what  implied  contracts  are-.  Thus  it  has  been  suggested  that  a 
genuine  agreement,  reached  not  by  means  of  express  words  but 
by  means  of  acts  and  conduct,  is  an  express  contract  and  not  an 
imiDlied  contract.^  In  discussing  genuine  implied  contracts,  the 
questions  usually  presented  are  what  presumptions  of  law  arise 
on  the  facts  in  evidence,  or  what  inferences  of  fact  will  the  law 
permit  to  be  drawn  therefrom.  In  constructive  contracts  the 
questions  usually  presented  are,  (1)  under  the  facts  does  any 
liability  of  the  defendant  to  the  plaintiff  exist;  and  further, 
(2)  if  there  is  a  liability,  can  it  be  enforced  in  an  action  ea; 
contractu.  The  latter  question  is  of  little  importance  to-day  in 
jurisdictions  where  the  Common  Law  forms  of  actions  have  been 
abolished.  If  facts  appear  giving  a  right  to  recover  for  money 
had  and  received,  a  fictitious  promise  need  not  be  alleged.* 

6 "  It  must  be  remembered,  that  courts  adopt  the  doctrine  that  such 
the  promise  upon  which  the  action  contracts  are  created  by  law,  rather 
rests,  is  not  the  direct  act  of  the  than  implied  by  it."  Siems  v.  Bank, 
parties,  but  a  promise  which  the  law  7  S.  D.  338,  342;  64  N.  W.  167. 
implies  from  the  facts,  on  the  theory  7  "  Express  contracts  which  are 
that  a  party  is  willing  and  under-  proved  by  the  declarations  and  con- 
takes  to  do  what  he  ought  to  do.  duct  of  the  parties  and  other  circum- 
It  does  not  militate  against  the  stances,  all  of  which  are  explainable 
promise  which  the  law  implies  that  only  upon  the  theory  of  a  mutual 
the  facts  are  inconsistent  with  the  agreement,  are  often  called,  although 
intent  or  promise  to  pay  over.  .  .  .  not  with  entire  accuracy,  implied 
While  it  may  seem  illogical  for  the  contracts;  and  this  distinction  will 
law  to  imply  a  promise  on  the  part  explain  the  ambiguity  of  some  au- 
of  one  whose  conduct  and  declara-  thorities  and  the  apparent  eontra- 
tions  clearly  disprove  any  intention  riety  of  others."  Hinkle  v.  Sage,  67 
to  promise,  still  it  is  constantly  0.  S.  2.56,  263 ;  6-5  X.  E.  999. 
done.  It  is  one  of  the  fictions  of  « Waite  v.  Willis,  42  Or.  288;  7C 
the  law  which  it  seems  convenient,  Pac.  1034- 
if  not  necessary,  to  retain  until  the 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  116& 

II.     Work  and  Labor. 

§772.     Work  and  labor  done  at  request. 

If  one  person  performs  work  and  labor  for  another  of  a  sort 
for  which  compensation  is  customary,  intending  to  charge  there- 
for, and  the  person  for  whom  the  work  is  done  either  has  re- 
quested expressly  or  impliedly,  before  the  doing  of  such  work, 
that  it  should  be  done,  or  after  it  was  done,  has  voluntarily  ac- 
cepted the  benefits  arising  therefrom,  the  person  for  whom  the 
work  is  done,  is  liable  to  the  person  who  does  it.^  If  there  is  an 
express  contract  for  doing  the  work,  the  rights  of  the  parties  are 
controlled  by  the  rules  on  the  subject  of  express  contracts  already 
discussed.  If  there  is  no  express  contract  since  this  liability 
exists  by  reason  of  a  genuine  though  not  an  express  agreement, 
it  is  a  genuine  implied  contract."  If  the  services  are  rendered 
at  the  request  of  the  person  for  whom  they  are  rendered,  an 
implied  promise  on  his  part  to  make  reasonable  compensation 
therefor  exists  if  no  express  contract  has  been  made.^  So, 
where  a  board  of  health  directs  one  of  its  members  to  inspect  a 
case  of  diphtheria,  and  such  services  are  not  within  the  official 

1  Lafayette  Ry.  Co.  v.  Tucker,  124  327 ;  citing  Hood  v.  League,  102  Ala. 
Ala.  514;  27  So.  447;  Nichols  v.  228;  14  So.  572;  Wood  v.  Brewer, 
Vinson,    9    Houst.     (Del.)     274;    32      66  Ala.  570. 

Atl.  225;  Palmer  v.  Miller,  19  Ind.  3  Spearman  v.  Texarcana,  58  Ark. 

App.  624;   49  N.  E.  975;   Baxter  v.  348;    22   L.    R.   A.    855;    24    S.    W. 

Knox    (Ky.),  44  S.  W.  972;  Day  v.  883;  Clark  v.  Clark,  46  Conn.  586; 

Caton,  119  Mass.  513;  20  Am.  Rep.  Lockwood  v.  Robbing,  125  Ind.  398; 

347;    Eggleston    v.    Boardman,    37  25  N.  E.  455;  Wadleigh  v.  McDow- 

Mich.  14;  Courier,  etc.,  Co.  v.  Wil-  ell,    102    la.   480;    71    N.    W.    336; 

son   (Neb.),  90  N.  W.  1120;  Gnich-  Coleman  v.  Simpson,  2  Dana   (Ky.) 

tel  V.  Jewell,  59  N.  J.  Eq.  651;  44  166;    Blaisdell  v.  Gladwin,  4  Cush. 

Atl.    1099;    affirming   41    Atl.    227;  (Mass.)   373;  Ten  Eyck  v.  R.  R.,  74 

Bonynge  v.  Field,  81  N.  Y.  159.  Mich.  226;   16  Am.  St.  Rep.  633;  3 

2  "Where,  in  the  absence  of  an  L.  R.  A.  378;  41  N.  W.  905;  Ryans 
express  contract,  valuable  services  v.  Haspes,  167  Mo.  342;  67  S.  W. 
are  rendered  by  one  person  to  an-  285;  Emeiy  v.  Cobbey,  27  Neb.  621; 
other  which  are  knowingly  accepted,  43  N.  W.  410;  Masterson  v.  Mas- 
the  law  will  imply  a  promise  to  pay  terson,  121  Pa.  St.  605;  15  Atl. 
a  fair  and  reasonable  compensation  652;  Miller  v.  Tracy,  86  Wis.  330; 
for    such    services."     McFarland    v.  56  N.  W.  866. 

Dawson,  125  Ala.  428,  432;  29  So. 
'J'4 


11  TO  PAGE    OiSr    CONTRACTS. 

duty  of  the  member  of  such  board,  the  person  rendering  such 
services  may  recover  a  reasonable  compensation  therefor.* 
Where  a  director  of  a  corporation,  at  the  request  of  the  board  of 
directors,  attends  to  obtaining  a  right  of  way,  and  in  doing  so 
does  work  outside  of  his  official  duty  as  director,  the  corporation 
is  liable  to  him  for  reasonable  compensation.^  So,  where  A 
acted  as  body  servant  and  nurse  for  B  for  several  years,  and  B 
without  making  any  express  contract  for  paying  A  any  certain 
amount  of  wages,  had  promised  to  provide  for  him  handsomely, 
A  was  allowed  to  recover  a  reasonable  compensation  for  work 
done  by  him  for  B.**  If  an  attorney  renders  services  without 
any  express  agreement  as  to  the  amount  of  compensation  there- 
for, he  is  entitled  to  recover  a  reasonable  compensation  for  the 
work  done.^  A  previous  request  made  by  A  to  B,  to  perform 
services  for  A  makes  A  liable  therefor  even  though  he  does  not 
make  an  express  promise  to  pay  B  therefor.*  Thus  where  a 
managing  editor  is  requested  by  the  editor  in  chief  to  do  the 
work  of  the  latter  a  promise  on  the  part  of  the  editor  in  chief  to 
pay  him  is  implied.^  A  request  for  work  so  made  as  to  show 
that  the  party  making  it  does  not  intend  compensation  therefor 
creates  no  implied  liability.     Thus  A  owned  a  building  which 

4  Spearman  v.  Texarcana,  58  Ark.  8  Weeks  v.  North  Sidney,  26  N.  S. 
348;  22  L.  R.  A.  855;  24  S.  W.  883.  396;     Spearman    v.    Texarcana,    58 

5  Ten  Eyck  v.  R.  R.,  74  Mich.  226;  Ark.  348;  22  L.  R.  A.  855;  24  S.  W. 
16  Am.  St.  Rep.  633 ;  3  L.  R.  A.  883 ;  Sonoma  County  v.  Santa  Rosa, 
378;  41  N.  W.  905.  A  subsequent  102  Cal.  426;  36  Pac.  810;  Ten  Eyck 
fair  and  reasonable  agreement  be-  v.  R.  R._,  74  Mich.  226;  16  Am.  St. 
tween  such  director  and  the  board  of  Rep.  633;  3  L.  R.  A.  378;  41  N.  W. 
directors,  fixing  the  amount  of  such  905;  Blaisdell  v.  Gladwin,  4  Cush. 
compensation,  is  therefore  enforce-  (Mass.)  373;  Schwab  v.  Pierro,  43 
able.  Minn.  520;  46  N.  W.  71;  Pangborn 

GRyans  v.  Haspes,   167  Mo.  342  >  v.  Phelps,  63  N.  J.  L.  346;   43  Atl. 

67  S.  W.  285.     In  such  action,  sums  977;  Fuller  v.  Mowry,  18  R.  I.  424; 

of  money  given  by  B  to  A  as  gratui-  28  Atl.  606;  Bonner  v.  Bradley,  14 

ties    cannot    be    deducted    from    the  Tex.  Civ.  App.  234;  36  S.  W.  1014; 

amount  which  A  should  recover.  Isham  v.  Parker,   3  Wash.  755;   29 

7  Miller  v.  Tracy,  86  Wis.  330 ;  56  Pac.  835. 

N.  W.  866.     If  he  is  retained  by  an  o  Pangborn  v.  Phelps,  63  N.  J.  L. 

administrator  to  do  work  for  the  es-  346 ;  43  Atl.  977. 
tate    he  may  recover   from  the   ad- 
ministrator personally. 


IMPLIED    CONTRACTS    AND    QUASI-CON TKACTS.  1171 

was  being  erected  for  him  by  B,  the  chief  contractor.  X,  a  sub- 
contractor, was  doing  the  plastering  under  his  contract  with  B. 
X  plastered  one  room  which  he  claimed  that  B  was  not  bound 
by  his  contract  with  A  to  have  plastered.  A  knew  that  he  was 
plastering  such  room  and  demanded  that  he  plaster  it,  claiming 
that  B  was  bound  by  his  contract  with  A  to  have  it  plastered. 
Even  if  A  was  wrong  in  his  contention,  he  was  not  liable  to  X 
on  an  implied  contract.^** 

§773.    Public  officers. 

Eeasons  of  public  policy  make  the  case  of  the  public  officer  an 
exception  to  the  general  rule  that  a  request  for  the  rendition  of 
services  implies  a  promise  to  pay  therefor.  If  the  law  fixes  a 
specified  compensation  for  certain  services  to  be  rendered  by  a 
public  officer,  he  cannot  recover  extra  compensation  for  such 
services  even  if  they  are  reasonably  worth  it.^  So  after  having 
performed  the  services  he  has  no  right  of  action  for  additional 
compensation  on  the  ground  that  the  compensation  was  less  than 
the  services  were  worth.^  If  the  law  makes  no  provision  for 
compensation  for  any  or  all  of  the  official  duties  of  a  publio 
officer  he  can  make  no  charge  therefor.  ^  If  he  is  not  willing  to 
perform  such  work  for  nothing,  he  should  resign.  If  he  collects 
compensation  from  the  municipality  for  which  he  acts,  which  is 


loHartnett  v.  Christopher,  61  Mo.  119  Cal.  686;  52  Pae.  35;  Ex  parte 

App.  64.  Harrison,    112    Ind.   329;    14   N.   E. 

1  Brown  v.  United  States,  9  How.  225;   Hamil  v.  Carroll  County,   106 

(U.  S.)   487;  Kreitz  v.  Behrensmey-  la.  523;   69  N.  W.  1122;   71  *N.  W. 

er,  149  111.  496;  24  L.  R.  A.  59;  36  425:    Gardner   v.   Newaygo   County, 

N.    E.    983;    Moore   v.    Independent  110  Mich.  94;  67  N.  W.  1091. 
District,  55  la.  654;   8  N.  W.  631;  3  Torbert    v.    Hale    County,     131 

Rogers  v.  Simmons,  155  Mass.  259;  Ala.    143;     30    So.    453;     Marshall 

29  N.  E.  580;  O'Shea  V.  Kavanaugh,  County   v.   Johnson,    127   Ind.   238; 

65  Neb.  639;  91  N.  W.  578;  State  v.  26  N.  E.  821;  Tippecanoe  County  v. 

Meserve,    58    Neb.    451;    78    N.    W.  Barnes,  123  Tnd.  403;  24  N.  E.  137; 

721;   Clark  v.  Lucas  County,  58  O.  Twinam   v.    Lucas   County.    104    la. 

S.  107;  50  N.  E.  356.  2.31;  73  N.  W.  473;  State  v.  Brown, 

2Mullett    V.    United    States.    150  146  Mo.  401;   47  S.  W.  .504;  Crock- 

U.  S.   566;   Irwin  v.   Yuba   County,  er  v.  Brown  County,  35  Wis.  284. 


1172  PAGE    ON    CONTRACTS. 

not  authorized  by  law,  he  may  be  compelled  to  refund.*  Thus 
a  statute  authorized  the  appointment  of  a  commissioner  to  re- 
vise the  statutes,  but  made  no  provision  for  his  compensation- 
He  has  no  right  of  action  for  the  reasonable  value  of  his  ser- 
vices.^ However,  it  has  been  held  that  an  attorney  is  not  a  pub-- 
lic  officer  in  this  sense.  Hence  if  the  statute  authorizes  the 
county  to  employ  an  attorney  in  disbarment  proceedings  and 
does  not  provide  for  compensation,  he  may  nevertheless  recover 
a  reasonable  compensation.^ 

§774.     Elements  of  implied  request. 

If  the  person  for  whom  services  of  a  kind  usually  made  the 
subject  of  charge  are  rendered  knows  of  their  rendition,  he  is 
liable  therefor  though  he  has  made  no  express  request,  in  the 
absence  of  special  circumstances  negativing  his  liability.^  If 
the  person  for  whom  the  work  is  done  knows  that  it  is  being  done 
and  that  the  person  doing  expects  compensation  from  the  person 
for  whom  it  is  done,  and  believes  that  such  compensation  will  be 
made,  and  the  latter  does  nothing  to  correct  such  impression,  he 
is  liable  for  the  work  thus  done.^  In  the  absence  of  an  express 
previous  request  it  is  necessary  that  the  person  for  whom  the 
work  is  done  should  know  that  it  is  being  done  and  further  that 
it  is  being  done  for  his  benefit  and  also  upon  his  liability.  If  A 
employs  B  to  do  certain  work,  and  B  employs  C  to  aid  him 
therein,  no  implied  contract  between  A  and  C  exists,  even  if  A 
knows  that  C  is  doing  the  work  and  that  A  will  ultimately  re- 
ceive the  benefit  thereof,  since  A  is  liable  over  to  B  on  his  con- 
tract for  the  work  thus  done.^  Thus  where  a  railroad  lets  a  con- 
tract for  grading  to  B  and  B  employs  C  to  work  thereon,  these 

4  St.    Croix    County    v.    Webster,  i  Lewis    v.     Meginniss,     30    Fla. 
Ill  Wis.  270;   87  N.  W.  302.  419;  12  So.  19. 

5  Harris  v.  State,  9  S.  D,  453;  69  2  Riser  v.  Holladay,  29   Or.   338; 
N.  W.  825.  45  Pac.  759. 

6  Hyatt  V.  Hamilton  County,  121  s  Petterson  v.  Ry.,   134  Cal.  244; 
la.  292;  63  L.  E.  A.  614;  96  N.  W.  66  Pac.  304. 

855. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1173 

facts  do  not  give  C  a  right  of  action  against  the  railroad.* 
Hence  the  fact  that  C  believed  that  A  was  employing  him  is  im- 
material as  affecting  A's  liability  if  A  did  not  know  of  such  be- 
lief and  did  not  so  act  as  to  justify  such  belief.^ 

§775.     Acceptance  of  work  and  labor. 

If  the  services  are  accepted  voluntarily,  a  previous  request  is 
not  necessary  to  the  creation  of  liability.^  Thus  if  a  litigant 
knows  that  a  stenographer  is  taking  and  transcribing  testimony 
during  a  trial  for  the  use  of  the  attorney  of  the  litigant,  the  lat- 
ter, on  accepting  the  benefit  of  such  services  is  liable  therefor." 
So  if  A  nurses  and  cares  for  B,  and  B  accepts  such  services  he  is 
liable  therefor.^  If  A  renders  services  on  a  farm  owned  in  part 
by  B  and  in  part  by  C,  and  such  services  are  rendered  for  the 
benefit  of  both,  and  A  expects  to  be  paid  by  both,  B  and  C  are 
jointly  liable  for  such  services  if  they  accept  them  knowing  of 
A's  belief.*  So  if  water  is  furnished  to  a  village,  and  the 
authorities  accepting  it  were  authorized  to  contract  therefor, 
and  were  not  required  by  law  to  make  contracts  in  a  specified 
form,  the  village  is  liable  for  a  reasonable  comj)ensatioii  there- 
for." 

The  principle  that  voluntary  acceptance  of  services  creates  a 
liability  to  pay  therefor  often  takes  us  into  cases  of  constructive 
contract,  since  there  is  often  no  enforceable  contract  in  fact  be- 
tween the  parties. 

4Petterson  v.  Ry.,   134  Cal.  244;  Works  Co.  v.  Port  Jervis.  151  N.  Y. 

66  Pac.  304.  Ill;  45  N.  E.  388;  Moffitt  v.  Glass, 

sPetterson  v.  Ry.,   134  Cal.  244;  117  N.  C.  142;  23  S.  E.  104;  Riser 

66  Pac.  304.  v.   Holladay,    29    Or.    338;    45    Pac. 

1  Nichols     V.     Vinson,     9     Houst.  '   759;  Wheeler  v.  Hall,  41  Wis.  447. 

(Del.)    274;   32  Atl.  225;  Rockford,  2  Palmer  v.  Miller,    19   Ind.  App. 

etc.,  Ry.  V.  Wilcox,  66  111.  417;  Pal-  624;  49  N.  E.  975. 

mer  v.  Miller,  19  Ind.  App.  624;  49  3  Baxter    v.    Knox    (Ky.),    44    S. 

N.   E.   975;    Shoemaker   v.   Roberts,  W.   972. 

103  la.  681;  72  N.  W.  776;  Viley  v.  *  Snyder  v.  Neal,   129  Mich.  692; 

Pettit,  96  Ky.  576;   29  S.  W.  438;  89  N.  W.  588. 

Baxter   v.    Knox    (Ky.),    44    S.    W.  5  Port  Jervis  Water  Works  Co.  v. 

972;  Snyder  v.  Neal,  129  Mich.  692;  Port  Jervis,   151   N.  Y.   Ill;   45  N. 

89  N.  W.  588;   Port  Jervis  Water  E.  388. 


1174  PAGE    ON    CONTRACTS. 

§776.     Acceptance  of  benefits  not  optional. 

This  rule,  however,  applies  only  where  the  party  for  whom 
the  services  are  rendered  is  free  to  take  their  benefit  or  to  reject 
it.  If  the  services  are  of  such  nature  that  he  has  no  choice  but 
to  accept  them,  he  cannot  be  said  to  accept  them  voluntarily. 
Such  acceptance,  therefore,  creates  no  liability.^  Thus  if  an 
attorney  is  retained  by  unauthorized  agents  of  a  church  to  pre- 
fer charges  against  a  clergyman,  and  he  prefers  such  charges 
and  prosecutes  the  case  and  procures  the  suspension  of  such 
clergyman  from  the  ministry  by  reason  of  such  charges,  his 
services  are  not  so  accepted  by  the  church  as  to  make  it  liable  to 
him,  by  a  resolution  that  by  reason  of  such  suspension,  such 
clergyman  should  be  required  to  leave  the  parsonage  owned  by 
the  church.^  So  one  who  voluntarily  acts  as  janitor  cannot  re- 
cover though  the  occupant  of  the  building  is  benefited  thereby.' 
So  if  work  is  done  in  putting  a  heating  plant  in  a  building  under 
a  special  contract,  and  the  contract  is  not  performed  and  what 
has  been  done  cannot  be  removed  without  injury  to  the  building, 
no  recovery  can  be  had  for  such  work.*  So  if  a  building  has 
been  repaired,^  or  painted,^  or  if  a  stone  base  has  been  built 
under  an  iron  fence,  and  the  fence  has  been  painted,'^  or  a  bridge 
has  been  constructed,^  or  a  street  laid  down,^  and  the  contract 
under  which  the  services  have  been  rendered  is  either  unenforce- 
able," or  has  not  been  performed,"  the  owner  of  such  real  prop- 

iParshley  v.  Church,  147  N.  Y.  e  Qinther  v.  Shultz,  40  O.  S.  104. 
583;  30  L.  E.  A.  574;  42  N.  E.  15;  7  Zottman  v.  San  Francisco,  20 
Riddell  V.  Ventilating  Co.,  27  Mont.  Cal.  96;  81  Am.  Dec.  96. 
44;  69  Pae.  241  (decided  under  a  « Buchanan  Bridge  Co.  v.  Camp- 
statute  which  substantially  re-  bell.  60  0.  S.  406 ;  54  N.  E.  372. 
enacts  the  Common  Law  rule  as  far  »  Detroit  v.  Paving  Co..  36  ilich. 
as  the  particular  case  is  concerned).  335. 

2  Parshley  v.  Church,  147  N.  Y.  lo  Zottman  v.  San  Francisco,  20 
583;  30  L.  R.  A.  574;  42  N.  E.  15.  Cal.  96;  81  Am.  Dec.  96;  Buchanan 

3  Cleveland  County  v.  Seawell,  3  Bridge  Co.  v.  Campbell,  60  O.  S. 
Okla.  281;  41  Pac.  592.  406;  54  N.  E.  372. 

4  Riddell  V.  Ventilating  Co.,  27  u  Ginther  v.  Shultz,  40  0.  S. 
Mont.  44;  09  Pac.  241.  104. 

5  Davis  V.  School  District,  24  Me. 
349. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1175 

erty  has  no  choice  but  to  make  use  of  the  property  upon  which 
such  work  has  been  done,  and  therefore  his  making  use  of  such 
property  is  not  an  acceptance  of  such  services  so  as  to  create  a 
liability  to  pay  therefor.  Some  cases,  however,  do  not  seem  to 
enforce  this  distinction.  Thus  where  A  placed  a  bath-tub,  wash- 
bowl and  other  plumbing  in  B's  house  under  a  contract  with 
whose  terms  he  did  not  comply,  and  A  makes  use  of  the  house 
with  such  plumbing  in  it,  A  is  liable  for  such  plumbing  in  quan- 
tum meruit.^'  So  where  A  constructs  a  system  of  waterworks 
for  a  city  under  a  contract  to  furnish  one  with  a  capacity  of 
two  hundred  and  fifty  thousand  gallons  a  day  and  the  system 
actually  furnished  has  a  capacity  of  only  fifty  thousand  gallons 
a  day,  and  the  city  makes  use  of  the  system  actually  constructed, 
it  is  liable  therefor.^^  But  in  these  last  cases  it  may  be  that 
under  the  particular  facts,  the  party  accepting  the  services  may 
be  held  to  have  had  the  option  to  accept  or  not.  So  if  A  renders 
services  in  saving  B's  property  without  B's  knowledge  or  assent, 
A  cannot  recover  therefor ;  and  the  fact  that  B  retains  and  uses 
the  property  thus  saved  is  not  such  an  acceptance  of  A's  services 
as  to  make  B  liable  therefor.^*  Thus  where  A  voluntarily  re- 
paired a  broken  levee  on  B's  land  without  B's  request,  A  cannot 
recover  from  B  for  such  work.^^  So  in  a  leading  case,  A  was 
about  to  burn  over  some  stubble,  and  he  notified  B,  whose  wheat 
was  stacked  near  the  field  to  be  burned  over,  to  remove  such 
wheat.  B  promised  to  do  so,  but  neglected  it.  While  the  stub- 
ble was  burning  the  wind  changed,  and  B's  wheat  was  threatened 
with  destruction.  A  saved  it,  B  knowing  nothing  of  the  matter 
until  afterAvards.  It  was  held  that  A  could  not  recover  from  B 
for  his  services.^" 

12  Gross  V.  Creyts.  130  Mich.  672;  is  Xew  Orleans,  etc..   Ry.  v.  Tur- 
90  N.  W.  689.  can.  46  La.  Ann.  155;  15  So.  187. 

13  Sherman  V.  Connor.  88  Tex.  35 ;  ib  Bartholomew     v.     Jackson,     20 
29  S.  W.  1053.  Johns.     (K    Y.)    28;     11    Am.    Dec. 

14  Watson  V.  Ledoux.  8  La.  Ann.  237. 
68. 


1176  PAGE    ON    CONTEACTS. 

§777.     Services  rendered  as  gratuity. 

If  A  renders  services  for  B,  and  A  does  not  intend  at  the  time 
of  their  rendition  to  make  any  charge  therefor,  and  B  knows  of 
such  intention,  A  cannot  subsequently,  upon  changing  his  mind, 
recover  for  such  services  as  upon  an  implied  contract,  even  if 
such  work  was  done  with  B's  knowledge  or  at  B's  request.^  The 
operation  of  this  principle  is  clearest  where  the  services  are  ren- 
dered Tinder  an  express  agreement  that  no  charge  shall  be  made 
therefor.  If  A  performs  services  for  B  under  an  express  agree- 
ment tha*  they  are  to  be  gratuitous,  he  cannot  subsequently  re- 
cover therfefor.^  The  principle  is  by  no  means  limited  to  cases 
of  express  agreement  that  no  compensation  shall  be  made,  but 
extends  to  cases  where  from  the  acts  of  the  parties  and  the  sur- 
rounding circumstances  it  is  apparent  that  the  party  by  whom 
the  services  were  rendered  did  not  intend  to  charge  therefor  and 
the  party  for  whom  they  were  rendered  accepted  them  in  re- 
liance upon  such  intention.  Thus  where  services  are  rendered 
solely  because  of  friendship  and  mutual  accommodation,^  as 
where  a  real  estate  broker  and  an  attorney  interchange  services 
for  accommodation,*  or  one  renders  services  as  attorney  in  fact, 
both  parties  knowing  that  the  services  are  to  be  gratuitous,^  or 

iLevy   V.   Gillis,    1   Penn.    (Del.)  221;  Potter  v.  Carpenter,  71  N.  Y. 

119;   39  Atl.  785;   Evans  v.  Henry,  74;   Forbis  v.  Inman,  23  Or.  68;  31 

66  111.  App.  144;  Hill  v.  Hill,  121  Pac.  204;  Hoffeditz  v.  Iron  Co.,  141 
Ind.  255;  23  N.  E.  87;  McFadden  v.  Pa.  St.  58;  21  Atl.  764;  Crampton 
Ferris,  6  Ind.  App.  454;  32  N.  E.  v.  Seymour,  67  Vt.  393;  31  Atl. 
107;  Tank  v.  Rohweder,  98  la.  154;  889;   State  v.  St.  Johnsbury,  59  Vt. 

67  N.  W.  106;  Cole  v.  Clark,  85  Me.  332;  10  Atl.  531;  Gross  v.  Cadwell, 
336;  21  L.  R.  A.  714;  27  Atl.  186;  4  Wash.  670;  30  Pac.  1052. 

Allen  V.  Allen,  60  Mich.  635;  27  N.  2  Sidway  v.  Live  Stock  Co.,    163 

W.  702 ;  Cicotte  v.  Church,  60  Mich.  Mo.  342 ;  63  S.  W.  705. 

552;  27  N.  W.  682;  Woods  v.  Ayres,  3  Tank  v.  Rohweder,  98   la.    154; 

39    Mich.    345;    33    Am.    Rep.    396;  67  X.  W.  106;  Rabasse's  Succession, 

Buelterman  v.  Meyer,  132  Mo.  474;  49  La.  Ann.  1405;  22  So.  767. 

34  S.  W.  67;  Woods  v.  Land,  30  Mo.  *  Gross  v.  Cadwell,  4  Wash.  670; 

App.   176;    Disbrow  v,  Durand,   54  30  Pac.  1052. 

N.  J.  L.  343;  33  Am.  St.  Rep.  678;  s  Royston    v.    McCully     (Tenn.), 

24     Atl.     545;     Doyle     v.     Trinity  52  L.  R.  A.  899;  59  S.  W.  725. 

Church,   133   N.  Y.   372;    31  N.   E. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1177 

one  renders  political  services  for  a  friend  in  a  campaign/  or 
one  friend  indorses  a  note  for  another,  the  note  being  ultimately 
paid  out  of  the  maker's  property  and  no  loss  resulting  to  the  in- 
dorser  by  reason  thereof/  no  recovery  can  be  had.  If  services 
are  rendered  without  the  intent  of  making  a  charge  therefor,  or 
of  creating  a  legal  liability  thereby,  the  fact  that  the  person  ren- 
dering them  did  so  in  the  hope  that  the  party  receiving  them 
would  be  grateful  therefor,  and  would  manifest  such  gratitude, 
in  some  substantial  form,  such  as  a  gift  or  legacy,  does  not  give 
to  the  party  rendering  such  services  a  right  to  recover  a  reason- 
able compensation  therefor  if  such  hopes  are  disappointed.®  So 
services  rendered  for  each  other  by  persons  who  are  under  con- 
tract to  intermarry,''  as  where  one  party  furnishes  board  to  the 
other,^**  cannot  be  recovered  for  upon  breach  of  the  contract  to 
marry,  as  on  an  implied  contract.  The  remedy,  if  any,  is  by  an 
action  for  breach  of  the  express  promise  to  marry,  and  not  by  an, 
action  in  quantum  meruit.  So  if  a  woman  believes  a  man  to  be 
single,  and  marries  him  and  keeps  house  for  him,  she  cannot  re- 
cover for  services  thus  rendered,  when  she  discovers  that  he  is 
already  married.^^  Where  a  man  marries  a  woman  believing 
her  single,  and  she  was  already  married,  he  cannot  recover  on  an 
implied  contract  for  furnishing  her  with  board,  lodging,  medical 
attendance  and  the  like.  His  damages  of  this  sort  are  insepar- 
able from  his  claim  for  damages  for  deceit ;  and  accordingly  will 
not  survive  against  her  estate.^^     Where  no  such  liability  exists 


6Le%y  V.   Gillis,    1    Penn.    (Del.)  388;   56  Am.  St.  Rep.  4.30;   36  Atl. 

119;  39  Atl.  785.  623. 

7Hagar     v.     Whitmore,     82     Me.  lo  Clary  v.  Clary,  93  Me.  220;  44 

248;    19    Atl.    444.     (The    indorser  Atl,  921. 

subsequently  sought  to  recover  com-  n  Cooper    v.    Cooper,     147    Mass. 

pensation  for  ever  having  incurred  370;  9  Am.  St.  Rep.  721;  17  N.  E. 

liability.)  892.     Contra,     Fox    v.     Dawson,     8 

sOsbourn    v.    Governors,    etc.,    2  Mart.    (0.  S. )    (La.)   94;  Higgins  v. 

Stra.    728;    Guenther    v.    Birkicht's  Breen,  9  Mo.  497. 

Administrator,  22   Mo.   439;    Castle  See  §  533. 

V.     Edwards,     63     Mo.     App.     564;  12  Payne's  Appeal,  65  Conn.  397; 

Swires   v.   Parsons,    6    Watts.   &    S.  48   Am.  St.  Rep.  215;    33   L.  R.  A. 

(Pa.)    357.  418;   32  Atl.  948. 

9  La  Fontain  v.  Hayhurst,  89  Me. 


11Y8  PAGE    ON    CONTRACTS. 

a  subsequent  note  payable  to  the  order  of  the  maker,  not  indorsed 
by  him,  but  delivered  to  the  person  performing  such  services 
creates  no  liability/^  Board  and  lodging  furnished  to  one  who 
comes  on  invitation  as  a  guest  are  understood  to  be  gratuitous 
and  no  recovery  can  be  had  therefor.^*  By  statute  in  Kentucky 
no  recovery  can  be  had  for  board  and  lodging  unless  furnished 
by  the  keeper  of  a  tavern  or  house  of  private  entertainment  or 
unless  under  a  contract  therefor/'^  So  where  A  does  work  on 
land  which  he  claims  in  good  faith  as  his  own,  recovery  therefor 
from  the  real  owner,  after  the  claimant  is  defeated  by  the  real 
owner  in  an  action  for  the  possession  of  the  real  property,  cannot 
be  had.^^  He  may,  however,  set  off  the  increase  in  the  value  of 
the  property  resulting  from  his  improvements  against  the 
amount  due  from  him  for  rents  and  profits."  This  right  of  set- 
off is  founded  on  "  broad  and  growing  principles  of  equity,"^* 
and  was  originally  an  innovation  at  Common  Law.  The  Civil 
Law  allowed  compensation  for  the  value  of  the  improvements 
less  the  use  of  the  land."  This  rule  of  the  Civil  Law  was 
adopted  by  equity.  Equity  required  the  real  owner  to  do 
equity  if  he  was  obliged  to  ask  aid  of  equity  to  recover  his  prop- 
erty, and  to  make  compensation  for  the  increase  in  value  due  to 

i3Rabasse's     Succession,     49     La.  Jones  v.  Merrill,  113  Mich.  433;  67 

Ann.  1405;  22  So.  767.  Am.   St.  Rep.  475;   71   N.   W.   838; 

14  Action  by  husband:  invitation  Tice  v.  Fleming,  173  Mo.  49;  96 
given  by  his  wife  to  her  sister,  Har-  .Am.  St.  Rep.  479;  72  S.  W.  689; 
rison  v.  McMillan,  169  Tenn.  77;  Jackson  v.  Loomis,  4  Cow.  (N.  Y.) 
69  S.  W.  973.  168;    15   Am.   Dec.    347;    Estate   of 

15  Hancock  v.  Hancock's  Adminis-  Gleeson,  192  Pa.  St.  279;  73  Am. 
trator   (Ky.),  69  S.  W.  757.  St.  Rep.  808;  43  Atl.  1032;  Putnam 

16  Dudley  v.  Johnson,  102  Ga.  1;  v.  Tyler.  117  Pa.  St.  570;  12  Atl. 
29  S.  E.  50;  Lunquest  v.  Ten  Eyck,  43;  Dawson  v.  Grow,  29  W.  Va. 
40  la.  213;  Pharr  v.  Broussard,  106  333;  1  S.  E.  564;  Davis  v.  Louk, 
La.    59;     30    So.    296;     Russell    v.  30  Wis.  308. 

Blake,   2   Pick.    (Mass.)    505;    Bon-  is  Tice   v.    Fleming,    173    Mo.    49, 

ner  v.  Wiggins.  52  Tex.  125;  Moore  56;    96  Am.   St.   Rep.  479.   483;    72 

V.  Ligon,   30   W.   Va.   146;    3   S.   E.  S,    W.    689.     See     also    Barton    v. 

672.  Land  Co.,  27  Kan.  634. 

"Potts   V.    Cullum,   68    111.    217;  la  Putnam  v.  Ritchie,  6  Paige  (N. 

Petit  V.  R.   R.,   119  Mich.  492;    75  Y.)   390. 
Am.   St.   Rep.  417;    78  N.   W.   554; 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1179 

the  improvements  placed  thereon  by  the  innocent  claimant.^ 
According  to  the  weight  of  authority,  equity  could  give  no 
further  relief,  than  by  way  of  set-off.  Affirmative  compensa- 
tion could  not  be  had."^  In  other  cases,  however,  equity  has  ig- 
nored the  restriction  to  set-off  and  allowed  compensation  for  im- 
provements to  the  extent  of  the  increase  in  value  due  thereto, 
even  if  they  exceed  the  amount  of  rents  and  profits. ^'"^  Modern 
statutes  known  as  occupying  claimant  acts,  or  betterment  acts, 
have  extended  these  principles  in  specific  classes  of  cases,  ^o 
discussion  of  these  statutes  will,  however,  be  undertaken  here. 
So  one  who  by  mistake  erects  a  house  on  the  land  of  another  can- 
not have  compensation  therefor. ^^  The  right  of  recovery  exists 
only  in  favor  of  one  who  in  good  faith  believes  himself  to  be  the 
owner.  Thus  a  tenant  for  life,^*  or  for  years,^^  cannot,  in  any 
form  of  action,  have  compensation  for  increase  in  value  due  to 
improvements  made  by  him.  One  who  performs  work  and  labor 
upon  his  own  property  cannot  hold  others  liable  therefor  upon 
an  implied  Contract.  He  must  be  taken  as  having  done  the  work 
for  his  own  benefit,  whatever  his  secret  intention  may  have  been. 
Thus  where  A's  cattle  were  sold  at  auction,  and  the  title  thereto 
did  not  pass  until  possession  was  delivered  and  the  money  paid 
or  security  given,  A  cannot  recover  from  the  purchaser  for  keep- 
ing such  cattle  between  the  time  of  the  auction  and  the  time  of 


20  Green  v.  Biddle,  8  Wheat.    (U.  34  S.  E.  674;  Effinger  v.  Kenney,  92 

S.)    1;   Williams  v.  Vanderbilt,   145  Va.  245;  23  S.  E.  742. 

111.  238;    36  Am.  St.  Rep.  486;   21  23  Dutton  v.  Ensley,  21  Ind.  App. 

L.  R.  A.  489;  34  N.  E.  476;  Parsons  46;   69  Am.  St.  Rep.  340;  51  N.  E. 

V.  Moses,  16  la.  440;  Sale  v.  Crutch-  380. 

field,  8  Bush.    (Ky.)    636;   Miner  v,  24  Springfield    v.    Bethel,    90    Ky. 

Beekman,  50  N.  Y.  337.  593;    14   S.   W.   592;    Moore  v.   Si- 

2iMcCloy  V.  Arnett,  47  Ark.  445;  monson,  27  Or.  117;  39  Pac.  1105. 

2   S.   W.    71;    Byers  v.    Fowler,    12  25  Jones  v.  Hoard,  59  Ark.  42;  43 

Ark.  218;  54  Am.  Dec.  271;  Dudley  Am.   St.    Rep.    17;    26   S.    W.    193; 

V.    Johnson,    102    Ga.    1;    29    S.    E.  Windon  v.  Stewart,  43  W.  Va.  711; 

50;  Jackson  v.  Loorais,  4  Cow.   (N.  28  S.  E.   776;    Willoughby  v.   Fur- 

Y.)    168;  15  Am.  Dec.  347;  Jones  v.  nishing   Co.^    93    Me.    185;    44    Atl. 

Perry,  10  Yerg.  (Tenn.)  59;  30  Am.  612;  Wolf  v.  Holton,  92  Mich.  136; 

Dec.  430.  52  N.  W.  459. 

22  Taylor  v.  James,  109  Ga.  327; 


1180  PAGE    ON    CONTEACTS. 

giving  security. ^^  A  cotenant  in  possession  cannot  recover  com- 
pensation from  his  cotenants  for  v^^ork  done  in  taking  care  of  the 
common  property  as  in  collecting  the  rents."^  The  principle 
that  no  recovery  can  be  had  for  services  rendered  by  A,  whereby 
B  is  benefited  if  A  does  not  intend  to  make  a  charge  against  B 
therefor,  applies  even  in  cases  where  A  believed  when  he  per- 
formed the  services,  that  he  was  bound  by  a  contract  with  X,^* 
or  by  some  positive  rule  of  law"^  to  render  such  services.  Thus 
Avhere  A  believing  that  he  is  doing  work  under  his  contract  with 
X  does  work  which  B  is  under  contract  to  do,  A  cannot  recover 
from  B.^"  So,  where  A  is  employed  by  the  government  to  trans^ 
ix)rt  mail,  and  he  does  not  only  the  work  which  is  required  by 
his  contract  with  the  government,  but  also  work  which  the  rail- 
road which  hauls  the  mail  is  bound  to  do  by  reason  of  its  con- 
tract with  the  government,  he  cannot  recover  from  the  railroad 
where  he  does  this  work,  thinking  that  he  is  bound  by  his  con- 
tract with  the  government  to  do  it.^^  So,  a  county  auditor  can- 
not recover  from  the  treasurer  where  the  auditor  has  made  cer- 
tain tax  apportionments  and  statements  which  it  was  the  legal 
duty  of  the  treasurer  to  make,  where  both  auditor  and  treasurer 
are  under  the  impression  that  it  is  the  auditor's  duty  to  make 
such  apportionment  and  statements.^"  Whether  a  public  cor- 
poration or  an  individual  furnished  support  to  a  pauper  can 
recover  therefor  from  such  pauper  if  he  proves  to  have  property, 
or  subsequently  acquires  property,  depends  in  the  absence  of 
statute  on  whether  the  pauper  has  been  guilty  of  any  fraud  in 
inducing  such  person  to  furnish  such  support.  If  he  has  not 
been  guilty  of  fraud,  he  is  not  liable  in  the  absence  of  statute.^* 

26  Chalmers   v.   McAuley,    68    Vt.  si  Columbus,  etc.,  Ry.  v.  Gaffney, 

44;  33  Atl.  767.  65  O.  S.  104;  61  N.  E.  152;  Johnson 

27Switzer    v.    Switzer,    57    N.    J.  v.    Ey.,    69    Vt.    521;    38    Atl.    267. 

Eq.  421;  41  Atl.  486.  Contra,  McClaiy  v.  R.  R.,  102  Mich. 

28  Columbus,  etc.,  Ry.  v.  GaflFney,  312;   60  N.  W.  695. 

65  0.  S.  104;   61  N.  E.   152;  John-  32Keough    v.    Wendelschafer,  73 

son  V.  Ry.,  69  Vt.  521;  38  Atl.  267.  Minn.  352;   76  N.  W.  46. 

29  Keough   V.    Wendelschafer.    73  33  Kennebunkport    v.     Smith,  22 
Minn.  352;  76  K  W.  46.  Me.    445;    Deer    Isle    v.    Eaton.  12 

soRohr  V.  Baker,  13  Or.  350;    10      Mass.   327;   Charleston  v.   Hubbard, 
Pac.  627.  9  N.  H.  195;  Albany  v.  McNamara, 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1181 

Thus,  if  a  pauper  subsequently  acquired  property,  he  is  not 
liable  for  support  furnished  to  him  by  a  public  corporation.^* 
If,  however,  the  pauper  has  received  such  support  through 
fraudulent  representations  as  to  his  financial  condition,  the  per- 
son furnishing  such  support  has  been  allowed  to  recover.  Thus, 
where  a  voluntary  charitable  association,  thinking  A  a  pauper 
through  A's  misrepresentations,  supported  A,  and  A  promised  to 
make  a  will  in  favor  of  such  association,  when  it  began  to  sus- 
pect that  A  was  not  in  need  of  support,  and  A  subsequently  re- 
voked the  will  made  in  jjerformance  of  this  contract  and  made 
another  will,  it  was  held  that  equity  could  not  give  specific  per- 
formance of  a  promise  to  make  a  will,  as  the  consideration  was  a 
past  consideration,  but  that  the  voluntary  association  could  re- 
cover for  the  support  furnished. ^^  In  some  jurisdictions  the 
statute  specifically  provides  for  a  recovery  against  a  pauper  for 
support  furnished,  if  such  pauper  has  or  subsequently  acquires, 
property.^^  A  right  of  action  against  one  to  whom  support  has 
been  furnished  as  a  pauper  is  limited  by  the  statute  giving  such 
right.  Thus  a  statute  giving  a  right  of  action  against  certain 
relatives  who  were  primarily  liable  for  the  support  of  a  pauper 
does  not  give  a  right  of  action  against  such  pauper.^^  Under  a 
constitutional  provision  that  no  special  legislation  shall  be  made 
with  reference  to  the  estates  of  persons  under  disability,  an  in- 
sane pauper  can  not  be  required,  on  acquiring  property,  to  pay  a 
greater  sum  for  support  than  one  who  is  not  a  pauper  would 
have  been  obliged  to  pay.^*  Thus,  in  the  absence  of  statute,  the 
estate  of  an  insane  person  is  not  liable  for  support  furnished  if 
there  is  no  special  contract  therefor.^^     In  some  cases,  already 

117  N.  Y.  168;   6  L.  R.  A.  212;   22  se  Cutler  v.  Maker,   41   Me.   594; 

N.   E.  931 ;    Montgomery   County  v.  East    Sudbury  v.    Belknap,    1    Pick. 

Nyce,   161  Pa.  St.  82;   28  Atl.  999;  (Mass.)   512;  Directors  v.  Nyce,  161 

Fairbanks  v.  Benjamin,  50  Vt.  99.  Pa.  St.  82;  28  Atl.  999. 

34  Deer    Isle    v.    Eaton,    12    Mass.  37  Bremer  County  v.  Curtis,  54  la. 
327;    Charleston   v.   Hubbard,   9  N.  72;  6  N.  W.  135. 

H.  195.  ssSchroer  v.  Asylum,  —  Ky.  — ; 

35  Eggers   V.   Anderson,   63   N.   J.      68  S.  W.  150. 

Eq.  264;   55  L.  R.  A.  570;   49  Atl.  39  Montgomery  County  v.  Gupton, 

578.  139  Mo.  303;   39  S.  W.  447;  40  S. 

W.   1094. 


1182  PAGE    ON    CONTEACTS. 

cited,  language  is  used  which  seems  to  support  the  broad  prin- 
ciple that  one  who  performs  services  with  another  without  in- 
tending to  charge  therefor,  cannot  recover  even  if  the  services 
are  of  a  sort  for  which  charges  are  usually  made,  and  the  party 
for  whom  the  services  are  rendered  does  not  know  that  the  other 
party  does  not  intend  to  make  a  charge.  While  this  principle  is 
supported  by  occasional  dicta,  the  cases  in  which  the  point  is 
actually  presented  for  decision,  do  not  go  so  far.  The  secret 
uncommunicated  intention  of  one  party  to  a  contract  is  gen- 
erally of  no  importance,  and  as  it  cannot  be  invoked  to  confer 
legal  rights  u]X)n  him,  it  ought  not  to  be  invoked  to  defeat  legal 
rights.  The  true  rule  seems  to  be  that  one  who  performs  ser- 
vices, such  as  are  usually  the  subject  of  charge,  at  the  request  of 
the  party  for  whom  they  are  performed,  whether  express  or  im- 
plied, is  entitled  to  recover  therefor,  even  if  at  the  time  he  ren- 
der the  services  his  own  secret  intention  was  to  make  no  charge 
for  such  services.*"  Thus,  where  A  performed  work  for  a  shoot- 
ing club  at  the  request  of  the  officers  thereof  in  obtaining  leases 
of  land  for  the  use  of  such  club,  he  can  recover  a  reasonable  com- 
pensation for  such  work,  even  though  he  did  not  intend  to  make 
any  charge  if  the  club  would  buy  his  house,  which  they  did,  and 
employ  him  as  steward  at  a  salary,  which  they  did  not  do."  So, 
a  physician  who  performed  services  which  he  intended  at  the 
time  of  performing  them  to  be  gratuitous,  can  recover  therefor 
irrespective  of  his  intention,  if  the  other  party  was  not  induced 
by  such  intention  to  accept  the  services.*^  Thus,  where  A  has 
rendered  services  for  B,  not  intending  to  charge  therefor,  an  in- 
struction by  a  court  to  the  jury,  in  an  action  by  A  to  recover  a 
reasonable  compensation  to  the  effect  that  A's  intention  to  make 
no  charge  will  not  prevent  recovery  unless  A's  "  conduct  and 
course  of  dealing  was  such  as  to  justify  B  in  believing  and  un- 

40  Thomas  v.  Shooting  Club.  121  there  should  be  nothing  paid,  the 
N.  C.  238;  28  S.  E.  293;  Moore  v.  plaintiff  is  entitled  to  recover." 
Ellis,  89  Wis.  108;  61  N.  W.  291.  Thomas   v.    Shooting   Club,    121    N. 

41  "Here   as  the  implied   promise  C.  238,  240;  28  S.  E.  293. 

is  not  met  by  any  agreement  that  42  Prince  v.  McRae,  84  N.  C.  674. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1183 

derstanding  that  no  charge  was  intended,"  was  held  correct.*' 
Tn  some  cases  the  rights  of  the  parties  who  have  rendered  mu- 
tual services,  which  are  intended  by  the  parties  to  be  reciprocal 
and  gratuitous,  have  been  worked  out  on  a  somewhat  different 
theory.  Thus,  where  A  was  B's  ward  and  lived  in  B's  family, 
and  rendered  services  for  B  and  his  family,  not  expecting  to  be 
paid  for  such  services,  but  expecting  such  services  would  offset 
her  board,  A  can  recover  a  reasonable  compensation  for  such 
services  when  B  has  as  a  matter  of  fact  made  a  charge  against 
her  for  her  board,  and  settled  his  accounts  by  applying  her  estate^ 
in  his  hands  to  the  payment  of  such  account  for  board.**  From 
one  point  of  view,  strict  logic  might  hold  that  A  should  have  re- 
sisted B's  charge  for  board  by  showing  the  circumstances  under 
which  the  board  was  furnished.  A  seems,  however,  to  have 
learned  of  the  facts  too  late  to  resist  the  settlement  of  B's  ac- 
counts, and  her  rights  were  decided  on  the  theory  that  she  had 
performed  the  services  either  under  a  mistake  of  fact  or  by  rea- 
son of  B's  fraud  and  concealment. 

§778.     Services  between  members  of  the  same  family. —  General 
principles. 

Services  rendered  between  members  of  the  same  family  form 
a  common  example  of  services  rendered  as  a  gratuity.  Persons 
who  live  together  as  members  of  the  same  family,  and  render 
personal  services  each  to  the  other,  generally  do  so  from  motives 
of  affection  and  not  because  of  the  expectation  of  a  financial  re- 
ward therefor.  Accordingly,  the  mere  rendition  of  personal 
services  between  persons  so  situated,  does  not  establish  a  liabil- 
ity on  the  part  of  the  person  receiving  such  services  to  make  com- 
pensation to  the  person  rendering  them,  even  though  the  services 
may  be  performed  at  the  express  request  of  the  person  receiving 
the  benefit  thereof  or  may  be  voluntarily  accepted  by  him.* 

43  Moore  v.  Ellis,  89  Wis.  108 ;  61  i  Morris    v.    Simpson.    3    Houst. 

N.  W.  291.  (Del.)    568;    Poole  v.   Bap:gett,    110 

44Boardman   v.    Ward,    40   Minn.  Ga.  822;  .36  S.  E.  86;  Collar  v.  Pat- 

399;    12   Am.   St.   Rep.   749;    42   N.  terson,  137  111.  403;   27  N.  E.  604; 

W.  202.  Stock  V.  Stoltz,  137  111.  349;  27  N". 


118-i  PAGE    ON    CONTRACTS. 

Conversely,  no  recovery  can  be  had  by  the  party  to  such  rela- 
tionship who  furnishes  board  and  lodging."  This  principle  is 
sometimes  spoken  of  as  an  exception  to  the  general  rule  that  lia- 
bility exists  where  services  for  which  compensation  is  usually 
made,  are  rendered  by  one  person  to  another  at  the  previous  re- 
quest of  such  other,  or  are  voluntarily  accepted  by  him.  It  is 
not,  however,  properly  si^eaking,  an  exception  to  that  rule,  be- 
cause such  services  as  are  here  described,  are  not  ordinarily  the 
subject  of  compensation.  It  is  rather  an  illustration  of  the 
principle  that  services  rendered  for  which  the  party  rendering 
them  does  not  expect  to  make  a  charge,  and  accepted  by  the  per- 
son for  whom  they  are  rendered  with  that  understanding,  do  not 
create  a  legal  liability. 

§779.     Who  are  members  of  family. —  Husband  and  wife. 

As  between  husband  and  wife,  there  is  not  only  a  presump- 
tion that  mutual  services  are  gratuitous,^  but  in  many  jurisdic- 
tions an  express  promise  to  make  compensation  therefor  is  unen- 
forceable as  against  public  policy.^  Thus  a  contract  whereby  a 
husband  agrees  to  pay  his  wife  for  services,^  even  if  not  per- 

E.  604;   Hill  v.  Hill,  121  Ind.  255;  404;  17  Atl.  617;  Newell  v.  Lawton, 

23   N.  E.   87;    McGarvey   v.   Roods,  20  R.  I.  307;   38  Atl.  946;   Murphy 

73  la.  363;  35  N.  W.  488;  Cowan  v.  v.  Murphy,  1  S.  D.  316;  9  L.  R.  A. 
Musgrave,  73  la.  384;  35  K  W.  820;  47  N.  W.  142;  Beale  v.  Hall, 
496;  Spitzmiller  v.  Fisher,  77  la.  97  Va.  383;  34  S.  E.  53;  Riley  v. 
289;  42  N.  W.  197;  Coleman  v.  Riley,  38  W.  Va.  283;  18  S.  E. 
Simpson,  2  Dana  (Ky.)  166;  Bix-  569;  Ellis  v.  Cary,  74  Wis.  176; 
ler  V.  Sellman,  77  Md.  494;  27  Atl.  17  Am.  St.  Rep.  125;  4  L.  R.  A.  55; 
137;    Harris   v.    Harris,    106    Mich.  42  N.  W.  252. 

246;  64  N.  W.  15;  Harris  v.  Smith,  2  Tank  v.  Rohweder,   98   la.   154; 

79  Mich.  54;  6  L.  R.  A.  702;  44  N.  67  N".  W.  106. 

W.    169;    Allen  v.  Allen,   60  Mich.  i  Lapworth    v.    Leach,    79    Mich. 

635;  27  N.  W.  702;  Baxter  v.  Gale,  16;  44  X.  W.  338. 

74  Minn.  36;  76  N.  W.  954;  Louder  2  See  §  426. 

V.  Hart,  52  Mo.  App.  377;  Callahan  3  Kedey  v.  Petty,  153  Ind.  179; 
V.  Riggins.  43  Mo.  App.  130;  Woods  54  N.  E.  798;  Michigan  Trust  Co. 
V.  Land,  30  Mo.  App.  176;  Moore  v.  v.  Chapin,  106  Mich.  384;  58  Am. 
Moore,  58  Neb.  268;  78  N.  W.  495;  St.  Rep.  490;  64  N.  W.  334;  Cole- 
Clark  V.  Sanborn,  68  N.  H.  411;  36  man  v.  Burr,  93  N.  Y.  17;  45  Am. 
Atl.   14;   Barhites'  Appeal,   126  Pa.  Rep.  160;  In  re  Collister,  153  N.  Y. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS. 


1185 


formed  at  their  home,  but  in  business,*  or  a  contract  whereby  a 
wife  agrees  to  support  her  husband^  are  void. 

§780.     Persons  related  by  consanguinity. 

Where  parents  and  children  are  living  together  as  members  of 
a  family,  services  rendered  by  one  for  the  other,  come  within 
this  rule,  and  do  not  of  themselves  establish  any  implied  con- 
tract to  make  compensation  therefor.^  Thus,  if  a  parent  ren- 
ders services  for  a  child,^  as  where  a  father  takes  care  of  a  horse 
for  his  son,^  there  is  no  implied  promise  to  pay  therefor.  The 
same  principle  applies  where  a  parent  furnishes  provisions  to 
her  daughter  as  a  gift.  The  husband  of  the  daughter  cannot  be 
held  liable  to  make  compensation  therefor,  as  on  an  implied  con- 
tract.*    So,  if  a  child  renders  services  to  a  parent,^  as  where 


294;  GO  Am.  St.  Rep.  620;  47  N.  E. 
268. 

4  Whitaker  v.  Whitaker,  52  N.  Y. 
368;  11  Am.  Rep.  711.  Contra, 
Nuding  V.  Urich,  169  Pa.  St.  289; 
32  Atl.  409. 

5  Corcoran  v.  Corcoran,  119  Ind. 
138;  12  Am.  St.  Rep.  390;  4  L.  R. 
A.  782;  21  N.  E.  468. 

iBorum  v.  Bell,  132  Ala.  85;  31 
So.  454;  Poole  v.  Raggett,  110  Ga, 
822 ;  36  S.  E.  86 ;  O'Kelly  v.  Faulk- 
ner, 92  Ga.  521;  17  S.  E.  847;  Hud- 
son V.  Hudson,  90  Ga.  581 ;  16  S.  E. 
349;  Stock  v.  Stoltz,  137  111.  349; 
27  N.  E.  604;  Robnett  v.  Robnett, 
43  111.  App.  191;  King  v.  Kelly.  28 
Ind.  89;  Niehaus  v.  Cooper,  22  Ind. 
App.  610;  52  N.  E.  761;  Weir  v. 
Weir,  3  B.  Mon.  (Ky.)  645;  39  Am. 
Dec.  487;  Wright  v.  Senn,  85  Mich. 
191;  48  N.  W.  545;  Penter  v.  Rob- 
erts. 51  Mo.  App.  222;  Garcia  v. 
Candelaria,  9  N.  M.  374;  54  Pae. 
342;  Ulrich  v.  Ulrich.  136  N.  Y. 
120;  18  L.  R.  A.  37;  32  N.  E.  606; 
Wilkes  V.  Cornelius,  21  Or.  348;  28 
75 


Pac.  135;  Zimmerman  v,  Zimmer- 
man, 129  Pa.  229;  15  Am.  St.  Rep. 
720;  18  Atl.  129;  Butler  v.  Slam, 
50  Pa.  St.  456;  Hatch  v.  Hatch,  60 
Vt.  160;  13  Atl.  791;  Harshberger 
V.  Alger,  31  Gratt.  (Va.)  53; 
Riley  v.  Riley,  38  W.  Va.  283;  18 
S.  E.  569;  Pritchard  v.  Pritchard, 
69  Wis.  373;  34  N.  W.  506;  Leary 
V.  Leary,  68  Wis.  662;  32  N.  W. 
623;  Hall  v.  Finch,  29  Wis.  278;  9 
Am.  Rep.  559;  32  N.  W.  623. 

2Larsen  V.  Hansen,  74  Cal.  320; 
16  Pac.  5;  Stoneburner  v.  Motley, 
95  Va.  784;  30  S.  E.  364;  Bost- 
wick  V.  Bostwick,  71  Wis.  273;  37 
N.  W.  405. 

3  Stoneburner  v.  Motley,  95  Va. 
784;   30  S.  E.  364. 

4  Anderson  v.  Baird  (Ky.),  40 
S.  W.  923. 

5  Perry  v.  Perry,  2  Duv.  (Ky.) 
312;  Kostuba  v.  Miller,  137  Mo. 
161;  38  S.  W.  946;  Ulrich  v.  Ul- 
rich. 1.36  K  Y.  120;  18  L.  R.  A. 
37;  32  N.  E.  606. 


1186  PAGE    ON    CONTEACTS. 

board,  care  and  lodging  are  furnished  to  a  parent  by  a  child,* 
there  is  no  implied  liability  on  the  part  of  the  parent  to  make 
compensation  therefor.  This  principle  is  not  confined  to  cases 
where  a  child  is  a  minor,  and  is  therefor  not  to  be  referred  solely 
to  the  fact  that  the  earnings  of  the  minor  are  the  property  of  his 
parents.  The  principle  is  the  same  where  an  adult  child  lives 
with  his  parents  as  a  member  of  the  family,  and  receives  his 
board  and  renders  services.  Even  in  such  a  case,  there  is,  on 
the  one  hand,  no  implied  liability  of  the  child  to  pay  for  his 
board ;  and,  on  the  other  hand,  there  is  no  implied  liability  of 
the  parents  to  pay  for  the  services  of  the  child.^  So,  where  an 
uncle.  A,  requested  a  minor  child,  B,  who  had  been  emancipated 
by  his  father,  C,  to  work  for  C,  and  had  expressed  his  approval 
of  his  conduct  in  so  doing,  no  implied  contract  exists  on  the  part 
of  A  to  pay  B  for  such  services.*  The  same  principle  applies  to 
services  rendered  by  brothers  and  sisters,  each  for  the  other, 
where  they  are  living  together  in  one  family.  No  liability  to 
make  compensation  is  created  by  the  mere  fact  of  the  rendition 
of  the  services  in  the  absence  of  anything  to  show  some  under- 
standing that  compensation  should  be  made.^  Accordingly  the 
courts  commits  no  error  in  refusing  to  allow  a  question  to  be 
answered,  which  was  intended  to  call  forth  evidence  that  the 
sister  had  rendered  the  services  at  the  request  of  her  brothel'.^'* 
The  same  principle  applies  as  between  grandparents  and  grand- 
children.^^ If  they  are  living  together  in  one  family,  a  grand- 
child cannot  recover  for  personal  services  rendered  to  his  grand- 

6  Niehaus  v.  Cooper,  22  Ind.  App.  9  Fuller  v.  Fuller,  21  Ind.  App. 
610;  52  N.  E.  761;  Turner  v,  Tur-  42;  51  N.  E.  373;  Ayres  v.  Hull,  5 
ner,  100  Ky.  373;  38  S.  W.  506;  Kan.  419;  Martin  v.  Sheridan,  46 
Gor'rell  v.  Taylor,  107  Tenn.  568;  Mich.  93;  8  N".  W.  722;  Hayes  v 
64  S.  W.  888;  Nicholas  v.  Nicholas,  Cheatham,  6  Lea  (Tenn.)  1;  Tay 
100  Va.  660;  42  S.  E.  669,  866.  lor  v.  Lincumfelter.   1   Lea    (Tenn.) 

7  Wall  V.  Wall,  69  111.  App.  389;  83;  Morrissey  v.  Faucett,  29 
Schwachto^en     v.     Schwachtgen.     65  Wash.  52;   68  Pac.  352. 

111.  App.  127;   Donovan  v.  Driscoll,  lo  Morrissey  v.  Faucett,  28  Wash. 

116  la.  339;  90  N.  W.  60.  52:  68  Pac.  352. 

8  Bristol  V.  Sutton,  115  Mich.  nDodson  v.  McAdams,  96  N.  C. 
365;  73  N.  W.  424.  149;   60  Am.  Rep.  408. 


IMPLIED    CONTEACTS    AND    QUASI-CONTRACTS.  1187 

parents.^^  Similar  considerations  apply  to  services  rendered 
between  persons  more  remotely  related,  living  together  as  one 
family,  as  between  cousins.^^ 

§781.     Persons  related  by  affinity. 

This  principle  is  not  limited,  however,  to  blood  relationship. 
If  a  son-in-law  or  daughter-in-law  renders  services  for  parents- 
in  law,  while  members  of  the  same  family,^  as  by  furnishing 
board  and  lodging,^  no  implied  contract  exists  by  reason  of  such 
facts  alone.  The  same  principle  applies  to  mutual  services 
rendered  between  step-parents  and  ste}>children.^  Thus,  if  a 
st€i>father  voluntarily  supports  his  stejD-children,*  or  a  step- 
child voluntarily  renders  services  for  a  step-father,^  no  implied 
contract  exists.  Accordingly,  if  a  stej)-daughter  renders  ser- 
vices to  the  family,  in  reliance  upon  a  promise  made  by  her 
mother  that  she  should  receive  compensation  for  such  services, 
she  cannot  recover  from  the  estate  of  her  step-father  for  such 
services  unless  it  can  be  shown  that  he  not  only  knew  that  the 
promise  had  been  made,  but  that  he  also  knew  that  she  continued 
to  render  such  services  upon  such  promise.^  The  principle  that 
a  contract  for  compensation  is  not  implied  between  a  step-father 
and  step-daughter,  has  been  carried  so  far  that  an  attorney  who 
procured  a  divorce  for  his  stei>daughter,  who  at  that  time  was 
living  in  his  family  and  rendering  domestic  services,  could  not 
recover  therefor  four  years  after.     In  the  meantime,  however, 

12  Castle  V.  Edwards.  63  Mo.  App.  3  Kirchgassuer     v.      Rodick,      170 

564;    Murphy   v.   Murphy.    1    S.   D.  Mass.  543;  49  N.  E.  1015;  Williams 

316;  9  L.  R.  A.  820;  47  N.  W.  142;  v.  Hutchinson.  3  N.  Y.  312;  53  Am. 

Jackson    v.    Jackson.    96    Va.    16.5;  Dee.    301;    Ellis    v.    Gary,    74    Wis. 

31  S.  E.  78,  176;   17  Am.  St.  Rep.   125;  4  L.  R. 

i3Neal    V.    Gilmore,    79    Pa.    St.  A.  55;  42  X.  W.  252. 

421.  4  Livingston     v.     Hammond,     162 

iHinkle   v.   Sage,   67    0.   S.   256;  Mass.  375;  38  N.  E.  968;  Haggerty 

65  N.  E.  999.  v.  McCanna,  25  N.  J.  Eq.  48. 

2  Mariner     v.     Collins,     5     Harr.  s  Harris  v.   Smith,   79  Mich.   54; 

(Del.)    290;  Thoinpson  v.  Halstead,  6  L.  R.  A.  702;  44  N.  W.  169. 

44    W.    Va.    390;    29    S.    E.    991;  c  Harris   v.    Smith.   79   Mich.    54; 

Schmidt's   Estate,   93   Wis.   120;    67  6  L.  R.  A.  702;  44  N.  W.  169. 
N.  W.  37. 


1188  PAGE    ON    CONTEACTS. 

he  had  set  up  claims  for  certain  disbursements  made  by  him  in 
a  foreclosure  suit  brought  by  her,  but  had  not  made  any  claim 
for  such  legal  services.^  However,  a  step-father  who  supports 
his  step-children  on  his  wife's  land  undertakes  their  support 
only  by  his  labor  as  applied  to  their  property.  Hence  in  an  ac- 
tion by  them  against  him  to  recover  railroad  ties,  made  from 
timber  growing  on  such  land,  he  may  counter-claim  for  their 
support.^ 

Similar  principles  apply  where  services  are  rendered  between 
brothers-ifi-law,  sisters-in-law  and  the  like,  while  members  of 
one  family.^ 

§782.    De  facto  ntembership  of  same  family. 

The  principle  under  discussion  is  not  limited  to  cases  of  rela- 
tionship by  blood  or  affinity,  ^ut  it  applies  also  to  persons  who 
are  de  facto  members  of  the  same  family,  even  if  there  is  no  re- 
lationship of  any  kind  between  thew.^  Thus,  if  a  child  has 
been  taken  into  a  family  as  a  member  thereof  by  persons  in  no 
way  related  to  it,  there  is  on  the  one  hand  r»d  implied  contract 
that  the  child,  or  the  parents  of  the  child,  should  inake  compen- 
sation for  its  board  f  nor,  on  the  other  hand,  that  ^he  persons 
who  take  such  child  into  their  family,  are  to  make  compe:risation 
for  the  services  performed  by  such  child. ^  This  rule  applies 
even  where  an  "  adopted  "  child  remains  a  member  of  the  fam- 
ily after  becoming  of  age.* 

§783.     Limitations  of  doctrine. 

Some  jurisdictions  limit  this  doctrine  to  cases  where  the  ser- 
vices rendered  are  purely  personal  in  their  nature,  and  such  as 

7  Baxter   v.    Gale,    74    Minn.    36;  177    Mass.    321;     58    X.    E.    102.3. 

76  N.  W.  954.  sCroxton    v.    Foreman,     13    Tnd. 

sKempson  v.  Goss,  69  Ark.  235;  App.  442;  41  N,  E.  838. 

62  S.  W.  582.  3  Walker  v.  Taylor,  28  Colo.  233 ; 

9  Hill   V.   Hill,    121    Ind.   255;    23  64    Pae.    192;    Graliam   v.    Stanto<«, 

N.  E.  87.  177  Mass.  321 ;  58  N".  E.  1023. 

1  Walker  v.  Taylor,  28  Colo.  233 ;  *  Lang  v.  Dietz,  191   111.   161 ;   60 

64    Pae.    192;    Graliam    v.    Stanton,  X.  E.  841. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1189 

would  ordinarily  be  inspired  by  affection  or  the  sense  of  duty.^ 
Thus,  it  has  been  held  that  there  is  an  implied  contraqt  to  pay 
for  such  services  as  washing,  or  making  and  mending  clothing 
rendered  between  persons  living  together."  This  doctrine  is  by 
its  terms  limited  to  services  rendered  between  members  of  the 
same  family.  If  the  persons  are  related,  but  not  living  together, 
this  doctrine  has  no  application.^  Thus,  if  a  woman  who  does 
washing  and  housecleaning  for  a  living  does  work  of  the  same 
sort  for  her  daughter  and  her  daughter's  husband,  and  is  not  a 
member  of  the  latter's  household,  there  is  an  implied  agi'eement 
on  his  part  to  pay  therefor.*  So  if  A,  a  middle-aged  man,  works 
a  year  for  his  brother,  B,  in  superintending  the  building  of 
certain  houses  for  B,  and  during  such  period  A  lives  with  his 
own  family  in  one  of  B's  houses,  B  is  liable  to  pay  A  a  reason- 
able compensation,  even  though  A  had  been  a  guest  at  B's  home 
for  six  weeks  at  the  time  of  the  beginning  of  such  work,  before 
his  family  had  rejoined  him.^  On  the  other  hand,  the  mere 
fact  that  the  persons  between  whom  the  services  are  rendered 
are  living  in  the  same  house,  is  not  conclusive  that  they  are 
members  of  the  same  family.^  If  the  persons  who  reside  in  the 
same  house  are  not  so  related  that  one  of  them  is  bound  in  law 
to  support  the  other,  it  is,  in  case  of  a  dispute,  a  question 
of  fact  in  what  capacity  the  person  who  renders  the  serivces  is 
residing  in  that  house.  Thus  a  nephew  who  lives  with  his  uncle 
and  renders  services  in  connection  with  his  uncle's  business 
may  recover  if  it  can  be  shown  that  the  board  furnished  him 
was  in  part  compensation  for  the  services  rendered  by  him.'  So 
where  a  wealthy  man  supported  his  second  cousin  at  his  house,  it 
was  a  question  of  fact  for  the  jury,  whether  she  lived  there 

1  Hurst  V.  Lane,  105  Ga.  506;   31  5  Williams  v.  Williams.  114  Wis, 
S.    E.     135;     Frailey    v.    Tliompson      79;   89  N.  W.  835. 

(Ky.),  49  S.  W.  13.  «  Gill  v.  Staylor,  93  Md.  453;   49 

2  Frailey  v.  Thompson  (Ky.),  49      AU.  650;    Spragiie  v.   Sea,   152  Mo. 
S.  W.  13.  327;  53  S.  W.  1074. 

3  Williams  v.  Williams,   114  Wis,          7  Gill  v.  Staylor,  93  Md.  453;   49 
79;  89  N.  W.  835.  At\.  650. 

4  Winter    v.     Greiling,  114    Wis. 
378 ;  90  N.  W.  425, 


1190  PAGE    ON    CONTRACTS. 

merely  as  a  member  of  his  family,  or  whether  she  was  living 
there  as  housekeeper;  in  the  latter  case  there  would  be  an  im- 
plied contract  on  his  part  to  pay  for  her  services  without  any 
express  contract.^  So  a  nephew  may  recover  for  board  fur- 
nished his  aunt,  Avhere  he  shows  that  she  came  to  his  house  on  a 
temporary  visit,  was  taken  ill  while  there,  and  remained  there 
on  account  of  ill  health  seven  months,  until  her  death. ^  So, 
where  a  person  is  shown  to  be  living  in  another's  house  as  a 
boarder,  under  an  express  contract  for  a  compensation,  he  is 
liable  for  services  rendered  not  included  in  the  express  agree- 
ment, such  as  nursing  in  sickness.^"  It  has,  however,  been  held 
that  where  a  devise  is  given  A  on  the  condition  that  she  furnish 
a  home  for  her  uncle,  B,  on  the  property  devised  to  her,  as  long 
as  he  lives,  and  she  accepts  such  devise,  and  her  uncle  lives  with 
her,  a  family  relation  is  thereby  created  between  uncle  and 
niece,  so  that  she  cannot  recover  for  services  in  caring  for  him  in 
the  absence  of  an  express  contract  on  his  part.^^ 

§784.     When  services  not  gratuitous. 

The  rule  that  there  is  no  implied  agreement  for  a  compen- 
sation for  services  between  persons  in  domestic  relations  living 
together  as  members  of  a  family,  is  merely  a  prima  facie  rule. 
In  the  absence  of  any  evidence  there  is  a  presumption  that  such 
services  are  gratuitous.^  This  presumption  is  rebuttable,"  and 
it  has'  been  held  error  when  evidence  has  been  introduced  to 
show  that  there  was  an  understanding  for  compensation  to 
charge  that  there  was  a  presumption  of  law  against  such  claim.^ 

sSprague    v.    Sea,    152    Mo.    327;  Bixler  v.  Sellman,  77  Md.  494,  496; 

53  S.  W.  1074.  27  All.  137. 

9  Glenn  v.   Gerald,   64   S.   C.   236;  2  pitts    v.    Pitts,    21     Ind.     309; 

42  S.  E.  155.  Resso  v.  Lehan,  96  la.  45:  64  N.  W. 

lopfeiffer  v.  Michelsen,  112  Mich.  689;  Bixler  v.  Sellman,  77  Md.  494; 

614;  71  N.  W.  156;  Gates  v.  Gilmer  27   Atl.   137;   Ulrieh  v.   Ulrich,   136 

(Tenn.  Ch.  App.),  48  S.  W.  280.  X.  Y.  120;  18  L.  E.  A.  37;  32  N.  E. 

"Lackey's    Estate,    181    Pa.    St.  606;    Gorrell   v.    Taylor.    107    Tenn. 

638;  37  Atl.  813.  568;  64  S.  W.  888. 

i"A    presumption    of   law    arises  3  Ulrich  v.  Ulrich,  136  X.  Y.  120; 

that    such    service    is    gratuitous."  18  L.  R.  A.  37;  32  X.  E.  606. 


IMPLIED    CONTKACTS    AND    QUASI-CONTKACTS.  1191 

The  force  of  the  presumption  has  been  held  to  depend  upon  the 
relationship  of  the  parties,  the  presumption  becoming  "  weaker 
and  therefore  more  easily  rebutted  as  the  relationship  recedes."* 
It  is  for  the  person  alleging  that  such  mutual  services  were  not 
gratuitous  to  prove  that  fact.^  An  express  contract  to  make 
compensation  between  the  persons  between  whom  such  services 
are  rendered  is  sufficient  to  create  a  liability  on  the  part  of  the 
person  receiving  such  services  to  make  compensation  therefor,® 
as  where  a  father  promises  to  make  compensation  to  his  son  for 
furnishing  board  and  lodging/  Thus  where  a  brother-in-law 
induces  his  sister-in-law,  who  was  a  member  of  the  family  and 
worked  in  her  brother-in-law's  store  as  well  as  in  the  family,  to 
believe  that  she  would  receive  pay  for  such  services,  he  is  liable 
to  her  therefor,  even  if  he  did  not  intend  to  make  such  compen- 
sation, and  was  jesting  when  he  made  the  statement  on  which 
she  relied/  It  is  not  necessary,  however,  that  the  express  con- 
tract between  the  parties  should  be  enforceable.  Even  though 
for  some  reason  it  may  be  unenforceable  as  a  contract,  it  may, 
nevertheless,  suffice  to  show  that  the  services  were  not  rendered 
gratuitously.^  Thus,  where  a  step-daughter  rendered  services  for 
her  step-father  under  an  oral  agi'eement  which  is  unenforceable 
by  reason  of  the  statute  of  frauds,  she  may  recover  a  reasonable 
compensation  for  the  services  thus  rendered.^**  So  where  a 
mother  makes  an  agreement  with  the  guardians  of  her  insane  son 
when  he  comes  to  live  at  her  house  that  she  shall  be  paid  for 
caring  for  him  out  of  his  estate,  such  agreement  is  sufficient  to 
show  that  such  services  were  not  rendered  gratuitously  even 

4Gorrell     v.     Taylor,     107     Tenn.  W.  Va.  261;   76  Am.  St.  Eep.  815; 

568;   64  S.  W.  888.  33  S.  E.  257. 

5  Enger  v.   Lofland,    100   la.   303 ;  7  Harris  v.   Orr,   46   W.   Va.  261 ; 

69   N.   W.   526;    Bixler   v.   Sellman,  76  Am.  St.  Rep.  815;   33  S.  E.  257. 

77  Md.  494;  27  Atl.  137.  8  Piatt  v.   Durst,  42   W.   Va.   63; 

sFrailey     v.     Thompson      (Ky.),  .32  L.  R.  A.  404 ;  24  S.  E.  580. 

49  S.  W.  13;  O'Connor  v.  Beckwitli,  s  Ellis  v.   Gary.   74  Wis.   176;    17 

41  Mich.  657;  3  N.  W.  166;  Johanke  Am.   St.  Rop.   125;   4  L.  R.  A.  55; 

V.    Schmidt,    79    Minn.    261 ;    82    N".  42  N.  W.  252. 

W.  582;  Jackson  v.  .Tackson.  96  Va.  lo  Ellis  v.  Gary,  74  Wis.  176;    17 

165;  31  S.  E.  78;  Harris  v.  Orr,  46  Am.   St.  Rep.   125;   4  L.  R.   A.  55; 

42  N.  W.  252. 


1192  PAGE    ON    CONTRACTS. 

though  the  contract  was  unenforceable  because  the  apix)intnient 
of  the  guardians  was  void/^     So  it  has  been  held  that  recovery 
can  be  had  for  services  rendered  upon  the  understanding  that 
the   party  for  whom   they   were    rendered   would   make   com- 
pensation by  will,  where  he  dies  without  making  any  such  pro- 
vision in  his  will,  even  though  there  was  no  agreement  as  to  the 
amount  of  such  compensation/^     So,  if  there  has  been  an  ex- 
press enforceable  contract,  the  person  rendering  such  services 
may,  in  case  of  a  breach  of  such  contract  for  any  reason,  recover 
a  reasonable  compensation  for  such  services.^^     Thus,  where  a 
son  supported  his  father  for  life,  under  a  contract  by  which  the 
father  was  to  devise  to  the  son  certain  realty,  and  the  father  by 
reason  of  subsequent  insanity,  was  unable  to  perform  such  con- 
tract, the  son  may  recover  a  reasonable  compensation  for  such 
services,  not  exceeding  the  value  of  the  land  to  be  devised  to 
him/*     So  recovery  may  be  had  for  services  rendered  by  a  son 
to  a  father  under  a  contract  which  has  since  been  rescinded, 
in  which  case  the  son  is  obliged  to  account  for  personalty  re- 
ceived by  him  under  such  contract  and  not  surrendered  when 
the  contract  was  terminated/^    Whiile  an  express  contract  is  the 
most  satisfactory  and  safe  method  of  showing  that  the  services 
were  not  intended  to  be  gratuitous,  it  is  not,  however,  necessary. 
If  the  facts  and  circumstances  of  the  case  show  that  there  is  in 
fact  an  understanding  between  the  person  rendering  the  ser- 
vices and  the  person  for  whom  they  were  rendered,  that  a  com- 
pensation should  be  made  therefor,  the  person  rendering  the 
services  may  recover  a  reasonable  compensation.*^     Such  under- 

iiJessup  V.  Jessup,  17  Tnd.  App.  leMurrell    v.    Studstill,    104    Ga. 

177;  46  N.  E.  550.  G04;    30  S.  E.   750;   Neish  v.  Gan- 

12  Schwab    V.     Pierro,     43    Minn,  non,   198   111.   219;   64   N.   E.   1000; 

520;  46  N.  W.  71.  Warren    v.    Warren,    105    111.    568; 

i3Johanke  v.   Schmidt,  79  Minn.  Morton  v.   Rainey,    82   111.   215;    25 

261;  82  N.  W.  582.  Am.  Rep.  311;   Jones  v.  Adams.  81 

1*  Hudson  V.  Hudson,  90  Ga.  581;  111.  App.   183;   Collins  v.  Williams, 

16  S.  E.  349;   s.  c,  87  Ga.  678:  27  21  Ind.  App.  227:  .52  N.  E.  92;  Rid- 

Am.  St.  Rep.  270;  13  S.  E.  583.  ler  v.  Ridler,  103  la.  470;  72  N.  W. 

15  Walker  v.  Walker,  100  la.  99;  671;    Gorrell   v.    Taylor,    107   Tenn. 

69  N.  W.  517;   reversing  on  rehear-  568;    64    S.    W.    888;    Westcott    v. 

ing,  63  N.  W.  331.  Westcott,  69  Vt.  234;  39  Atl.  199; 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1193 

«ianding,  however,  must  be  clearly  proven/^  or  as  some  courts 
have  held,  there  must  be  an  express  contract  or  its  equivalent/* 
Some  courts  have  gone  further  than  this.     They  have  declared 
that  such  a  contract  can  be  proven  only  by  direct  and  positive 
evidence,  and  that  it  is  erroneous  to  charge  the  jury  that  such  a 
contract  may  be  proved  by  clear  and  satisfactory  evidence  ;^^  or 
have   si>oken   as   if  an   express   contract  were   indispensable."*' 
This  statement,  however,  carries  the  rule  too  far.     The  true 
rule  is,  that  the  rendition  of  such  services  is  not  by  itself  any 
evidence  that  there  was  an  agreement  between  the  parties  for 
compensation,  and  does  not  of  itself  impose  any  liability  upon 
the  party  for  whom  they  were  rendered.     'No  liability  exists, 
unless  there  is  proof  of  a  contract,  implied  or  expressed  for 
compensation  ;  and  the  rendition  of  such  services  is  not  such  evi- 
dence.    It  has  even  been  held  not  to  be  necessary  to  have  in  fact 
a  mutual  understanding  that  the  services  rendered  between  rela- 
tives are  for  compensation  in  order  to  create  a  liability  therefor. 
If  the  person  rendering  such  services  expects  to  be  compensated 
and  the  circumstances  under  which  they  are  rendered  are  such 
that  the  person  for  whom  they  are  rendered  must,  as  a  reason- 
able man,  know  that  they  are  rendered  for  compensation,  he  is 
liable  therefor  even  if  he  did  not  in  fact  know  of  such  expecta- 
tion.^^    Declarations  to  third  persons,  made  by  the  person  for 
whom  services  are  rendered  by  a  member  of  his  family,  to  the 
effect  that  such  services  are  valuable  and  will  be  paid  for  are 
not  sufficient  to  show  the  existence  of  a  contract  to  pay  there- 
for.^^ 

§785.    Extra  work. 

If  A  has  agreed  with  B  to  perform  a  certain  definite  and 
specific  contract  for  B,  without  giving  his  entire  time  to  B's 

Broderick  v.  Broderick,  28  W.  Va,  20  Murphy    v.    IMurphy,    1    S.    D. 

385.  316;  9  L.  R.  A.  820;  47  N.  W.  142. 

17  Price  V.  Price,  101  Ky.  28;   39  21  Spencer   v.   Spencer,    181    Mass. 
S.  W.  429.  471;  63  N.  E.  947. 

18  Jackson  v.     Jackson,     96     Va.  22  Donovan    v.    Driscoll,     116    la. 
165;  31  S.  E.  78.  339;  90  N.  W.  60. 

19  Bash  V.  Bash,  9  Pa.  St.  260. 


1194  PAGE    ON    CONTRACTS. 

employment,  A  may  recover  for  services  rendered  by  him  in  ad 
dition  to  those  specified  in  the  contract  if  B  either  requests  A  tu 
render  such  extra  services  or  vohmtarily  accepts  the  benefit  of 
them,  when  B  knows,  or  should  know,  that  A  expects  compensa- 
tion therefor/  Extra  work  done  while  performing  a  building 
contract  is  a  common  illustration  of  this  principle."  One  who 
performs  such  extra  work  at  the  request  of  the  owner  may  re- 
cover, even  though  such  request  is  oral  and  the  contract  provides 
that  extra  work  must  be  done  only  on  a  written  order ;  or  though 
such  extra  work  is  done  on  written  and  oral  orders  of  an  author- 
ized agent,  while  the  contract  provides  that  it  can  be  done  only 
on  written  orders  signed  by  the  owner  of  the  building.^  So  A, 
who  has  an  express  contract  to  act  as  a  salesman  for  B  within  a 
specified  territory,  may  recover  his  necessary  expenses  and  a  reas- 
onable compensation  for  sales  made  outside  of  the  territory 
specified,  if  made  at  B's  request.*  So  if  A  has  a  contract  to  furn- 
ish B  with  board,  A  may  recover  a  reasonable  compensation  for 
services  rendered  to  B  as  a  nurse  during  illness.^  So  where  A  has 
contracted  to  furnish  B  with  power  to  operate  a  certain  derrick, 
A  may  recover  for  extra  power  furnished  after  B  has  put  in  a 
new  derrick  requiring  greater  power.®  If  on  the  other  hand,  B 
has  entered  into  a  contract  of  employment  with  A,  whereby  B  is 
to  give  to  A  his  time,  for  a  compensation  fixed  by  the  week, 
month  and  the  like;  the  question  whether  B  is  entitled  to  any 
compensation  for  extra  work  depends,  in  the  absence  of  an 
agreement  for  compensation  therefor,  on  whether  the  extra  work 
done  is  of  the  same  general  character  as  that  for  which  B  was 

1  Fulton    County   v.    Gibson,    158  2  Fulton    County    v.    Gibson,    158 

Ind.  471;    63   N.  E.   982;    Evans  v.  Ind.  471;  (33  N.  E.  982. 

McConnell,    99   la.    326;    63    N.    W.  3  Norwood  v.  Lathrop,   178  Mass. 

570;  68  N.  W.  790;  Escott  v.  \\niite,  208;  59  N.  K  650. 

10   Bush.    (Ky.)    169;    Norwood   v.  *McEwen  v.  Loucheim,  II5  N.  C. 

Lathrop.   178  Mass.   208;    59   N.   E.  348;  20  S.  E.  519. 

650;      Pfeiffer     v.     Michelsen,     112  5  Pfeiffer  v.  Michelsen,   112  Mich. 

Mich.  614;   71  N.  W.  156;  McEwen  614;    71   N.   W.    156;    Gates  v.   Gil- 

V.  Loucheim,   115  N.  C.  348;   20  S.  mer     (Tenn.    Ch.    App.),   48    S.    W. 

E.    519;    Trow   v.    Forsyth,    70   Vt.  280. 

498;  41  Atl.  501;  Isham  v.  Parker,  e  Trow    v.    Forsyth,    70   Vt.    498; 

3  Wash.  755;  29  Pac.  835.  41  Atl.  501. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1195 

employed,  or  not.  If  it  is  of  the  same  general  character  B  can- 
not recover/  So  where  A  employs  B  to  collect  rents  at  two  hun- 
dred and  fifty  dollars  a  month,  B  cannot  recover  for  extra  ser- 
vices in  preventing  squatters  from  settling  on  A's  land,  in  ex- 
pelling them  therefrom  and  in  retaining  exclusive  possession 
for  A.^  So  if  A  hires  B  as  a  domestic  servant  at  a  certain  com- 
pensation per  week,  B  cannot  recover  for  extra  work  because  A 
became  sick  after  B  had  entered  on  her  employment,  and  A's 
work  was  thereby  greatly  increased.''  Thus  if  B  is  to  work  for 
A  for  a  certain  sum  per  month,  B  cannot  recover  for  work  done 
on  Sunday,^"  especially  if  he  knew  in  advance  that  Sunday  work 
was  expected,  and  if  he  had  received  the  stipulated  wages 
without  objection.^^  So  if  a  statute  limits  the  number  of  hours 
of  a  day's  work,^"  or  provides  that  in  the  absence  of  agreement 
to  the  contrary  a  certain  number  of  hours  shall  constitute  a  day's 
work,^^  an  employee  who  is  hired  at  a  certain  sum  by  the  week, 
month  and  the  like  cannot  recover  for  extra  work  in  the  absence 
of  express  contract  or  of  facts  from  which  an  agreement  to  pay 
for  extra  work  may  be  inferred.  This  is  true  especially  if  the 
employee  knows  in  advance  that  the  work  for  which  he  is  em- 
ployed will  necessitate  some  work  overtime,^'*  or  if  the  employee 
is  notified  that  if  he  wishes  to  keep  his  position  he  must  do  the 
extra  work,^^  especially  as  before  the  action  here  decided  he  had 
applied  for  and  received  an  allowance  for  extra  work.  So 
where  A  is  hired  by  B  to  work  for  him  at  a  certain  rate  per 
month,  which  amount  A  receives  regularly  without  objection, 

7  United  States  v.  Martin,  94  U.  Tnd.  App.  251;  36  N.  E.  452;  Mc- 
S.  400;  Guthrie  v.  Merrill,  4  Kan.  Carthy  v.  New  York,  96  N.  Y.  1; 
187;    Sehiirr   v.    Savigny,    85   Mich,      48  Am.  Rep.  601. 

144;  48  N.  W.  547.  i3  Luske  v.   Hotchkiss^    37    Conn. 

8  Cany  V.  Halleck,  9  Cal.  198.  219;    9    Am.    Eep.    314;    Schurr    v. 
9Voorhees    v.    Coombs,    33    N.    J.      Savigny,    85   Mich.    144;    48   N.   W. 

■L.  494.  547. 

10  Guthrie  v.  Merrill,  4  Kan.  187.  i4  Luske   v.    Hotchkiss,    37    Conn. 

"Lowe   V.    Marlowe,   4   111.    App.  219;  9  Am.  Rep.  314;  Lowe  v.  Mar- 

420.  low.  4  111.  App.  420. 

12  United    States    v.    Martin,    94  is  United  States  v.  Martin,  94  U. 

U.    S.   400;    Grisell   v.   Feed   Co.,   9  S.   400. 


lli)6  PAGE    ON    CONTRACTS. 

giving  a  receipt  in  full  therefor,  A  cannot  thereafter  claim  com- 
jjensation  for  extra  time.^®     So,  even  if  the  statute  provides  that 
extra  compensation  shall  be  made  for  extra  work  unless  tliere  is 
a  provision  in  the  contract  to  the  contrary,  it  has  been  held  that 
an  expert  photographer  who  accepts  employment  for  a  year  at 
twenty  dollars  a  week  must  know  that  the  nature  of  his  work 
must  require  some  extra  work,  and  therefore  it  is  an  implied 
term  of  such  contract  that  no  compensation  is  to  be  made  for 
extra  work.^''     Conversely,  under  a  statute  providing  that  ten 
hours  shall  constitute  a  day's  work  unless  there  is  a  provision  in 
the  contract  to  the  contrary,  an  employer  cannot  insist  that  his 
employee  who  is  hired  at  two  dollars  and  a  half  a  day,  must  esti- 
mate his  time  where  he  has  worked  less  than  ten  hours  on  some 
days  by  counting  the  number  of  hours  worked  and  dividing  by 
ten/^     Some  courts  have  used  language  intimating  that  only  an 
express  contract  to  pay  for  extra  work  could  create  liability  in 
such  cases,^**  though  the  same  authority  concedes  that  such  a 
proposition,  while  not  containing  prejudicial  error  under  the 
facts  of  the  particular  case,  is  too  broad  for  the  statement  of  the 
rule  in  a  legal  treatise. "°     The  true  rule  is  that  a  contract  to 
pay  for  extra  work  may  be  either  express,  or  implied  from  the 
surrounding  facts,"^  but  that  the  mere  rendition  of  such  extra 
services  with  the  knowledge  of  the  person  for  whom  they  are 
rendered,  or  voluntary  acceptance  by  him  does  not  constitute 
such  a  contract.     Some  authorities,  however,  hold  that  a  re- 
quest for  work,  in  addition  to  the  number  of  hours  fixed  by 
statute  as  a  day's  work,  creates  an  implied  liability  to  pay 
therefor.     Thus,  where  A  had  agi'eed  to  work  for  B  at  eight 
shillings  a  day,  payable  weekly,  and  the  statute  provided  that 
ten  hours  should  constitute  a  day's  labor  unless  there  was  some 
provision  in  the  contract  to  the  contrary,  it  was  held  that  if  B 

lePorster    v.    Green,    111    Mich.  20 Cany  v.  Halleck,  9  Cal.  198. 

264 ;  69  N.  W.  647.  -^  Luske    v.   Hotchkiss,    37    Conn. 

i7Sehurr    v.    Savigny,    85    INIicli.  219;    9    Am.    Eep.    314;    Grisell    v. 

144:   48  N.  W.   547.  Feed  Co.,  9  Ind.  App.  251;  36  N.  E. 

18  Brooks  V.  Cotton.  48  N.  H.  50.  452 ;  McCarthy  v.  Xew  York,  96  N. 

19  Cany  v.  Halleck,  9  Cal.   198.  Y.  1 ;  48  Am.  Rep.  601. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1197 

requested  A  to  work  at  niglit,  B  could  recover  for  the  number  of 
hours  in  excess  of  ten  per  day  which  he  had  worked.  The  fact 
that  he  received  his  weekly  pay  for  day  labor,  was  held  to  be 
no  bar  for  a  subsequent  recovery  for  his  work  at  night,  nor  was 
the  fact  that  he  waited  five  years  after  his  employment  ter- 
minated before  making  his  claim,  held  to  bar  him.^^ 

If  the  extra  work  done  is  of  a  character  different  from  the 
general  nature  of  that  for  which  the  employee  was  hired,  a  pre- 
vious request  by  his  employer  to  do  such  work,^^  or  a  subsequent 
voluntary  acceptance  thereof,-*  will  of  itself  create  an  implied 
agreement  to  pay  therefor."^  Thus  if  an  agent  of  the  United 
States  to  sell  lands  belonging  to  the  United  States  is  hired  to 
sell  other  lands  belonging  to  Indians  a  contract  to  pay  a  reason- 
able compensation  is  implied."''  So  an  agent  of  a  corporation  at 
a  monthly  salary  who  does  extra  work  in  getting  subscriptions 
to  the  corporation's  stock  under  the  offer  of  the  corporation  to 
pay  two  per  cent  commission  for  obtaining  such  subscriptions 
can  recover  such  commission."'  So  where  A  who  is  the  mayor 
of  a  city  and  a  member  of  its  council  is  employed  by  the  council 
to  act  as  attorney  for  the  city  in  a  pending  case,  he  may  re- 
cover. ^^  If  the  adversary  party  to  the  contract  requests  a  depar- 
ture therefrom  which  necessitates  additional  labor  and  material, 
the  contractor  may  recover  a  reasonable  compensation  for  such 
extra  labor  and  material  if  no  express  contract  is  made  there- 
for."^ Thus  extra  recovery  may  be  had  by  a  railroad  contractor 
for  putting  in  a  temporary  track  in  order  to  enable  the  company 
to  secure  subscriptions  which  were  conditioned  on  the  comple- 


22Bachelder  v.   Biekford,   62   Me.  27  Cincinnati,  etc.,  R.  R.  v.  Clark- 

527.  son,  7  Ind.  595. 

23  United    States    v.    Brindle,    110  ssNiles   v.   Muzzy,   33   Mich.    61; 
U.  S.  688;  Niles  v.  Muzzy,  33  Mich.  20  Am.  Rep.  670. 

61 ;  20  Am.  Rep.  670.  29  Henderson    Bridge    Co.    v.    Mc- 

24  Cincinnati,  etc.,  R.  R.  v.  Clark-  Grath,  134  U.  S.  260;  Smith  v.  Salt 
son,  7  Ind.  595.  Lake     City,     83     Fed.     784;     Cook 

25  Converse  v.    United   States,   21  County    v.    Harms,     108    111.    151; 
How.   (U.  S.)    463.  Evans  v.  McConnell.  99  la.  326;  63 

26  United    States   v,   Brindle,    110  X.  W.  570;  Isaacs  v.  Reeve    (N.  J. 
U.  S.  688.  Eq. ) ,  44  Atl.   1 ;  Delafield  v.  West- 


1198  PAGE    ON    COISTTKACTS. 

tioii  oi  the  road  by  a  certain  date.'^*'  On  the  other  hand  one  who 
does  no  more  than  he  agreed  to  do  cannot  recover  more  than 
the  contract  price  because  the  performance  is  less  profitable  than 
he  had  anticipated.^^  No  recovery  can  be  had  as  for  extra 
work  for  work  necessary  in  the  performance  of  the  contract 
though  not  sj>ecifically  mentioned  therein,^^  as  for  blasting  rock 
when  necessary  for  the  excavation  of  drains  required  by  the 
specifications  f^  digging  to  an  extra  depth,^*  or  driving  piling^^ 
to  obtain  a  secure  foundation  required  by  the  contract,  or  under- 
pinning an  adjoining  building  to  make  an  excavation  and  put  in 
a  foundation  required  by  the  contract.^^  One  who  does  more 
work  or  furnishes  more  material  than  is  required  by  the  terms 
of  the  contract  without  the  consent  of  the  adversary  party  can- 
not recover  therefor.  Thus  a  contractor  who  has  agreed  to  rub 
down  brick  work  cannot  recover  as  for  extra  work  though  he  uses 
acid  in  cleaning  the  walls.^^  So  one  who  has  agreed  to  put  in 
glass  for  three  elevations  of  a  building,  and  without  the  knowl- 
edge of  the  owner,  and  in  spite  of.  the  fact  that  the  owner  has 
warned  him  not  to  put  in  more  than  the  contract  calls  for,  puts 
glass  in  on  the  fourth  elevation  also,  cannot  recover  extra  com- 
pensation.^^ 'Ro  recovery  can  be  had  oy  a  contractor  for  extra 
work  made  necessary  by  the  failure  of  the  contractor  or  his  em-i 
ployees  to  comply  with  the  specifications.^"  ISTo  recovery  can 
be  had  for  extra  work  if  the  party  claiming  to  have  done  such 
work  knows  before  he  does  it  that  the  adversary  party  claims 
that  such  work  is  required  by  the  provisions  of  the  contract.*" 

field,  77  Hun  124;  Lee  v.  Brayton,  ss  Stewart     v.      Cambridge,      125 

18  R.  I.  232;   26  Atl.  256;   Rhodes  Mass.   102. 

V.  Cliite,  17  Utah  137;  53  Pae.  990.  36  Ashley   v.    Henahan,    56    O.    S. 

30  Central   Trust   Co.   v.    Condon,  559 ;  47  N.  E.  573. 

67  Fed.  84.  37  Chamberlain  v.  Hibbard,  26  Or. 

31  Contracts  for    excavating  under  428;    38  Pac.  437. 

directions   of  the   owner's  engineer.  38  Pittsburgh    Plate   Glass    Co.  v. 

Huckestein    v.    Inclined   Plane    Co.,  MacDonald,   182  Mass.   593;    66   N. 

173  Pa.  St.  169;   33  Atl.  1108.  E.  415. 

32Brigham  v.  Martin,   103  Mich.  39  O'Brien  v.   New  York.    139   N". 

150;   61  N.  W.  276.  Y.  543;  35  N.  E.  323. 

33  Lee  V.  Brayton,   18  R.  I.  232;  4o  O'Brien  v.   New   York,    139   N. 

26  Atl.  2.56.  Y.  543;  35  N.  E.  323. 

34Ruecking  v.  McMahon,  81  Mo. 
App.  422. 


IMPLIED    CONTRACTS    AKD    QUASI-CONTRACTS.  119& 

In  such  case,  if  the  contractor  is  willing  to  take  the  chances  of 
the  correctness  of  his  interpretation  of  the  contract,  he  should 
perform  the  contract  as  he  understands  it,  and  enforce  his  con- 
tract rights  against  the  adversary  party.*^  Even  if  an  archi- 
tect's certificate  is  by  the  contract  necessary  to  recovery,  he  may 
recover  without  it  if  his  interpretation  of  the  contract  is  correct, 
since  it  is  in  such  case  witliheld  unreasonably.*^  If  the  con- 
tract requires  a  written  order  from  the  architect  for  extra  work 
no  recovery  can  be  had  for  extra  work  done  without  such  order 
if  the  owner  or  his  authorized  agent  have  neither  of  them 
waived  such  provision.*'  The  architect  has  no  authority  in  such 
cases  to  bind  the  agent  by  an  oral  order,  by  virtue  alone  of  his 
employment  as  architect  with  power  to  order  alterations  in 
writing.  The  owner  may  waive  such  provision,  however,  and 
thus  bind  himself  by  oral  modifications  of  the  contract.** 

§786.     Work  and  labor  done  under  a  contract  void  for  mistake  as 
to  an  essential  element. 

If  A  and  B  attempt  to  make  a  contract,  and  by  reason  of  some 
mistake  in  the  formation  no  contract  is  made,  A,  who  has  per- 
formed work  and  labor  under  such  supposed  contract,^  may  re- 
cover a. reasonable  compensation  therefor.  Thus  A  cut  timber 
on  B's  land  and  made  it  into  lumber,  believing  that  he  had  a 
special  contract  with  B  for  payment  therefor.  In  fact,  owing 
to  a  mutual  misunderstanding  as  to  the  time  when  payment  was 
to  be  made  there  really  was  no  contract  between  A  and  B.  It 
was  held  that  A  could  recover  a  reasonable  comj^ensation  for  his 
services.^     A  superintended  the  construction  of  a  building  for 

41  O'Brien  v.  New  York,  139  N.  **  Perry  v.  Potashinski,  169  Mass. 
Y.  543;  35  N.  K  323.  351;  47  N.  E.  1022. 

42  O'Brien  v.  New  York,  139  N.  Y.  i  Collins  v.  Stove  Co.,  63  Conn. 
543;   35  N.  E.  323.  356;  28  Atl.  534;  Rowland  v.  R.  R., 

43  0'Keefe  v.  Church,  59  Conn.  61  Conn.  103;  29  Am.  St.  Rep.  175; 
551;  22  Atl.  325;  Stewart  v.  Cam-  23  Atl.  755;  Russell  v.  Clough,  71 
bridge,  125  Mass.  102;  Ashley  v.  N.  H.  177;  93  Am.  St.  Rep.  507;  51 
Henahan,  56  0.  S.  559;  47  N.  E.  Atl.  632;  Burton  v.  Mfg.  Co.,  132 
573;    Vanderwerker    v.    R.    R.,    27  N.  C.  17;  43  S.  E.  480. 

Vt.  130.  2  Russell  V.  Clough,  71  N.  H.  177; 


1200  PAGE    ON    CONTRACTS. 

B,  believing  that  he  was  working  under  a  special  contract.  In 
fact  by  mistake  as  to  an  essential  fact  there  was  no  meeting 
of  the  mind.  An  instruction  to  the  jury  that  under  such  facts, 
A  could  recover  a  reasonable  compensation  for  his  services  was 
held  proper.^ 

§787.    Work  done  for  one  at  request  of  another. 

If  A  requests  B  to  perform  services  for  C,  the  mere  fact  of 
the  request  does  not  create  an  implied  contract  on  the  part  of  A 
to  pay  B  for  such  services.  The  same  rule  applies  to  delivering 
goods.^  Thus  if  a  bystander  calls  in  a  physician  to  act  for  an 
injured  j)erson  who  cannot  act  for  himself,^  or  a  father  calls  in 
a  physician  to  attend  to  an  adult  child  who  is  sick  at  his  father's 
house,  and  for  whose  support  the  father  is  not  liable,^  or  A  re- 
quests a  physician  to  care  for  A's  insane  brother  B,  who  is  not 
a  member  of  A's  family,*  the  person  summoning  the  physician 
is  not  liable  to  him  for  his  services.  A  different  result  was 
reached  where  A,  who  had  been  brought  up  in  B's  family,  had 
gone  away  to  work,  but  had  returned  to  B  and  was  then  living' 
m  B's  house  and  doing  domestic  work  without  any  specific  con- 
tract for  compensation,  became  sick  and  B  called  in  X,  a  physi- 
cian to  attend  to  A.  It  was  held  a  question  of  fact  whether 
the  understanding  between  X  and  B  was  that  B  was  personally 
liable  to  X  for  X's  seiwices  to  A.^  If  A  requests  B  to  furnish 
board  and  lodging  to  C  and  others,  employees  of  A,  A  is  not 
liable  to  B  unless  he  has  promised  to  pay  therefor.^  If,  how- 
ever,   A  agrees  with  a  hospital  that  A  will  pay  for  the  care  of 

93  Am.  St.  Rep.  507;  51  Atl.  632.  658;   Meisenbach  v.  Cooperage  Co., 

3  Burton  v.  Mfg.  Co.,   132  N.  C.  45  Mo.  App.  232. 
17;  43  S.  E.  480.  3  Rankin   v.    Beale,    68   Mo.    App. 

1  "  Furnishing  or   delivering  to  a  325;   Boyd  v.  Sappington,  4  Watts, 
third    party,    though    upon    defend-  (Pa.)    247. 

ant's  request,  does  not  as  a  matter  •*  Smith  v.  Watson,  14  Vt.  332. 

of    law    imply    an    undertaking    by  s  Clark   v.   Waterman,   7   Vt.   76; 

defendant     to     pay."     Conrad     Na-  29  Am.  Dec.  150. 

tional  Bank  v.  Ey.,  24  Mont.  178,  c  Conrad   National    Bank   v.   Ry., 

183;  61  Pac.  1.  24  Mont.   178;   61   Pae.  1. 

2  Starett   v.    Miley,    79    111.    App. 


IMPLIED    CONTKACTS    AND    QUASI-CONTKACTS.  1201 

B  till  further  notice,  A  cannot  end  his  liability  by  giving  such 
notice  unless  B  has  so  far  recovered  as  to  be  capable  of  being 
moved.^ 

§788.     Goods  sold  and  delivered. 

An  action  for  goods  sold  and  delivered  can  be  maintained 
wherever  goods  have  been  sold  and  delivered  by  one  person  to 
another  under  an  express  agreement  which  is  incomplete  in 
that  the  contract  price  had  not  been  fixed.^  Under  some  circum- 
stances this  action  will  not  lie  for  goods  delivered  under  a  con- 
tract void  for  mistake  as  to  an  essential  element.  A  sold  and 
delivered  coal  to  B  under  what  both  parties  believed  to  be  a 
special  contract.  The  contract  was,  however,  void  for  mistake : 
A  understanding  that  the  transaction  was  a  cash  sale  while  B 
understood  that  the  price  of  the  coal  was  to  be  credited  on  A's 
account.  A  did  not,  on  learning  of  the  mistake,  demand  return 
of  coal;  but  insisted  that  B  should  keep  it  under  the  contract 
as  claimed  by  A.  B  used  it.  It  was  held  that  B  was  not  liable 
to  A  for  a  reasonable  compensation  for  the  coal  in  the  absence 
of  estoppel.^  This  action  also  lies  where  property  has  been 
taken  by  one  person  with  the  consent  of  the  owner,  the  parties 
intending  the  title  to  pass  although  no  express  agreement  has 
been  made.^  Thus,  a  mortgagee  of  chattels,  holding  under  a 
mortgage  which  provides  that  the  mortgagor  may  sell  the  prop- 
erty  in  the  name  of  the  mortgagee,  may  recover  under  common 
counts  in  assumpsit  against  one  who  has  bought  such  property 
from  the  mortgagor  ;*  even  though  under  an  ordinary  mortgage, 

7  St.    Barnabas   Hospital    v.   Elec-  3  Carney  v.  Cook,  80  la.  747;   45 

trie  Co.,  G8  Minn.  254;  40  L.  R.  A.  X.   W.   919;    Rumford   Falls   Power 

388;  70  N.  W.  1120.  Co.   v.   Paper   Co.,    95   Me.    186;    49 

iMcEwen   v.   Morey,    60   111.    32;  Atl.  876;  Krey  v.  Hussman,  21  Mo. 

James  v.  Muir,  33  Mich.  223 ;  Smith  App.     343 ;     Indiana     Mfg.    Co.    v. 

V.   Summerfield.   108  N.  C.   284;    12  Hayes,  155  Pa.  St.  160;  26  Atl.  6; 

S.  E.   997;    Graflf  v.   Callahan,    158  Goodland  v.  Le  Clair,  78  Wis.  176; 

Pa.  St.  380;   27  Atl.  1009.  47  N.  W.  268. 

2  Concord   Coal   Co.   v.   Ferrin,   71  *  Flood    v.    Bntzbach.     114    Mich, 

N.   H.   331;    93  Am.   St.   Rep.   496;  613;    68   Am.   St.   Rep.   501;    72   N. 

51  Atl.  283.  W.  603. 
76 


1202  PAGE    ON    CONTRACTS. 

the  mortgagee  could  not  recover  ou  the  common  counts  from 
a  third  person  who  bought  mortgaged  property.^  A  builder 
who  uses  goods  and  materials  belonging  to  another  is  liable  to 
such  other  for  their  value  in  this  form  of  action.^  Thus,  A 
had  a  contract  to  erect  a  building  for  B.  A  got  the  iron  work 
for  such  building  from  X.  The  contract  between  A  and  B  pro- 
vided that  no  material  should  be  estimated  or  paid  for  until 
used  in  the  permanent  construction  of  the  building.  X  delivered 
certain  beams  under  his  contract  with  A,  but  before  they  were 
used  in  the  building,  A  forfeited  his  contract,  B  let  a  new  con- 
tract to  C,  and  C  used  this  iron.  It  was  held  that  X  could  re- 
cover from  C  for  such  iron.'^  A,  a  car-wheel  company,  shipped 
to  B,  the  receiver  of  a  railroad,  a  number  of  car-wheels  in  excess 
of  his  order.  B  refused  to  accept  the  entire  number  thus  ship- 
ped, but  A  asked  B  to  unload  the  wheels,  and  hold  them  subject 
to  A's  order,  and  to  be  paid  for  by  B  only  in  case  he  actually 
used  them.  Subsequently,  at  a  receiver's  sale,  X,  who  knew  all 
these  facts,  bought  these  wheels  among  other  property.  X  was 
held  liable  to  A  for  the  value  of  such  wheels  in  implied  contract.^ 
Goods  sold  and  delivered  to  one  person  may  constitute  a  liabil- 
ity against  another,  at  whose  request  and  in  reliance  upon  whose 
promise  to  pay,  such  goods  were  sold  and  delivered.®  Thus,  a 
lumber  company  drew  orders  for  money  upon  itself  in  favor 
of  its  employees.  A  storekeeper,  at  the  request  of  the  lumber 
company,  received  these  orders  in  payment  of  goods  sold  to  such 
employees.  It  was  held  that  the  storekeeper  could  recover  from 
the  lumber  company  for  the  goods  sold  and  delivered.^"  One 
person  is  not  liable  for  goods  sold  to  another,  though  he  may 
have  received  the  proceeds  thereof.  Thus  A,  a  creditor  of  B's, 
agreed  that  B  could  continue  in  business  if  A's  bookkeeper  could 
take  charge  of  the  cash  and  the  drawing  of  checks.     A  tempo- 

sTate  V.  Torcoutt,  100  Mich.  308;  « jSTorthwestern,    etc.,    Co.   v.   Ry, 

58  N.  W.  993;  Warner  v.  Beebe,  47  94  Wis.  603;  69  N.  W.  371. 

Mich.  435;   11  N.  W.  258.  » Cox   v.    Peltier,    159    Ind.    355; 

6  Clare  v.   Johnson    (Ky.).   56   S.  65  N.  E.  6;  East,  etc.,  Co.  v.  Barn- 

W.  5.  well.  78  Tex.  328;   14  S.  W.  782. 

T  Bavley    v.    Anderson,    71    Wis.  i^Enst.  etc.,  Co.  v.  Barnwell,   78 

417;  36  N.  W.  863.  Tex.  328;   14  S.  W.  782. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1203 

rarv  arrangement  of  that  sort  was  entered  into,  which  either 
party  could  avoid  at  will.  Under  such  arrangement,  A  was  not 
liable  for  goods  sold  and  delivered  to  B."  If  goods  are  sold  to 
A  upon  A's  credit,  the  fact  that  they  are  delivered  to  B,  and  that 
B  received  the  benefit  of  them,  does  not  make  B  liable  there- 
for.^^  Thus  a  railroad  company  is  not  liable  for  material  fur- 
nished to  its  main  contractor  for  use  upon  its  road,^^  nor  is  the 
owner  of  property  liable  for  material  furnished  to  the  main 
contractor,  and  used  by  such  contractor  in  building  a  house  upon 
such  proi>erty.^*  The  right  of  one  whose  property  has  been 
wrongfully  taken  by  the  tort  of  another,  to  maintain  an  action  in 
assumpsit  against  such  other  is  discussed  elsewhere. 

IV.        Money  Had  and  Received. 

§789.     General  nature  of  rig-ht. 

If  A  receives  money  which  belongs  to  B,  under  circumstances 
which  give  A  no  right  thereto,  but  which  bind  A  on  principles  of 
justice  and  fairness  to  repay  such  money  to  B,  the  Common  Law 
allowed  B  to  sue  as  on  contract,  although  there  was  no  express 
contract,  and  no  real  implied  contract.^  This  principle  has  sur- 
vived in  our  law,  and  an  action  as  upon  contract  will  lie  for 
money  had  and  received  wherever  one  person  has  received  money 
which  belongs  to  another,  and  which  in  justice  and  right  should 
be  returned."     Since  the  contract  alleged  in  the  plaintiff's  com- 

11  Wood-Dryer  Grocery  Co.  v.  debt  and  gives  tliis  action,  founded 
Bank,  110  Ala.  311;  20  So.  311.  in  the  equity  of  the  pUiintiff's  case 

12  Peirce  v.  Closterhouse,  96  as  it  were  upon  a  contract." 
Mich.  124;   55  N.  W.  663.  Moses  v.   Macferlan,   2    Burr.    1005, 

13  Alabama,    etc.,    Ry.    v.    Moore,  1008;    quoted    in   Bates-Farley   Sav- 
109  Ala.  393;   19  So.  804.     So  with  ings    Bank    v.    Dismukes,    107    Ga, 
work      and      labor.     Woodruff      v.  212,  217;  33  S.  E.  175. 
Rochester,  etc.,  R.  R.  Co.,  108  N.  Y.  2  Gaines  v.  Miller,  111  U.  S.  395j 
39;   14  N.  E.  832.  Pauly  v.  Pauly.  107  Cal.  8;  48  Am. 

i4Limer   v.    Traders'   Co.,   44    W.  St.  Rep.  98;   40  Pac.  29;   Brown  V. 

Va.  175;  28  S.  E.  730.  Woodward.    75    Conn.   2.54;    53   AtL 

1  "  If  the   defendant  be  under   an  112;    Bates-Farley  Savings  Bank  v. 

obligation  from  the  ties  of  natural  Dismukes,    107    Ga.    212;    33    S.   E. 

justice  to  refund,  the  law  implies  a  175;  Wilson  v.  Turner,  164  111.  398; 


1204 


PAGE    ON    CONTRACTS. 


plaint  is  often  purely  fictitioiiSj  the  plaintiff's  right  to  recover  in 
a  contract  does  not  depend  upon  any  principles  of  privity  of  con- 
tract between  the  plaintiff  and  the  defendant,  and  no  privity  is 
necessary.^  The  plaintiff's  right  to  recover  is  governed  by  prin- 
ciples of  equity,  although  the  action  is  one  at  law.*  The  plaintiff 
may,  in  most  cases,  recover  at  law  in  assumpsit  where  he  could 
have  compelled  an  accounting  for  the  money  received  by  the  de- 
fendant, had  the  action  been  in  equity.^     If  A  has  in  his  posses- 


45  N.  E.  820;  Long  v.  Straus,  107 
Ind.  94;  57  Am.  Rep.  87;  6  N.  E. 
123;  7  N.  E.  763;  Comer  v.  Hay- 
worth,  30  Ind.  App.  144 ;  96  Am.  St. 
Eep.  335;  65  N.  E.  595;  Garrott  v. 
Jaffrey,  10  Bush.  (Ky.)  418;  Pease 
V.  Bamford^  96  Me.  23;  51  Atl.  234; 
Spencer  v.  Towles,  18  Mich.  9; 
School  District  v.  Thompson,  51 
Neb.  857;  71  N.  W.  728;  Gangwer 
V.  Fry,  17  Pa.  St.  491;  55  Am.  Dec. 
578;  Matthies  v.  Herth,  31  Wash. 
665;   72  Pac.  480. 

3  Moses  V.  Macferlan,  2  Burr 
1005;  Rapalje  v.  Emory,  2  Dall. 
(U.  S.)  51;  Bank  of  the  Metropolis 
V.  Bank,  19  Fed.  301;  Levinshon  v. 
Edwards,  79  Ala.  293;  Kreutz  v. 
Livingston,  15  Cal.  344;  Brown  v. 
Woodward,  75  Conn.  254;  53  Atl. 
112;  Eagle  Bank  v.  Smith,  5  Conn. 
71;  13  Am.  Dee.  37;  Bates-Farley 
Savings  Bank  v.  Dismukes,  107  Ga. 
212;  33  S.  E.  175;  Allen  v.  Stenger, 
74  111.  119;  Glascock  v.  Lyons,  20 
Ind.  1 ;  83  Am.  Dec.  299 ;  Calais  v. 
Whidden,  64  Me.  249;  Howe  v. 
Clancey,  53  Me.  130;  Lewis  v.  Saw- 
yer, 44  Me.  332 ;  Mills  v.  Bailey,  88 
Md.  320;  41  Atl.  780;  Mason  v. 
Waite.  17  Mass.  560;  Walker  v. 
Conant,  65  Mich.  194;  31  N.  W. 
786.  (Decided  on  demurrer  to  pe- 
tion.  On  hearing  on  the  merits  no 
liability  to  make  compensation  was 
found  to  exist.  Walker  v.  Conant, 
69  Mich.  321;  13  Am.  St.  Rep.  391; 


37  N.  W.  292;  Richardson  v.  Drug 
Co.,  92  Mo.  App.  515;  69  S.  W.  398; 
Fogg  V.  Worster,  49  N.  H.  503 ;  Rob. 
erts  v.- Ely,  113  N.  Y.  128;  20  N.  E. 
606;  Salem  v.  Marion  County,  25 
Or.  449;  36  Pac.  163;  Madden  v. 
Watts,  59  S.  C.  81;  37  S.  E.  209; 
Finch  V.  Park,  12  S.  D.  63;  76  Am. 
St.  Rep.  588;  80  K  W.  155; 
Siems  v.  Bank,  7  S.  D.  338; 
64  N.  W.  167;  Colgrove  v.  Fill- 
more, 1  Aik.  (Vt.)  347;  Soder- 
berg  v.  King  County,  15  Wash.  194; 
55  Am.  St.  Rep.  878;  33  L.  R.  A. 
670;  45  Pac.  785;  Ela  v.  Express 
Co.,  29  Wis.  611;  9  Am.  Rep.  619. 

4Rushton  v.  Davis,  127  Ala.  279; 
28  So.  476;  Brainard  v.  Colchester, 
31    Conn.   407;    Jackson  v.   Hough, 

38  W.  Va.  2.36;  18  S.  E.  575.  "An 
action  of  assumpsit  for  money  had 
and  received  is  a  remedy  equitable 
in  its  nature  existing  in  favor  of 
one  person  against  another  when 
that  other  person  has  received 
money  either  from  the  plaintiff  or 
a  third  person  under  such  circum- 
stances that  in  equity  and  good 
conscience  he  ought  not  to  retain 
the  same  and  which  ex  aequo  et 
bono  belongs  to  plaintiff."  Mer- 
chants', etc.,  Bank  v.  Barnes,  18 
Mont.  335,  337;  56  Am.  St.  Rep. 
586;  47  L.  R.  A.  737:  45  Pac.  218. 

5  Jackson  v.  Hough,  38  W.  Va. 
236;  18  S.  E.  575. 


IMPLIED    CONTKACTS    AND    QUASI-CONTRACTS.  1205 

sion  a  fund  the  equitable  title  to  which  is  in  B,  and  A's  only 
duty  in  connection  therewith  is  to  pay  it  over  to  B,  B  may  sue 
at  law  for  money  had  and  received."  Two  general  classes  of 
questions  are  presented  under  the  topic  of  money  had  and  re- 
ceived. The  first  concerns  the  rights  of  the  parties.  It  is, 
whether,  under  the  facts  the  plaintiff  has  a  right  of  recovery 
from  the  defendant.  The  second  concerns  the  form  of  the  ac- 
tion. It  is,  whether  an  action  in  contract  can  be  brought  if  upon 
the  facts  the  plaintiff  has  a  right  to  recover  in  some  form  of 
action.  The  answer  to  the  latter  question,  however,  decides 
whether  the  right  in  question  can  be  classed  with  contract  rights 
or  not.  Recovery  cannot  ordinarily  be  had  in  this  form  of  ac- 
tion if  there  is  a'  special  contract  between  the  parties.  Thus  if 
a  note  is  given  for  the  loan  the  right  of  the  lender  to  recover  is 
on  the  note  alone.^  However  if  X  obtains  a  loan  from  A  through 
X's  agent  B,  and  B's  note  is  given  therefor,  X  may  ignore  the 
note  and  sue  A  on  the  contract  of  loan. 

§790.    Elements  of  right  to  recover  in  this  action. —  Money  or 
equivalent  must  be  received. 

In  order  to  support  an  action  for  money  had  and  received, 
a  person  against  whom  the  action  is  brought  must  be  shown  to 
have  received,  either  money, ^  or  something  which  is  taken  as  the 

6  Rushton     V.     Davis,      127     Ala.  persons  sought   to  be  charged  have 
279;   28  So.  476.  received  money  belonging  to  him  or 

7  Pettyjohn  V.  Bank,  101  Va.  Ill;  to    which    he    is    entitled.     That    is 
43  S.  E.  203.  the    fundamental    fact    upon    which 

1  St.  Louis,  etc.,  Co.  v.  McPeters,  the    right    of    action    depends.     The 

124  Ala.  451;    27   So.   518;    Palmer  purpose  of  such  action  is  not  to  re- 

V.    vSoott,    68    Ala.    380;     National  cover    damages    but    to    make    the 

Trust  Co.  V.  Gleason,  77  N".  Y.  400;  party    disgorge,    and    the    recovery 

33  Am.  Rep.  632;   Huganir  v.  Cot-  must  necessarily  be   limited   by  the 

ter,  102  Wis.  323;  72  Am.  St.  Rep.  party's  enrichment  from  the  alleged 

884;   78  N.  W.  423.     "The  rule  is  transaction."       Limited  Investment 

quite   elementary  that  to   enable   a  Association   v.    Investment   Associa- 

person   to    maintain    an    action    for  tion,  99  Wis.  54,  58;  74  N.  W.  633; 

money  had  and  received  it  is  neees-  quoted   in   .Tohnson   v.   Abresch    Co., 

sary  for  him  to  establish  that  the  109  Wis.  182;  85  N.  W.  348. 


1206  PAGE    ox    CONTKACTS. 

equivalent  of  money,"  belonging  to  the  person  by  whom  the  a*^' 
tion  is  brought  or  for  his  use.  On  the  one  hand,  an  action  can 
not  be  had  for  money  had  and  received  where  it  is  not  skown 
that  the  person  against  whom  it  was  brought,  received  either  the 
money  or  property  belonging  to  or  for  the  use  of  the  plaintiff.^ 
This  is  simply  an  application  of  the  general  principle,  that  an 
action  on  an  implied  contract  cannot  be  made  the  means  of  en- 
forcing damages  for  breach  of  an  express  contract.*  One  ex- 
ception to  this  principle  is  the  case  where  the  only  thing  re- 
maining for  the  party  in  default  to  do  was  to  pay  the  money.® 
Assumpsit  for  money  had  and  received  cannot  be  made  the 
means  for  recovering  damages  for  breach  of  a  contract  to  erect 
improvements  for  plaintiff's  use,  upon  a  right  of  way  conveyed 
by  plaintiff  to  defendant,*'  nor  damages  for  a  bailee's  selling  lum- 
consigned  to  him  at  less  than  the  price  agreed  upon.'  If  B 
sues  one  to  whom  B  alleges  that  insurance  money  has  been  paid 
to  the  use  of  B,^  B  cannot  recover  if  the  evidence  discloses  that 
no  money  was  had  and  received,  but  that  B's  action  is  really  for 
a  breach  of  a  contract  to  effect  the  insurance.  Thus  an  action 
for  money  had  and  received  will  not  lie  in  favor  of  B  against 
A  where  X  has  done  work  for  A,  which  should  have  inured  in 
whole  or  in  part  to  B.^  To  allow  recovery  in  this  form  of  action 
the  money  paid  must  have  come  to  the  possession  of  the  person 
against  whom  the  action  is  brought,  or  have  been  paid  to  his 
use.  B  had  given  his  wife,  X,  some  money  which  she  claimed 
to  have  invested.     Subsequently  X  forged  B's  name  to  a  note 

2  Snapp  V.  Stamvood,  65  Ark.  222;       N.  M.  601;  62  Pac.  1101;  Royalton 
45  S.   W.  546;   Buckeye    (Township      v.  Turnpike  Co.,  14  Vt.  311. 

of)    V.  Clark,   90  Mich.  432;    51   N.  s  Stewart   Mfg.   Co.   v.   Mfg.    Co., 

W.     528;     Matthewson    v.    Powder  67  K  J.  L.  577;  52  Atl.  391. 
Works,  44  N.  H.  289.  e  Labadie  v.  Ry.,   125  Mich.  419; 

3  St.  Louis,  etc.,  Co.  v.  McPeters,  84  N.  W.  622. 

124  Ala.  451;  27  So.  518;  National  7  Anderson  v.  Corcoran,  92  Mich. 

Trust  Co.  V.  Gleason,  77  N.  Y.  400;  628;  52  N.  W.  1025. 

33  Am.  Dec.  632.  ^  Johnston    v.    Abresch    Co.,    109 

4  P.  Dougherty   Co.  v.  Gring,    89  Wis.  182;  85  N.  W.  348. 

Md.  535;  43  Atl.  912;  Stewart  Mfg.  » Craig    v.    Matheson,    32    N.    S. 

Co.  V.  Mfg.  Co.,  67  N.  J.  L.  577;  52  452;  Hassard  v.  Tomkins,  108  Wis. 
Atl.  391;  Bushnell  v.  Coggshall,  10      186;  84  N.  W.  174. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1207 

which  X  discounted.  Subsequently  an  action  was  brought 
against  B  and  X  on  this  note.  X  then  forged  B's  name  to  an- 
other note,  which  X  discounted.  A  part  of  the  proceeds  of  this 
note  she  applied  to  paying  off  the  note  sued  upon  in  the  first 
action,  and  part  she  aj)plied  to  paying  certain  bills  for  which 
her  husband  was  primarily  liable.  X  told  B  that  the  money 
thus  received  came  from  the  former  investment  of  B's  money. 
It  was  held  that  A,  who  had  furnished  the  money  on  the  second 
forged  note,  could  recover  from  B  that  part. of  the  money  ap- 
plied to  the  payment  of  the  bills  mentioned,  but  could  not  re- 
cover that  part  applied  to  the  payment  of  the  first  forged  note, 
since  B  was  not  liable  thereon,  and  the  money  did  not  come 
into  his  hands,  nor  was  it  paid  for  his  use.^"  So  if  an  action  is 
brought  against  a  merchant  for  money  had  and  received,  on 
the  ground  that  goods  bought  by  his  agent  without  his  authority 
were  delivered  at  his  store  and  sold  by  him,  the  evidence  must 
show  that  he  sold  such  goods  and  received  the  money  therefor.^* 
A  and  B  agreed  to  buy  land  on  their  joint  interest,  and  A  was  to 
negotiate  the  purchase  ;  B  furnished  part  of  the  purchase  money, 
and  subsequently,  on  learning  that  A's  representations  that  the 
price  agreed  upon  was  the  lowest  possible  price  and  did  not  in- 
clude any  commissions  to  A  for  making  the  purchase,  were  false, 
and  that  A  had  an  agreement  with  the  vendee  whereby  A  was 
to  receive  a  certain  amount  of  the  last  payment  to  be  made  as  his 
commission,  refused  to  pay  the  rest  of  the  purchase  price  due 
from  him.  B  was  not  allowed  to  recover  for  money  had  and 
received,  where  A  subsequently  completed  the  contract  and  re- 
sold the  land  at  a  loss/"  A  had  a  contract  for  the  performance  of 
certain  work  and  labor,  and  X  was  a  subcontractor.  The  man 
whom  X  employed  boarded  with  B,  and  when  A  paid  X's  em- 
ployes A  retained  in  his  possession  the  amount  owing  by  each 

10  Mechanics'  Bank  v.  Woodward,  12  Blewitt  v.  MoRae.  100  Wis. 
74  Conn.  689;  51  Atl.  1084;  and  see  153;  75  K  W.  1003.  The  court 
Brown  v.  Woodward,  75  Conn.  254;  held  that  there  had  been  no  reseis- 
53  Atl.  112.  sion  in  this  case,  and  that  B's  rem- 

11  Lesher  v.  Loudon,  85  Mich.  52 ;  edy  was  by  action  against  A  for 
48  N.  W.  278.  fraud. 


1208  PAGE    ON    CONTRACTS. 

for  board  fnrnislied  by  B.  B  bad  a  contract  with  X  to  operate 
a  boarding  bouse  for  tbe  men  at  certain  sum  per  week,  but 
B  bad  no  contract  witb  A  binding  A  to  retain  tbe  amount  due 
for  such  board.  A  paid  tbe  men  and  retained  sucb  amounts; 
but  when  sucb  men  were  paid,  X  owed  A  for  supplies  to  an 
amount  in  excess  of  tbe  amount  so  retained  by  A.  It  was  beld 
that  B  bad  no  right  of  action  against  A  for  money  bad  and  re- 
ceived, since  A  had  received  nothing  from  any  person  to  the  use 
of  B.^^  A,  B  and  C  took  part  in  a  forgery,  by  means  of  which 
X  was  induced  to  pay  to  A  a  sum  of  money.  It  was  held  that 
X  might  recover  from  A,  B  and  C  for  money  had  and  received, 
if  the  understanding  of  the  wrongdoers  was  that  A  was  collect- 
ing it  for  their  common  interests.  X's  right  of  recovery  was  not 
affected  by  the  fact  that  A  had  appropriated  all  the  frauds  of 
this  crime,  and  that  B  and  C  bad  in  fact  received  no  part  there- 
of from  A.^*  A,  X's  agent,  forged  A's  name  on  certain  stock 
certificates,  sold  them  to  B,  deposited  the  money  in  A's  name 
and  then  embezzled  it.  It  was  held  that  this  was  not  such  re- 
ceipt by  A  that  B,  on  being  obliged  to  return  the  stock  certifi- 
cates, could  maintain  an  action  against  A  for  such  money  had 
rind  received.^^  On  tbe  other  band,  it  is  not  necessary  that  the 
person  against  whom  an  action  for  money  had  and  received  is 
brought,  should  have  received  money  belonging  to,  or  to  the  use 
ofj  the  plaintiff.  If  be  has  taken  something  as  the  equivalent 
of  the  money,  he  is  liable  in  this  action.^®     Thus,  where  he 

laEriekson    v.    Construction    Co.,  ing  to  establish  his  interest  in  the 

107   Wis.   49;    82  N.  W.   694;    dis-  proceeds."     National    Trust    Co.    v. 

tinguishing,    Sterling   v.    Ryan,    72  Gleason,  77  N.  Y.  400,  408;  33  Am. 

Wis.  36;    7  Am.   St.  Rep.  818;    37  Rep.  632. 

N.  W.  572,  as  a  case  where  A  had  is  Fay  v.  Slaughter,  194  111.  157; 

agreed  with  B  to  retain  such  money,  88  Am.  St.  Rep.   148;   56  L.  R.  A. 

14  National  Trust  Co.  v.  Gleason,  564;    62   N.   E,   592;    reversing,    94 

77    N.   Y.   400;    33    Am.   Rep.    6.32.  111.  App.  111. 

"  To  charge  a  party  in  an  action  of  is  Snapp    v.    Stanwood,    65    Ark. 

that  character  the  receipt  of  money  222;    45    S.    W.    546.      (Qualifying 

by  him  directly  or  indirectly  must  Hutchinson    v.     Phillips,     11     Ark. 

be    established.     His    complicity    in  270,  on  this  point,  the  syllabus  of 

the  crime  is  not  the  cause  of  action,  which  restricts  such  action  to. cases 

but  only  an   item  of  evidence  tend-  where  money  only  has  been  rpcejved.) 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1209 

takes  a  note  belonging  to  another  as  cash,  he  may  be  liable  to  the 
real  owner  thereof  for  money  had  and  received/^  So,  where  A, 
B's  agent,  accepts  from  X,  from  whom  he  is  collecting  money  for 
B,  a  note  signed  by  B  and  endorsed  by  X,  as  part  payment  of 
such  sum,  A  is  liable  to  B  for  money  had  and  received.^*  So 
when  he  receives  an  order  as  the  equivalent  of  cash,  and  converts 
it,  or  its  proceeds,  to  his  own  use,  he  is  liable  for  money  had 
and  received/®  If  X,  a  debtor,  conveys  to  his  creditor.  A,  his 
stock  of  goods,  and  A  agrees  to  pay  debts  owing  by  X  to  B,  and 
othe^  creditors  of  X,  in  consideration  of  such  conveyance,  A 
may  be  liable  to  B  and  such  other  creditors  for  money  had  and 
received,  where  he  takes  such  goods,  treats  them  as  the  equiva- 
lent  of  money,  and  converts  them  into  money.^**  If  A  agrees 
to  pay  B  a  certain  sum  of  money  out  of  the  proceeds  of  the  sale 
of  certain  agricultural  produce,  B  may,  after  a  reasonable  time, 
maintain  an  action  against  A  for  money  had  and  received  for 
B's  use  in  the  absence  of  a  showing  by  A  that  he  has  not  yet  sold 
such  produce,  since,  after  a  reasonable  time  has  elapsed,  it  will 
be  presumed  that  such  sale  has  been  made.^^  Xo  recovery  can 
he  had  in  an  action  for  money  had  and  received  through  mis- 
take, unless  either  the  money  or  something  equivalent  thereto 
has  been  in  fact  received.""  Thus  A  believed  that  he  owed  B 
one  hundred  and  fifty  dollars.  B  knew  that  the  amount  was 
only  fifty  dollars.  In  settlement  of  such  claim,  A  delivered  to 
B  a  horse  which  A  valued  at  one  hundred  and  fifty  dollars,  and 

Seavey  V.  Dana,  61  N.  H.  339;  Mat-  is  Snapp    v.    Stanwood,    65    Ark. 

thewson  v.  Powder  Works.  44  N.  H.  222;  45  S.  W.  546. 

2s9.     "To    maintain    assumpsit   for  i9  Bavins   v.    Bank    (1900),    1    Q. 

money    had    and    received    it    must  B.   270;   Buckeye    (Township  of)    v. 

appear  that  the   defendant  received  Clark,  90  Mich.  432;  51  N.  W.  528; 

the  money  due  the  plaintiff  or  some-  Bowen  v.  School  District,  36  Mich, 

thing  which  he  had  received  as  and  149. 

insL^ad  of  it,   or   which   he  had  ac-  20  Potts   v.    Bank,    102   Ala.    286; 

tually    or    presumptively    converted  14  So.  663. 

intt/   money   before    suit."     Peay   v.  21  Barfield    v.    IMcCombs,    89    Ga, 

Ri.igo,    22   Ark.    68,    71;    quoted   in  799;  15  S.  E.  666. 

Swapp   V.    Stanwood,   65    Ark.    222 ;  22  Hendricks  v.  Goodrich,  15  Wis. 

>iJ  S.  W.  546.  679. 
IT  Seavey  v.  Dana,  61  N.  H.  339. 


1210  PAGE    ON    CONTRACTS. 

Avliicli  was  worth  about  that  sum.  It  was  held  that  A  could  not 
recover  from  B  one  hundred  dollars  as  money  had  and  recieved 
by  mistake."^  This  case  involved  the  principle  that  A  could  not 
affirm  in  part  and  rescind  in  part.  He  could  not  affirm  the 
payment  so  as  to  treat  his  original  liability  as  discharged  and 
vet  avoid  it  as  to  the  terms  upon  which  the  payment  was  made. 
In  the  settlement  of  a  claim  between  A  and  a  village,  an  illegal 
assessment  imposed  by  the  village  was  credited  on  A's  account, 
the  village  refusing  to  pay  A  unless  such  credit  was  made. 
It  was  held  that  this  did  not  amount  to  a  payment  by  A  of 
the  illegal  assessment,  but  that  it  was  merely  a  case  of  A's 
failing  to  collect  all  that  he  was  entitled  to  under  his  original 
cause  of  action.  Accordingly,  limitations  ran  from  the  time 
A's  original  claim  against  the  village  for  work  accrued,  and  not 
from  the  date  when  this  settlement  was  made."*  Recovery  may 
be  had,  however,  if  something  is  delivered  which  is  taken  as 
money.  Thus,  where  a  payment  is  made  in  small  notes,  which 
were  not  money  and  which  Avere  illegally  issued,  but  which 
were  in  fact  used  as  money,  recovery  can  be  had  in  such  an 
action.^^  So  where  an  agent  discharges  a  principal's  debt  by 
applying  thereon  a  debt  of  the  agent's,  this  is  treated  as  the 
equivalent  of  money."®  A,  by  mistake,  gave  a  negotiable  note 
to  B  in'^  settlement  of  an  account  which  had  already  been  paid. 
It  was  held  that  this  might  be  treated  as  a  payment  of  such 
account,  the  note  being  taken  as  money,  and  might  justify  a 
recovery."^  A  subsequently,  after  learning  the  facts,  paid  the 
note  voluntarily.  It  was  held  that  he  had  no  right  of  action 
to  recover  the  amount  thus  paid  by  him,  although  under  proper 
pleadings  he  might  recover  the  amount  of  the  note  for  the  over 
payment  made  by  giving  it.  This  action  lies  only  in  favor  of 
the  person  who  is  the  owner  of  the  money  which  is  the  subject 
of  the  action.     If  A  receives  B's  money,  X  cannot  maintain  an 

23  Hendricks  v.  Goodrich,  15  Wis.  6  Gill    (Md.)   68;  46  Am.  Dec.  655. 

679.  20  Beardsley    v.    Eoot,    11    Johns. 

24Brundage  v.   Port  Chester,   102  (X.  Y.)    464;  6  Am.  Dec.  386. 

X.  Y.  404 ;  7  X.  E.  398.  27  Gooding    v.     Morgan,     37     Me. 

25  Baltimore,  etc.,  Rv.   v.   Faunce,  419. 


IMPLIED    CONTRACTS    AND    QUASI-CQNTRACTS. 


1211 


action  against  A  therefor.  Thus,  where  X  drew  a  draft  which 
was  subsequently  altered,  the  amount  being  raised,  and  the 
drawee  bank  accepted  and  paid  such  raised  draft,  and  charged 
X  in  its  account  for  the  amount  of  the  draft  as  raised,  X 
cannnot  recover  against  A  for  money  had  and  received,  since 
A  has  not  received  any  of  X's  money.^^  An  action  for  money 
had  and  received  cannot  be  maintained  against  one  who  is 
known  to  the  lender  to  be  merely  a  surety,  receiving  none  of 
the  money  advanced. ^^ 

§791.    Person  receiving  money  must  not  be  entitled  in  good  con- 
science to  retain  it. 

The  right  of  one  person  to  recover  money  which  belongs  to 
him,   and   which   is   paid   to   another  person,   depends   not  on 
whether  the  person  to  whom  such  payment  was  made  could 
have  compelled  it  by  law  if  it  had  not  been  made  voluntarily,, 
but  upon  whether  the  person  to  whom  the  money  is  paid  is 
entitled  in  equity  and  good  conscience  to  retain  it.^     Examples 
of  payments  which  the  payee  could  not  have  compelled  by  law, 
but  which  when  made  the  payor  cannot  recover,  are  to  be  found 
in  gifts  and  voluntary  payments.^     This  principle  is  not  lim- 
ited, however,  to  cases  of  payment  which  are  technically  volun- 
tary.    AA-liere  a  widow  pays  the  just  debt  of  the  estate  of  her 
husband  out  of  the  assets  of  such  estate  which  are  in  her  pos- 
session, and  subsequently  she  is  appointed  administratrix,  she 
cannot  recover  on  behalf  of  the  estate  the  money  thus  paid 
by  her  without  authority  where  there  are  no  other  creditors 
whose  rights  are  interfered  with,  since  the  party  to  whom  the 
money  is  paid  is  entitled  in  good  conscience  to  retain  it;  and 

28  National  Bank  v.  Bank,  122  N.      defiance  if  he  has  the  best  right  to 
Y.  367 ;  25  N.  E  355.  it."     Goddard  v.  Seymour,  30  Conn. 

29  Arbuekle   v.   Templeton,  65  Vt.      394,  401 ;  Lime  Rock  Bank  v.  Plirap- 
205;  25  Atl.  1095.  ton,  17  Pick.    (Mass.)    159;  28  Am. 

1" However     tortiously     it      (the  Dec.    286;    Le    Breton  V.   Pierce,   2 

money)     may    have    come    into    his  All.   (Mass.)  8. 
hands,    the    defendant    can    in    this  -  See  §  797. 

form   of   action   set  the  plaintiff  at 


1212  PAGE    ON    CONTKACTS. 

if  such  payment  had  not  been  made,  he  would  have  had  a  right 
to  enforce  payment  from  the  administratrix  in  her  official  ca- 
pacity.^ If  A  received  money  from  X  for  the  use  of  B,  A  is 
liable  to  B  therefor,  even  if  A  could  not  have  enforced  the  pay- 
ment to  himself  of  such  money  from  X,  or  if  he  was  not  bound 
to  B  to  receive  such  money  when  paid  in.  Thus,  A,  a  factor, 
took  out  insurance  on  butter  which  was  consigned  to  him,  and 
received  the  premiums  therefor  from  his  principal,  B.  Subse- 
quently A  claimed  that  loss  was  sustained  upon  B's  butter, 
among  other  lots  of  butter ;  and  the  insurance  money  was  paid 
to  A,  in  part  upon  such  loss.  A  was  held  liable  to  B  for  the 
amount  of  such  insurance  money  representing  the  loss  upon 
B's  butter,  although  such  butter  w^as  not  in  fact  damaged ;  and 
A  was  not  bound  by  a  contract  with  B  to  procure  such  insur- 
ance.* An  application  of  this  principle  is  often  found  in  cases 
of  payment  by  mistake  of  fact.  Thus,  A  owed  B,  but  B's 
right  of  action  was  barred  by  the  statute  of  limitations.  A 
subsequently  paid  B  under  mistake  as  to  the  existence  of  such 
defence.  It  was  held  that  A  could  not  recover.^  So  where 
A  loaned  two  hundred  eighty  dollars  to  B  and  by  mistake 
the  note  was  drawn  for  two  hundred  thirty  dollars,  and  B  re- 
paid two  hundred  eighty  dollars  to  A,  B  cannot  recover  the 
fifty  dollars  ?rom  A  as  paid  under  a  mistake  of  fact.*'  So 
where  a  retired  army  officer  on  half  pay  accepted  a  position  in 
the  diplomatic  service,  which  by  statute  deprived  him  of  his 
rank  and  pay  in  the  army,  and  after  his  diplomatic  service  was 
ended  he  performed  military  duties  for  which  he  received  pay, 
the  United  States  cannot  recover  such  pay,  since  even  if  he  was 
not  an  officer  de  jure  he  was  de  facto,  and  as  such  entitled  to 
compensation.'  A,  a  grantee  of  a  mortgagor  X,  and  B,  a  mort- 
gagee, both  believed  that  certain  land  owned  by  A  was  covered 
by  a  mortgage  to  B.     A  made  a  payment  to  B  to  procure  the 

3  Rainwater    v.    Harris.    51    Ark.  ^  Hubbard    v.    Hickman,    4    Bush. 
401;  3  L.  E.  A.  845;  11  S.  W.  583.         (Ky.)    204. 

4  Fish  V.   Seeberger,    154   111.   30;  "Foster  v.  Kirby.  31  Mo.  496. 

39  N.  E.  982.  ''  Badeau  v.  United  States,  130  U. 

S.  439. 


IMFX.IED    CONTRACTS    AND    QUASI-CONTRACTS.  1213 

release  of  such  land  from  the  lien  of  such  mortgage.  Subse- 
quently, in  a  foreclosure  suit  between  B  and  X,  such  payment 
was  credited  upon  the  amount  of  the  mortgage  debt.  A  ma- 
jority of  the  court  held  that  inasmuch  as  B  had  changed  his 
position  in  veliance  upon  such  payment,  and  his  rights  had  been 
fixed  by  the  decree,  and  A,  who  had  opened  the  negotiations, 
and  had  asked  B  to  receive  the  payment,  was  the  more  negli- 
gent of  the  two,  A  could  not  recover  such  payment.®  Another 
application  of  this  principle  is  found  in  payments  made  by 
duress  or  compulsion  of  law.^  Where  A  had  erected  buildings 
upon  the  land  of  B,  a  minor,  under  a  contract  with  B's  father, 
whereby  A  was  to  erect  certain  buildings,  collecting  rents  there- 
from as  payment,  it  has  been  held  that  after  A  has  erected 
such  buildings  and  collected  rents  to  apply  on  the  cost  thereof, 
he  is  not  liable  to  the  minor  for  such  rents  received,  as  it 
would  not  be  just  to  give  the  minor  the  benefit  of  such  material 
and  labor  without  any  compensation  therefor,  even  though  the 
contract  is  unenforcible."  Taxes  which  have  been  paid,  cannot 
be  recovered  because  of  technical  irregularity  in  the  proceed- 
ings affecting  the  substantial  rights  of  the  parties,  even  though 
such  irregularity  might  have  been  a  ground  of  resisting  the  pay- 
ment in  the  first  instance.^^  The  same  principle  applies  to 
money  paid  on  street  assessments,  which  are  technically,  but 
not  substantially,  invalid.^^ 

§792.     Party  from  whom  recovery  is  sought  must  be  placed  in 
statu  quo. 

In  order  to  recover  in  an  action  for  money  had  and  received 
the  person  from  whom  recovery  is  sought  must  be  placed  in 
f)tatu  quo,  unless  he  is  a  wrongdoer.  A  common  illustration  of 
this  rule  exists  when  money  paid  to  an  agent  to  be  paid  over 

sRichey  v.  Clark,  11  Utah  467;  394;  Wiesmann  v.  Brighton,  83 
40  Pac.  717.  Wis.  550;  53  N.  W.  911. 

9  See  §§  256,  799  et  seq.  12  Newcomb  v.  Davenport,   86  la. 

10  McKee  V.  Preston,  66  Cal.  522;  291;  53  N.  W.  2.32;  Hopkins  v. 
6   Pac.   379.  Butte,  16  Mont.  103;  40  Pac.  171. 

11  Goddard  v.  Seymour,  30  Conn. 


1214  PAGE    ON    CONTKACTS. 

to  his  principal  and  by  him  so  paid  over  is  sought  to  be  recovered 
from  the  agent.  If  B  pays  money  to  A  as  agent  for  X,  and  A 
pays  that  money  over  to  X,  B  cannot  recover  such  money  from 
A  if  A's  agency  was  disclosed  when  the  payment  was  made,  and 
A  himself  has  committed  no  wrongful  act  in  inducing  or  com- 
pelling B  to  pay  him  the  money/  Thus,  where  a  purchase 
price  of  a  ward's  land  was  paid  to  the  guardian,  and  the  guar- 
dian remitted  the  money  to  his  ward,  the  guardian  is  not  liable 
in  an  action  for  money  had  and  received,  to  a  broker  suing  for 
commissions  for  the  sale  of  such  property.^  So,  selectmen  of 
a  town,  who  in  good  faith  determine  the  value  of  a  pauper's 
support  furnished  him  by  the  town,  which  amount  under  the 
law  he  must  refund  to  the  town  before  he  is  put  on  the  voting 
list,  are  not  liable  to  him  for  money  had  and  received,  where 
in  good  faith  they  fix  an  excessive  amount  which  he  pays  them 
and  they  pay  into  the  town  treasury.^  Where  property,  is  sold 
for  a  sidewalk  assessment,  and  the  proceeds  of  such  sale  are 
by  law  to  be  paid  over  to  the  contractor  entitled  thereto,  a  pur- 
chaser at  such  sale  cannot  recover  from  the  city  to  which  the 
money  is  paid,  and  he  pays  it  over  to  the  contractor  though  the 
assessment  proves  to  be  illegal,  and  the  purchaser  takes  nothing 
by  reason  of  his  purchase.*  If,  however,  the  fact  of  agency  is 
not  disclosed  to  the  person  making  the  payment,  at  the  time 
of  such  payment,  the  person  making  the  payment  may  recover 
from  the  agent  of  whom  he  pays  the  money,  if  the  facts  are 
such  that  he  could  have  recovered  from  the  principal  had  the 
payment  been  made  direct  to  the  principal.  Thus,  where  A, 
an  investment  company,  made  a  loan  for  its  principal,  C,  to  B, 
and  B  supposed  that  she  was  dealing  with  A  alone,  and  B 

1  Elliott  V.  Swartwout,  10  Pet.  N.  H.  143,  where  the  selectmen  were 
(U.  S.)  137;  Wilson  v.  Wold,  21  liable  for  taxes,  the  payment  of 
Wash.  398;  75  Am.  St.  Rep.  846;  58  which  had  been  wrongfully  exacted 
Pac.  223.  fis   a   condition   precedent  to   allow- 

2  Hudson  V.  Scott,  125  Ala.  172;  ing  the  person  so  paying  them  to 
2G  So.  91.  vote. 

3  Brown  v.  Harden,  61  N.  H.  15;  *  Richardson  v.  Denver,  17  Colo, 
distinguishing.    Ford  v.   Holden,   39  398 ;   30  Pac.  333.  • 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1215 

makes  over-payments  to  A,  by  way  of  usury,  which  B  is 
permitted  to  recover,  B  may  recover  from  A,  though  A  has 
forwarded  such  payments  to  C.^  If  payment  is  made  under 
protest,  this  is  sufficient  notice  to  the  person  receiving  it  to 
make  him  liable  therefor  if,  under  the  circumstances,  he  would 
have  been  liable  to  refund  a  payment  for  his  own  benefit,  even 
if  he  has  paid  over  to  his  principal  the  money  thus  received.* 

§793.    Action  does  not  enlarge  substantive  rights. 

In  allo^jving  an  action  for  money  had  and  received,  the  law 
intended  to  allow  a  simple  remedy  for  a  recognized  right,  and 
did  not  intend  to  create  a  right  where  there  was  none  already. 
B  had  been  dealing  with  X,  a  stock-broker,  and  the  result  of 
the  transaction  showed  a  balance  in  B's  favor.  B  requested 
A,  X's  agent,  for  a  settlement  of  that  balance,  and  asked  A  to 
pay  it.  A  finally  made  such  payment,  expecting  X  to  remit 
the  amount  to  him  at  once.  X  was  insolvent,  and  such  amount 
was  never  remitted.  It  was  held,  that  A  could  not  recover 
such  amount  from  B.^  A,  the  publisher  of  a  newspaper,  made 
a  subscription  to  a  fund  for  the  relief  of  the  families  of  certain 
firemen  who  had  lost  their  lives  in  the  discharge  of  their  duty, 
and  published  an  appeal  in  his  newspaper  for  other  subscrip- 
tions. A  number  of  subscriptions  were  made,  and  the  money 
was  paid  to  A.  It  was  held  that  the  only  child  and  heir  of 
one  of  the  firemen  had  no  right  of  action  against  A  to  recover 
his  part  of  the  money  so  paid  in  as  money  had  and  received, 
since,  under  the  terms  of  A's  request  the  disposition  of  the  fund 
thus  paid  in  was  left  to  his  discretion  and  judgment.^  While 
it  did  not  affect  the  legal  rights  of  the  parties,  the  dispute  arose 
in  this  way:  plaintiff  was  a  minor,  the  only  son  and  heir  of 
one  of  the  firemen  for  the  benefit  of  whose  families  the  money 
was  collected.     A  consulted   a  legal   adviser,   and   decided  to 

5  Thompson    v.     Investment  Co.,  i  Clippinger  v.    Starr,    130   Mich. 
114  la.  481;  87  N.  W.  438.                       463;  90  N.  W.  280. 

6  Elliott    V.    Swartwout,    10  Pet.  2  Hallinan    v.    Hearst    (Cal.),    62 
(U.  S.)    137.                                                 Pac    1063. 


1216  PAGE    ON    CONTRACTS. 

deposit  the  plaintiff's  share  of  the  fund  with  a  trust  company 
until  the  plaintiff  came  of  age.  The  lower  court  made  certain 
orders  as  to  the  disi^osition  of  the  income  of  that  fund  for  the 
benefit  of  the  plaintiff  during  his  minority,  and  to  which  orders 
A  did  not  except.  In  the  Supreme  Court,  the  plaintiff  was  the 
party  complaining  of  error  in  the  proceedings  of  the  court 
below,  in  refusing  to  turn  over  the  entire  fund  to  himself  or 
his  guardian.  Where  an  officer  is  holding  over  as  de  facto 
treasurer,  his  successor,  not  having  been  elected  legally,  a  school 
district  cannot  compel  him  to  pay  over  funds  lawfully  in  his 
possession  by  an  action  for  money  had  and  received.^  If  A 
obtains  money  from  B,  under  circumstances  which  make  him 
liable  to  refund,  and  uses  the  money  in  whole  or  in  part  to 
discharge  a  valid  debt  which  A  owes  X,  and  X  takes  without 
collusion  or  fraud,  B  cannot  recover  in  an  action  against  X  for 
money  had  and  received.*  Thus,  where  A  borrowed  money 
of  X,  and  to  secure  the  same  he  gave  a  forged  note  and  mort- 
gage apparently  signed  by  third  j^ersons,  and  subsequently  A 
borrows  money  from  B  and  gives  another  forged  mortgage, 
and  with  a  part  of  the  money  thus  borrowed  pays  the  first 
mortgage  to  X,  B  cannot  recover  from  X.^  So,  where  A  gets 
money  from  B  by  giving  a  note  to  which  A  sigTis  the  name  of 
his  principal  without  authority,  and  A  uses  the  money  thus 
obtained  to  pay  debts  of  his  principal,  which  A  should  have  paid 
out  of  those  of  X,  which  should  have  been  in  A's  hands  but 
which  A  in  fact  had  embezzled,  it  was  held  that  B  could  not 
recover  from  X  for  the  money  thus  used.®  So,  where  B,  a 
vendee  of  land,  has  a  right  to  rescind  the  sale,  he  cannot  recover 
in  an  action  for  money  had  and  received  from  one  who  has 
received  no  part  of  the  purchase  price,  except  what  was  paid 
to  him  by  the  vendor,  A,  as  commission  for  bringing  about  the 

3  School  District  v.  Smith,  67  Vt.  Am.  St.  Rep.  391 ;  37  X.  W.  292. 
566 ;  32  Atl.  484.  5  Walker  v.  Conant,  69  Mich.  321 ; 

4  Craft  V.  R.  R.,  150  Mass.  207;  13  Am.  St.  Rep.  391;  37  N.  W.  292. 
5  L.  R.  A.  641;  22  N.  E.  920;  6  Craft  v.  R.  R.,  150  Mass.  207-; 
Walker  v.  Conant,  69  Mich.  321 ;   13  5  L.  R.  A.  641 ;  22  N.  E.  920. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1217 

sale/  So,  where  A  gets  money  from  B  by  a  forged  draft,  and 
"witii  part  of  the  proceeds  thereof  he  discharges  a  debt  which  he 
owes  X,  who  knows  nothing  of  the  forgery,  and  who  surrenders 
to  A  a  note  endorsed  by  a  third  j>erson,  B  cannot  recover  from 
X.^  So,  where  A,  who  is  shipping  hogs  under  an  arrangement 
with  B,  a  firm  of  commission  brokers,  whereby  he  agreed  to 
consign  the  hogs  to  B,  and  draw  upon  B  with  each  consignment, 
and  to  use  the  money  thus  obtained  in  paying  for  the  hogs,  it 
was  held  that  where  A  took  part  of  this  money  and  paid  a  debt 
owing  by  him  to  a  bank,  X,  B  cannot  recover  such  money  from 
X,  although  X  knew  of  the  arrangement  under  which  the  money 
was  received,  since  the  relation  of  A  to  B  was  that  of  mere 
debtor  and  creditor.''  So,  Avhere  X,  the  cashier  of  a  bank,  who 
was  also  county  treasurer,  owes  certain  taxes  to  the  state 
as  county  treasurer,  and  draws  a  draft  which  he  signs  as 
cashier  of  his  bank,  on  another  bank  in  which  his  bank  has 
deposited  funds,  and  forwards  such  draft  to  the  state  in  pay- 
ment of  the  taxes  due  him,  which  draft  is  accepted  and  paid, 
the  bank  of  which  X  is  cashier  cannot  recover  from  the  state, 
although  the  cashier  never  paid  the  bank  for  such  draft.^°  The 
court  held  that  the  fact  that  the  cashier  had  signed  the  draft, 
was  no  notice  to  the  state  that  he  was  using  the  bank's  funds 
for  his  individual  debt.^^  If  facts  exist  which  discharge  the 
plaintiff's  right  of  action  upon  an  express  contract,  the  same 
facts  will  prevent  him  from  waiving  the  express  contract,  and 
suing  on  an  implied  contract.  ^^  Thus,  where  A,  had  deposited 
money  with  B  to  invest,  and  subsequently  A  and  B  had  an 

7  Limited  Investment  Association  25  N.  Y.  293,  where  one  who  took 
V.  Investment  Association,  99  Wis.  the  president's  individual  check  cer- 
54;  74  N.  W.  633.  tified   to   by   him   as    president   was 

8  Alabama  National  Bank  v.  Riv-  charged  with  notice  that  the  presi- 
ers,  116  Ala.  1;  67  Am.  St.  Rep.  dent  had  no  authority  to  accept  his 
95;  22  So.  580.  individual    check    on    behalf   of   the 

sHurlburt    v.    Palmer,    39    Neb.  bank. 
158;  57  N.  W.  1019.  12  Hammer    v.    Downing,    39    Or. 

10  Goshen  National  Bank  v.  State,  504;  64  Pac.  651;  65  Pac.  17,  990; 
141  N.  Y.  379;  36  N.  E.  316.  67  Pac.  30. 

11  Distinguishing,  Claflin  v.  Bank, 

77 


1218  PAGE   ON    CONTEACTS. 

accounting  and  made  a  settlement,  this  accounting  will  not  onlv 
bar  an  action  upon  the  express  contract  between  A  and  B,  but 
also  will  bar  an  action  for  money  had  and  received/^  If  A  has 
paid  money  to  B  under  such  circumstances  that  he  cannot  re- 
cover it  from  B,  and  such  payment  has  discharged  a  debt  due 
from  C  to  B,  A's  right  to  recover  from  C  cannot  be  litigated 
in  an  action  brought  by  A  against  B,  even  if  C  is  made  a  part;' 
thereto/^ 

§794.     Classes  of  rights. —  Receipt  of  money  from  third  pwson. 

In  determining  the  right  of  one  whose  money  has  been  placed 
in  the  hands  of  another  to  recover  the  same,  we  must  distin- 
guish between  two  general  classes  of  cases.  In  the  first  cls>,ss, 
the  party  who  receives  the  money  of  another,  receives  it  from 
a  third  person  in  whose  hands  it  is,  without  the  consent  of  the 
real  owner  thereof.  In  the  second  class  of  cases,  the  person 
receiving  the  money  receives  it  from  the  real  owner,  or  from 
a  third  person,  with  the  consent  of  the  real  owner.  The  chief 
distinction  in  legal  effect,  between  these  two  classes  of  cases,  is 
this :  In  the  first  class,  we  are  not  embarrassed  by  the  question 
whether  the  payment  was  a  voluntary  one.  In  the  second  cla?s, 
in  addition  to  the  question  of  ownership  of  the  original  fund 
and  the  right  to  recover  the  same,  presented  in  the  first  cla?«!, 
we  have  the  further  complicating  question  whether  the  payment 
was  not  a  voluntary  one,  since  if  the  payment  was  voluntary 
no  recovery  can  be  had  although  all  the  other  facts  might  be 
such  as  to  entitle  the  original  owner  to  recover.  If  A  receives 
money  from  X  which  belongs  to  B,  without  B's  consent,  the 
general  rule  is,  that  in  the  absence  of  special  circumstances  B 
may  recover  such  money  from  A.^  A  public  officer,  as  a  sheriff 
who  has  retained  money  which  he  claims  to  be  due  him  as 

13  Hammer  v.  Downing,  39  Or.  i  United  States  v.  Bank,  96  U.  S. 
504;  64  Pae.  651;  65  Pac.  17,  990;  30;  Bayne  v.  United  States,  93  U. 
67  Pac.  30.  S.  642;  Brand  v.  Williams,  29  Minn. 

14  Holt  V.  Thomas,  105  Cal.  273;  238;  13  N.  W.  42;  Knapp  v.  Hobbs, 
38  Pac.  891 ;  Langevin  v.  St.  Paul,  50  N.  H.  476 ;  Haeblef  v.  Myers,  132 
49  :Minn.  189;   51  X.  W.  817.  N.  Y.  363;  28  Am.  St.  Rep.  589;  15 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1219 

commissions,  but  which  belongs  to  a  board  of  education,  is  liable 
in  an  action  for  money  had  and  received.^  A  public  quasi 
corporation,  as  a  county  which  receives  taxes  and  applies  them 
all  to  its  own  use  when  it  should  pay  bonds  issued  by  a  town  out 
of  such  taxes,  is  liable  to  such  town  therefor.^  So,  if  a 
county  receives  money  belonging  to  other  persons  without  au- 
thority, it  must  refund  to  such  persons.*  Thus,  where  taxes  are 
paid  in  to  a  county  by  a  sheriff,  when  they  should  have  been 
paid  to  a  city,  the  city  may  recover.^  So,  where  a  county  is 
divided,  and  the  original  county  is  legally  entitled  to  taxes 
which  were  due  when  the  division  was  made,  but  which  had 
not  then  been  paid,  but  the  state  officials  through  whose  hands 
such  taxes  passed,  pay  a  part  thereof  to  the  new  county,  the 
original  county  may  recover  such  taxes  from  the  new  county.® 
A  stockholder  who  receives  dividends  when  the  corporation  is 
insolvent,  and  the  dividends  are  paid  out  of  the  capital  of  the 
corporation,  knowing  of  such  condition,  may  be  compelled  to 
repay  such  dividends  in  an  action  brought  by  the  receiver  of 
the  company.^  Where  a  school  trustee  expends  money  for  the 
actual  use  and  benefit  of  township  schools,  which  by  law  he  is 
required  to  pay  over  to  another  school  corporation,  such  town- 
ship is  liable  to  such  corporation  for  the  amount  of  money 
thus  expended.^  If  a  wife  has  taken  money  belonging  to  her 
husband  and  paid  premiums  on  an  insurance  policy,  taken 
out  by  her  upon  his  life  without  his  authority,  the  husband  may 
recover  the  premiums,  thus  paid  from  the  insurance  company.^ 

L.  Ic,  A.  588;   30  N.  E.  963;   State  6  Colusa  County  v.  Glenn  County, 

V.    fet.    Johnsbuiy,    59   Vt.    332;    10  117  Cal.  434;  49  Pac.  457. 

At/.  631.  7  Warren  v.  King,  108  U.  S.  389; 

2  Socorro   Board   of   Education   v.  Davenport  v.  Lines,   72   Conn.   118; 
Kobinson,    7    N.    M.    231 ;    34    Pac.  44  Atl.  17. 

2?5.  8  Center      School      Township      v. 

3  Strough     V.     .Jefferson     County,  School  Commissioners,  150  Ind.  168; 
119  N.  Y.  212;  23  X.  E.  552.  49  N.  E.  961   (citing  Argenti  v.  San 

4  Chapman    v.    County    of    Doug-  Francisco,    16   Cal.   255;    Merrill   v. 
lass,  107  U.  S.  348.  Marshall  County,  74  la.  24;   36  N". 

5  Salem  r.  Marion  County,  25  Or.  W.   778). 

449;  36  Pac.  163.  fl  Metropolitan    Life    Tns.    Co.    V 

Trende    (Ky.),   53    S.   W.   412. 


1220  PAGE    ON    CONTKACTS. 

Wliere  the  statute  provided  that  property  to  the  value  of  one 
thousand  dollars  is  exempt  from  administration  for  the  benefit 
of  the  widow  and  minor  children,  and  such  property  is  delivered 
to  the  widow,  a  minor  child  may  recover  its  share  from  the 
widow  in  an  action  for  money  had  and  received,  where  the 
widow  refuses  to  pay  to  such  child  its  share  of  such  amount.^* 
A  village  incorporated  under  an  unconstitutional  act,  borrowed 
money  from  the  state  for  school  purposes.  The  county,  as  the 
agent  of  the  state,  collected  from  the  village,  and  the  township 
in  which  it  was  situated,  the  entire  amount  thus  borrowed,  and 
paid  it  to  the  state,  and  then  collected  another  and  additional 
sum  as  a  part  of  such  loan.  It  was  held  that  the  township 
could  collect  from  the  county  the  amount  thus  collected  by  the 
county  in  excess  of  the  actual  loan,  the  county  having  retained 
such  excess  of  amount,  and  not  having  paid  it  over  to  the  state.^^ 
If  X  is  indebted  to  B,  and  A  collects  from  X  the  amount  of  this 
indebtedness  under  such  circumstances  that  X  is  still  liable 
to  B,  and  cannot  plead  the  payment  to  A  as  discharge  of  his 
liability  to  B,  the  question  is  presented  whether  B  can  recover 
from  A  for  money  had  and  received.  Where  A  gave  B  a  note, 
w^hich  B  indorses  before  maturity  to  C,  and  X  broiight  suit 
against  B  and  garnisheed  A,  and  A  disclosed  his  indebtedness 
to  B,  and  paid  the  amount  of  the  indebtedness  to  the  sheriff, 
who  forwarded  it  to  X,  it  has  been  held  that  C  has  no  right 
of  action  against  X  on  the  theory  that  he  had  no  claim  to  the  spe- 
cific fund,  his  right  of  action  being  against  A.^^  If  X 
is  indebted  to  B  under  circumstances  which  give  B 
a  property  right  in  a  specific  fund,  and  A  collects  that 
fund  from  X  under  circumstances  which  leave  X  still 
liable  to  B,  it  has  been  held  that  B  has  an  election 
to  sue  A  or  X  at  his  option.  If  he  sues  A,  A  cannot  defend 
on  the  theory  that  B  has  a  right  of  action  against  X.^^     On  the 

loLanforcl  v.  Lee,   119   Ala.   248;  53    N.    W.    982;    Merchants',     etc., 

72  Am.  St.  Rep.  914;  24  So.  578.  Bank  v.  Barnes,   18  Mont.   3.35;    56 

11  Milwaukee  v.  Milwaukee  Coun-  Am.  St.  Rep.  586;  47  L.  R.  A.  737; 
ty,  114  Wis.  374;  90  N.  W.  447.  45  Pac.  218. 

12  Corey  V.  Webber,  96  ]\Iich.  357;  i3  Bates-Farley    Savings    Bank    v. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1221 

other  hand,  it  has  heen  held  that  if  B  sues  X,  and  obtains  a 
judgment,  this  amounts  to  an  election,  and  B  cannot  afterwards 
maintain  an  action  against  A."  Thus,  where  A  had  deposited 
money  in  a  savings  bank,  in  trust  for  his  wife,  B,  and  the  bank 
had  given  a  pass-book  for  such  money,  and  after  the  death  of 
A  and  B,  B's  executor  had  demanded  payment,  but  had  been 
refused  because  he  did  not  have  the  pass-book,  and  A's  executor 
produced  the  pass-book  and  was  paid  by  the  bankj,  dn(i  B's  exec- 
utor sued  A's  executor  and  obtained  a  judgment,  execution  upon 
which  was  returned  because  no  property  could  be  found,  and 
B's  executor  then  sued  the  bank,  it  was  held  that  the  first  action 
and  judgment  amounted  to  an  election,  and  operated  as  a  bar 
to  the  second  action/^  If  B  has  in  some  way  obtained  a  lien 
upon  a  fund  or  property  belonging  to  X,  and  this  fund  or 
property  is  delivered  to  A,  he  takes  with  full  knowlecjge  of  B's 
lien,  B  can  enforce  the  amount  of  his  lien  in  an  action  against 
A  for  money  had  and  received.  Thus,  where  B  seizes  a  certain 
property  belonging  to  X  on  a  judgment,  and  A  with  knowledge 
of  the  judgment  induces  the  sheriff  to  sell  the  attached  property 
and  pay  the  proceeds  to  him,  X  can  maintain  an  action  against 
A  for  money  had  and  received.^^  So,  where  the  sheriff  wrong- 
fully pays  to  A  money  in  his  hands  which  he  should  have  paid 
to  B,  B  has  an  election  to  sue  the  sheriff  or  A.^^     So,  where  B 

Dismukes,    107    Ga.   212;    33   S.    E.  was  entitled  to  receive  it."     Bates- 

175.     "He  chose  the  latter  alterna-  Farley   Savings  Bank  v.  Dismukes, 

live;   he  saw  fit  to  ratify  the  un-  107  Ga.  212,  218;  33  S.  E  175. 

authorized  collection  by  the  defend-  i4  Fowler    v.    Savings    Bank,    113 

ant  and   the  unauthorized  payment  N.   Y.   450;    10   Am.   St.   Rep.   479; 

by  the  association,   and  it  does  not  4  L.  R.  A.  145;  21  X.  E.  172. 

now  lie   in   the   mouth    of   the    de-  is  Fowler    v.    Savings    Bank,    113 

fendant  to  say,  when  called  upon  to  N.  Y.  450;   10  Am.  St.  Rep.  479;  4 

pay  over  to  him  the  money  which  it  L.   R.  A.   145;   21   N.   E.   172.     The 

unlawfully    collected   upon   his    and  court    said    that    a    different    result 

his    assignor's    claims    against    the  would   have   been   reached   had   this 

building  and   loan   association   that  been  a  special  deposit, 

his  only  remedy  is  against  the  asso-  1 6  Finch   v.    Park.    12    S.    D.    63; 

eiation.     .     .     .     Under     such     cir-  76  Am.  St.  Rep.  588;  80  N.  W.  155. 

cumstances  the  law  implies  a  prom-  n  Brand    v.    Williams,    29    Minn, 

ise  on  the  part  of  the  defendant  to  238;  13  N.  W.  42. 
pay  the  money  over  to  the  one  who 


1222  .  PAGE    ox    CONTRACTS. 

obtained  a  judgment  in  an  action  against  X,  and  A  claiming 
a  lien  on  the  property,  intervenes,  and  has  the  attachment 
vacated,  and  A  then  induces  the  sheriff  to  pay  him  the  money 
made  on  such  attachment,  and  on  appeal  the  attachment  is  held 
valid,  and  B  takes  judgment  against  X,  and  shows  an  execution 
which  is  returned  unsatisfied,  X  can  maintain  an  action  against 
A  for  money  had  and  received/*  Where  a  de  facto  officer  re- 
ceives his  fees  and  retains  them  the  liability  of  the  public  cor- 
poration to  the  officer  de  jure  is  discharged ;  but  the  de  jure 
officer  may  recover  such  fees  from  the  de  facto  officer  as  money 
had  and  received/^  A  legal  right  to  a  definite  sum  must  be 
sho^\Ti  to  enable  the  plaintiff  to  recover.  A  and  B,  each  owning 
stock  in  a  corporation,  agreed  jointly  to  sell  their  interests  to 
X.  By  a  secret  agTeement  between  X  and  A,  A  was  to  receive 
additional  compensation.  B  sued  A  to  recover  his  share  of  such 
amount.  It  was  held  that  whatever  B's  rights  might  be  in  an 
action  of  deceit,  or  in  a  suit  in  equity  for  an  accounting,  he 
could  not  maintain  this  action.^  If  A  holds  money  in  his 
hands  which  is  claimed  by  B  and  X,  and  A  voluntarily  pays 
such  money  over  to  X,  A  is  liable  to  B  for  money  had  and 
received  if  B  proves  to  be  the  real  owner  thereof."^  Thus, 
where  X  stole  B's  money  and  deposited  it  with  A,  w^ho  took  it 
in  good  faith,  but  before  payment  A  was  notified  that  the  money 
was  really  that  of  B,  A  is  liable  to  B  for  money  had  and  received 
if  after  such  notice  he  pays  it  to  X  on  X's  order.^^  Since  com- 
pensation fixed  by  law  for  members  of  a  board  is  not  to  be  dis- 

isHaebler   v.    Myers,    132    N.    Y.  84.     This  case  impliedly  holds  that 

363;  28  Am.  St.  Rep.  589;  15  L.  R.  a  right  to  money  in  equity  does  not 

A.   588;   30  N.  E.  963.     The  court  always  give  a  right  to  this  action 

said  that  such  action  could  be  main-  at  law. 

tained   by  "those   who   would   have  21  McDuffee    v.    Collins,    117    Ala. 

been  entitled  to   the  money   on   the  487;    23   So.  45;   Osborn  v.   Bell.   5 

reversal    of   the   order,    provided    it  Den.     (N.    Y.)     370;    49    Am.    Dec. 

had    not   been    paid   to    the   defend-  275;    Hindmarch    v.    Hoffman,    127 

ants."  Pa.  St.  284;   14  Am.  St.  Rep.  842; 

isCoughlin  v.  McElroy,  74  Conn.  4  L.  R.  A.  368;   18  Atl.  14. 
397;   92  Am.  St.  Rep.  224;   50  Atl.  22  Hindmarch  v.  Hoffman,  127  Pa. 

1025.  St.  284;   14  Am.  St.  Rep.  842;  4  L. 

20Cummings  v.  Synnott,  120  Fed.  R.  A.  368;   18  Atl.  14. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1223 

tributed  among  them  in  proportion  to  the  work  actually  done 
bj  each,  one  member  may  recover  from  another  for  money  had 
and  received  where  such  member  has  collected  the  salary  due 
the  board  but  retained  a  disproportionate  amount  under  the 
claim  that  he  had  performed  more  work  than  the  other  mem- 
ber. ^^  Where,  contrary  to  law,  attorneys'  fees  are  included  in 
the  amount  for  which  property  is  advertised  on  foreclosure  of 
a  mortgage,  and  the  amount  of  the  mortgage  and  such  attorneys' 
fees  is  bid  therefor,  the  mortgagor  may  recover  from  the  party 
to  whom  such  excess  amount  is  paid.^*  Thus,  if  the  mortgagee 
bids  in  the  property  for  the  amount  of  the  mortgage  debt,  costs, 
and  such  fees,  the  mortgagor  may  recover  such  surplus  from 
him.^^  If  costs  are  included  by  the  sheriff,  which  he  has  no  right 
to  include,  as  where  the  mortgagee  buys  the  land  in,  and  such 
costs  are  paid  over  by  the  sheriff  to  the  county,  the  mortgagor 
may  recover  such  amount  from  the  county.^*^  If  an  excessive 
judgment  is  rendered,  and  the  judgment  creditor  bids  in  the  land 
for  the  full  amount  of  such  judgment  and  costs,  and  such  judg- 
ment is  subsequently  corrected,  the  judgment  debtor  may  re- 
cover such  difference  as  surplus  from  the  judgment  creditor. ^^ 
If  a  check  payable  to  B  is  forwarded  to  him,  but  stolen  by  X 
before  B  receives  it,  and  X  deposits  such  check  with  a  bank, 
A,  which  collects  the  check  and  pays  the  proceeds  to  X,  B  may 
recover  from  such  bank  in  an  action  for  money  had  and  re- 
ceived.^® 

§795.     Receipt   of   money   to   discharge   specific    obligation   due 
another. 

If  X  is  in  some  way  liable  to  B,  and  places  money  in  A's 
hands  with  which  A  is  to  pay  B'&  debt,  B  may  enforce  such 


23  stone  V.  Towne,  67  N.  H.  113;  Wash.   194;    55  Am.  St.   Rep.  878; 
29  Atl.  6.37.  33  L.  R.  A.  670;  45  Pac.  785. 

24  Wilkinson    v.    Baxter's    Estate,  27  Mitchell    v.    Weaver,    118    Ind. 
97  Mich.  536;  56  N.  W.  931.  55;   10  Am.  St.  Rep.  104;   20  N.  E. 

25Eliason  v.  Sidle,  61  Minn.  285;  525. 

63  N.  W.   730.  28  Buckley  v.   Bank.   35   N.   J.   L. 

26  Soderberg   v.   King   County,    15  400;    10   Am.   Rep.    249;    Shaffer   v. 


1224  PAGE    OlSr    CONTRACTS. 

liability  against  A  if  A  is  not  holding  such  money  solely  as 
X's  agent/  Thus,  if  X  puts  in  A's  hands  money  to  pay  A's 
debt  to  B  for  goods  furnished,  B  may  recover  from  A."  An 
arrangement  was  made  between  A,  B  and  X,  by  which  it  was 
agreed  that  A  was  to  discount  a  certain  note  which  X  owned, 
and  out  of  the  proceeds  was  to  pay  to  B  one  thousand  dollars ; 
in  reliance  upon  which  arrangement,  B  was  to  extend  credit  to 
X  in  the  sum  of  one  thousand  dollars.  B  extended  such  credit, 
and  A  refused  to  perform  the  contract  on  his  part,  but  dis- 
counted the  note  for  his  own  benefit.  A  was  held  liable  to  B 
for  money  had  and  received.^  B  held  a  mortgage  on  certain 
personal  property  belonging  to  X.  X  agreed  to  cause  the  pro- 
ceeds of  such  property  to  be  paid  to  B  if  B  would  refrain  from 
foreclosure  proceedings.  X  made  an  arrangement  whereby  the 
purchase  price  was  paid  to  A  under  a  contract  whereby  A  was 
to  pay  X's  debt  to  B  out  of  such  funds.  It  was  held  that  B 
could  recover  from  A.*  If  A  holds  money  as  X's  agent,  under 
instructions  to  pay  B,  A  is  not  liable  to  B  as  where  he  subse- 
quently delivers  such  money  to  X  on  X's  demand.^  Where  an 
agent  has  made  an  unauthorized  contract  on  behalf  of  his  prin- 
cipal, the  fact  that  the  agent  turns  over  personal  property 
other  than  money  to  his  principal,  and  reimburses  him  for  any 
possible  loss  by  reason  of  such  contract,  does  not  make  the 
principal  liable  to  the  adversary  contracting  party  in  an  action 
for  money  had  and  received.  Thus,  B  held  a  bill  of  lading 
issued  by  X,  an  agent  of  A,  a  steam-ship  company,  without  any 
authority,  and  before  the  goods  were  received.  X  subsequently 
transferred  his  property  to  A,  to  protect  A  against  any  loss 
on  account  of  such  bill  of  lading.  B  could  not  recover  from 
A  in  an  action  for  money  had  and  received.^     If  money  is 

McKee,    19    O.    S.    526;    Farmer   v,  3  Ehrman   v.    Rosenthal,    117    Cal. 

Bank,    100    Tenn. '187;    47    S.    W.  491 ;  49  Pac.  460. 

234.  4Coppage  v.  Gregg,  127  Ind.  359; 

1  Logan  V.  Talbott,  59  Cal.  652.  26  N.  E.  903. 

2Benner   v.    Weeks,    159    Pa.    St.  5  Lewis  v.  Sawyer,  44  Me.  332. 

504;   28  Atl.  355.  e  Lazard    v.    Transportation    Co., 

78  Md.  1;  26  Atl.  897. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1225 

delivered  to  A  by  B  for  a  specific  purpose,  and  he  refuses  to 
perform  the  agreement  under  which  it  is  received,  but  under- 
takes to  apply  the  money  to  a  liability  owing  to  him  by  B,  A  is 
liable  for  such  money  in  an  action  for  money  had  and  received 
to  the  person  for  whose  benefit  it  was  so  deposited.  Thus, 
where  A  received  from  C,  the  agent  of  B,  money,  to  be  applied 
upon  the  purchase  price  of  stock  bought  by  C  for  B,  and  such 
money  was  furnished  by  B,  A  cannot  apply  such  money  to  a 
debt  due  to  him  from  C,  even  if  A  does  not  know  when  the 
money  is  received  that  it  is  B's  money.^  B,  as  sheriff,  had 
incurred  certain  expenses  in  caring  for  a  property  seized  by 
him  in  his  official  capacity,  and  such  expenses  were  included 
in  a  bill  of  costs,  and  were  collected  as  a  part  of  the  judgment. 
The  entire  amount  of  the  judgment  was  paid  to  A,  the  attorney 
for  C,  the  successful  party.  A  credited  the  entire  amount  upon 
his  account  with  C.  It  was  held  that  B  could  maintain  an 
action  against  A  for  such  expenses,  even  if  B  could  not  prove 
that  A  had  received  this  money  under  an  express  agreement 
to  pay  B  out  of  such  proceeds.*  If  money  belonging  to  B,  or 
on  which  B  has  a  lien,  is  paid  by  X  to  A,  A  cannot  retain  such 
money  and  apply  it  to  the  discharge  of  the  debt  due  to  him 
from  X.^  Thus,  where  X  owns  certain  cattle,  upon  which  he 
had  given  a  lien  to  a  bank,  B,  of  which  John  D.  Myers  was 
president,  and  X's  agent,  under  an  arrangement  with  B,  was 
to  sell  the  cattle  and  forward  the  money  to  a  bank.  A,  of  which 
John  Q.  Myers  was  president,  the  bank  A  could  not  retain 
the  money  and  apply  it  to  an  indebtedness  from  that  bank  to 
X,  but  was  liable  over  to  B  for  such  amount. ^°  B  held  certain 
receivership  certificates  which,  by  an  arrangement  between  him- 

TBearce   v.    Fahrnow,    109    Mich.  73   N.   W.   667;    Cady   v.   Bank,   46 

315;   67  N.  W.  318.  Neb.   756;   65   N.  W.  906;    Bank  v. 

8  Knott  V.  Kirby,  10  S.  D.  30;  King,  57  Pa.  St.  202;  98  Am.  Dec. 
71  N.  W.  138.  215;    Rock    Springs    Nat.    Bank    v. 

9  Union  Stock  Yards  Bank  v.  Liiman,  6  Wyom.  123,  167;  42  Pac. 
Gillespie,  137  U.  S.  411;  Central  874;  43  Pac.  514;  reversing.  5 
National   Bank  v.   Ins.   Co.,   104   U.  Wyom.  159;   38  Pac.  678. 

S.  54;    Burtnett  v.   Bank,   38  Mich.  lo  People's  National  Bank  v.  My- 

€30;    Alter   v.   Bank,   53   Neb.   223;       ers,  65  Kan.  122;  69  Pac.  164. 


1226  PAGE    ON    CONTRACTS. 

self  and  A,  were  to  have  priority  over  those  held  by  A.  It  was 
held  that  if  A  received  payment  of  his  certificates  to  the  exclu- 
sion of  B,  B  could  maintain  an  action  against  A  therefor/'^ 
So  where  B,  a  beneficiary  of  a  life  insurance  policy  taken  out 
by  A,  had  agreed  with  A  to  pay  a  debt  owing  by  A  to  X  out  of 
such  policy,  it  has  been  held  that  B's  executor  may  maintain  an 
action  against  A  for  the  amount  of  such  debt.^^ 

§796.     Payment  by  one  not  beneficial  owner. 

If  one  person  who  has  in  his  hands  money  of  which  another 
person  is  the  beneficial  owner,  a  payment  by  the  holder  of  such 
money  to  a  third  person  is  not  such  a  voluntary  payment  by 
the  real  owner  thereof  as  to  prevent  him  from  recovering  it  if  it 
is  made  without  his  authority  and  if  not  in  payment  of  a  claim 
justly  due  from  him.  The  principle  of  voluntary  payments 
does'  not  apply  where  the  recovery  is  sought  by  one  having  a 
beneficial  interest  in  the  money  paid,  and  the  payment  was 
not  made  by  him  but  by  some  one  acting  as  his  trustee,  agent, 
and  the  like,  and. the  person  receiving  the  money  knew  that  the 
person  paying  it  was  acting  in  such  capacity.  Thus,  where 
an  assignee  for  the  benefit  of  creditors  pays  debts  out  of  prior- 
ity, the  creditor  who  receives  the  money  and  notes  out  of 
the  trust  estate,  is  liable  to  the  creditors  to  whom  such  money 
should  have  been  paid.^  Money  of  a  principal,  paid  by  his 
agent  without  authority,  may  be  recovered  by  his  principal 
from  the  person  to  whom  it  was  paid.^  Thus  if  a  bank  cashier 
pays  his  own  debt  by  entering  the  amount  thereof  as  a  credit 
on  the  pass-book  of  his  creditor,  and  such  creditor  draws  cheeks 
against  such  credits  and  the  checks  are  paid,  the  bank  may  re- 
cover the  amount  of  such  checks  from  such  creditor  f  so  if  the 
cashier  of  a  bank  gives  the  draft  of  the  bank  in  payment  of  his 

11  Fletcher    v.    Waring,    137    Ind.  S.)    221;  Dob  v.  Halsey,   16  Johns. 

159;  36  N.  E.  896.  (N.  Y.)    34;   8   Am.  Dec.   293;   Mt. 

i2Maybury  v.  Berkeiy,  102  ]\Iich.  Verd  Mills   Co.  v.  McElwee    (Tenn. 

126;  60  N.  W.  699.  Ch.  App.),  42  S.  W.  465. 

1  Dickie  V.  Northup,  24  N.  S.  121.  3  Hier  v.  Miller,  —  Kan.  — ;   63 

2 Rogers  v.  Batchelor,  12  Pet.   (U.  L.  R.  A.  952;   75  Pac.  77. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1227 

own  debt,  the  receiver  of  the  bank  may  recover  from  such  cred- 
itor.* Accordingly,  payments  of  public  money  form  an  excep- 
tion to  the  ordinary  rules  as  to  voluntary  payments  and  pay- 
ments under  mistake  of  law,  since  the  payments  are  always 
made  by  public  officers,  and  not  by  the  public,  which  is  really 
beneficially  interested  in  such  money.  Thus,  money  which  is 
paid  out  by  public  officers  in  violation  of  the  law,  may  be  re- 
covered from  the  person  to  whom  it  is  paid.^  The  fact  that  the 
payment  was  voluntary  on  the  part  of  the  officer,  does  not  pre- 
vent the  public  from  recovering.'^  A  government  may  recover 
money  paid  by  a  public  officer  under  an  erroneous  construc- 
tion of  the  law,  and  without  any  legal  authority  therefor.^  So 
if  money  is  paid  out  by  a  public  officer  upon  a  contract,  which 
the  corporation  represented  by  him  had  no  power  whatever  to 
make,^  or  upon  a  claim  which  the  corporation  had  no  power 
under  any  circumstances  to  allow,"  such  payment  may  be  recov- 
ered. Accordingly,  if  a  public  officer  draws  money  from  the 
public  treasury,^''  as  his  compensation,^^  such  as  his  salary,^^ 


4  Campbell  v.  Bank,  67  N,  J.  L.  United  States,  102  U.  S.  426; 
301;  91  Am.  St.  Rep.  438;  51  Atl.  United  States  v.  Bank,  15  Pet.  (U. 
497.  S.)   377. 

5  Weeks    v,    Texarkana,    50    Ark.  « Griffin    v.    Shakopee,    53    Minn. 
81;  6  S.  W.  504;  McLean  v.  Mont-  528;  55  N.  W.  738;  Chaska  v.  Hed- 
gomery   County,    32   111.   App.    131;  man,  53  Minn.  525;   55  N.  W.  737. 
Snelson  v.  State,  16  Ind.  29 ;  Heath  9  Ward  v.  Barnum,  10  Colo.  App. 
V.    Albrook,   —    la.   — ;    98    N.    W.  496;  52  Pac.  412. 

619;  Adams  v.  Power  Co.,  78  Miss.  loAda    County    v.    Gess,    4    Ida. 

887;    30   So.   58;    Demarest  v.   New  611;  43  Pac.  71;  Huntington  Coun- 

Barbadoes,  40  N.  J.  L.  604;  People  ty    v.    Heaston,    144    Ind.    583;    55 

V.  Fields,  58  N.  Y.  491 ;   (Board,  etc.,  Am.   St.   Rep.    192;    41   N.   E.   457; 

of)  Richmond  County  v.  Ellis,  59  N.  43  N.  E.  651;   St.  Croix  County  v. 

Y.  620;  Commonwealth  v.  Field,  84  Webster,    111    Wis.   270;    87   N.   W. 

Va.    26;    3    S.    E.    882;    Tacoma   v.  302. 

Lillis,   4    Wash.   797;    18   L.   R.   A.  "Weeks   v.    texarkana,    50    Ark. 

372;     31    Pac.     321;     Frederick    v.  81 ;   6  S.  W.  504;   Council  BluflFs  v. 

Douglas   County,   96   Wis.   411;    71  Waterman,   86   la.   688;    53   N.   W. 

N.  W.  798.  289;  Union  County  v,  Hyde,  26  Or. 

6  Ft.  Edward  v.   Fish,   156   N.  Y.  24;    37  Pac.  76. 

363;  50  N.  E.  973.  12  Ellis  v.   Board,  etc.,   107   Mich. 

7  Wisconsin,  etc.,  R.  R.  v.  United  528;  65  N.  W.  577;  Allegheny 
States,  164  U.  S.  190;  McElrath  v.  County  v.   Grier,    179  Pa.    St.   639; 


I 

1228  PAGE    ON    CONTRACTS. 

or  fees  collected  by  him  from  the  public  treasury  without 
authority  of  law,"  such  payments  may  be  recovered  in  an  action 
for  money  had  and  received.  The  fact  that  money  paid  to  a 
state  officer  as  compensation  for  services  was  paid  upon  the  ad- 
vice of  the  attorney  general,  does  not  prevent  the  recovery 
thereof,  if  unauthorized  by  law;^*  nor  does  the  fact  that  the 
payment  was  made  voluntarily,  with  full  knowledge  of  the  facts 
and  without  fraud,^^  or  under  a  mistake  of  law,^*'  even  if  such 
mistake  is  shared  by  the  officer  to  whom  payment  is  made,  who 
takes  in  good  faith.^^  The  right  to  recover  public  money  is 
especially  clear  where  the  officers  who  have  ordered  payment  of 
the  claim,  have  done  so  fraudulently,  and  in  order  to  convert 
the  money  to  their  own  benefit,^*  or  have  otherwise  acted  fraud- 
ulently.^^ Even  an  order  of  court  authorizing  the  payment  of 
such  illegal  fees  is  no  defense  to  an  action  to  recover  them  if 
made  in  a  proceeding  to  which  the  public  corporation  is  not  a 
party.^"  If  a  public  officer  renders  services  to  the  corporation 
which  he  represents,  outside  of  those  appropriate  to  his  official 
position,  and  which  could  have  been  rendered  as  well  by  a  pri- 
vate individual,  money  paid  him  for  such  services  cannot  be 
recovered  in  the  absence  of  a  statute,  provided  the  transaction  is 
free  from  fraud.^^  The  right  to  recover  public  money  is  es- 
pecially clear  in  eases  where  payment  is  made  under  a  mistake 
of  fact.^^  Thus,  where  an  excessive  bill  is  presented  for  public 
printing,  and  printers  appointed  pursuant  to  the  statute  to 
examine  the  account,  certify  to  its  correctness  under  a  mistake 

36    Atl,    353;    Tacoma    v.    Lillis,    4  i7  Allegheny  County  v,  Grier,  179 

Wash.    797;    18    L.    R.   A.    372;    31  Pa.  St.  639;  36  Atl.  353, 

Pac.  321.  18  Land,    etc.,    Co.    v.    Mclntyre, 

13  Camden  v.  Varney,  63  N.  J.  L.  100  Wis.  245;  69  Am.  St.  Rep.  915; 
325;   43  Atl.  889;  Union  County  v.  75  N.  W.  964. 

Hyde,  26  Or.  24 ;   37  Pac.  76.  is  Frederick    v.    Douglas    County, 

14  Commonwealth       v.       Norman  96  Wis.  411 ;  71  N.  W.  798. 
(Ky.),  50  S.  W.  225.  20  Union  County  v.  Hyde,   26  Or. 

15  Camden  v.  Varney,  63  N.  J.  L.  24 ;   37  Pac.  76. 

325;  43  Atl.  889.  21  Tacoma  v.  Lillis,  4  Wash.  797; 

16  Ellis  V.  Board,  etc.,   107  Mich.      18  L.  R.  A.  372;  31  Pac.  321, 
528-  65  N.  W.  577.  22  Haralson  County  v.  Golden,  104 

Ga.  19;  30  S.  E.  380. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1229 

of  fact,  such  payment  may  be  recovered.^^  Public  money, 
however,  can  be  recovered  only  from  one  to  whom  it  was  paid, 
or  for  whose  benefit  it  was  paid.  Thus,  a  county  cannot  recover 
from  one  who  holds  county  bonds  which  constitute  an  over- 
issue, interest  paid  upon  such  bonds  to  a  prior  holder  thereof."* 
So  where  town  officers  acting  for  the  public  at  large  and  not 
for  the  town  alone,  collected  school  taxes  and  paid  them  dispro- 
portionately the  school  district  which  was  entitled  to  a  part  of 
such  taxes  cannot  maintain  assumpsit  against  the  town.*^  In 
some  jurisdictions,  however,  it  is  held  that  payments  of  public 
money  to  public  officers  made  under  a  mutual  mistake  of  law 
cannot  be  recovered.^® 

§797.    Receipt  of  money  from  real  owner. —  Voluntary  payments. 

If  A,  a  person  of  full  legal  capacity,  pays  money  to  B  with 
the  intent  that  it  should  become  B's  property,  and  no  operative 
facts  such  as  mistake,  misrepresentation,  fraud,  non-disclosure, 
duress,  or  undue  influence  exist,  which  might  make  the  trans- 
action voidable,  A  cannot  recover  such  payment  from  B.  An- 
other and  more  common  form  of  stating  the  same  principle  is 
that  a  voluntary  payment  made  with  full  knowledge  of  the  facts 
cannot    be    recovered.^     The    same    principle    applies    where 

23  Worth  V.  Stewart,  122  N.  C.  528;  The  Xicanor,  40  Fed.  361; 
258;   29  S.  E.  579.  Prichard  v.  Sweeney,  109  Ala.  651; 

24  Taylor  v.  Daviess  County  19  So.  730;  Crenshaw  v.  Collier,  70 
(Ky.),  32  S.  W.  416.  Ark.  5;  65  S.  W.  709;  Harralson  v. 

25Weybridge    School    District    v.  Barrett,  99  Cal.  607;   34  Pac.   342; 

Bridgeport,  63  Vt.  383;  22  Atl.  570.  Bncknall  v.  Story,  46  Cal.  589;    13 

570.  Am.   Rep.  220;    Skelly  v.  Bank,   63 

26  Painter  v.  Polk  County,  81  la.  Conn.  83;  38  Am.  St.  Rep.  340;  19 

242;  25  Am.  St.  Rep.  489;  47  N.  W.  L.  R.  A.  599;  26  Atl.  474;  Jefferson 

65.     A    similar    view    seems    to    be  County   v.    Hawkins,    23    Fla.    223; 

guardedly     entertained     in     Lasalle  2  So.  362;  Macon  County  v.  Foster, 

County    V.    Milligan,    34    111.    App.  23  N.  E.  615;   Burlock  v.  Cook,  20 

346,  decided  partly  on  a  question  of  111.     App.     154;     Connecticut,     etc., 

fact  and  partly  with  the  expectation  Ins.    Co.   v.    Stewart,    95    Ind.    588; 

of  review  by  the  Supreme  Court.  Manning  v.  Poling,   114  la.  20;   83 

1  United    States    v.    Edmondston,  N.  W.  895;  86  N.  W.  30;  Bailey  v. 

181  U.  S.  500;  Little  v.  Bowers.  134  Paullina,  69  la.  463;  29  N.  W.  418; 

V.    S.    547;    The    Agathe,    71    Fed.  Cumming  Harvester  Co.  v.  Sigerson, 


1230 


PAGE    ON    CONTKACTS. 


money  is  paid  by  X  to  B  for  A,  and  in  A's  presence.^ 
The  fact  that  a  formal  protest  is  made  when  the  pay- 
ment is  made  does  not  prevent  it  from  being  voluntary.^ 
If  A,  with  full  knowledge  of  all  the  facts,  pays  excessive  assess- 
ments to  an  insurance  company,  he  cannot  recover  such  assess- 
ments.* An  insurance  company  which  pays  the  amount  of  in- 
surance after  loss  with  full  knowledge  of  all  the  material  facts, 
cannot  recover  the  money  thus  paid,  as  on  the  ground  that  the 
loss  was  on  property  not  covered  by  the  policy;^  nor  can  they 


63  Kan.  340;  65  Pac.  639;  Williams 
V.  Shelbounie,  102  Ky,  579;  t^t  S. 
W.  110;  Tyler  v.  Smith,  18  B.  Mon. 
(Ky.)  793;  New  Orleans,  etc.,  Co. 
V.  Improvement  Co.,  109  La,  13; 
94  Am.  St.  Rep.  395;  33  So,  51; 
Regan  v.  Baldwin,  126  Mass.  485; 
30  Am.  Rep.  689;  Francis  v,  Hurd, 
113  Mich.  250;  71  N,  W.  582; 
Tompkins  v,  HoUister,  60  Mich, 
485;  34  N,  W.  551;  Carson  v,  Coch- 
ran, 52  Minn.  67;  53  N,  W,  1130; 
Morley  v,  Carlson,  27  Mo,  App.  5; 
Nebraska,  etc.,  Ins.  Co.  v,  Segard, 
29  Neb.  354;  45  N.  W,  681;  Red- 
mond V.  New  York,  125  N,  Y,  632; 
26  N.  E.  727;  Flynn  v,  Hurd,  118 
N.  Y.  19;  22  N.  E.  1109;  Howard 
V.  Life  Association,  125  N.  C.  49; 
45  L.  R.  A.  853;  34  S.  E.  199; 
Brumbaugh  v.  Chapman,  45  O.  S. 
368;  13  N.  E.  584;  Oil  Well  Sup- 
ply Co.  V.  Bank,  131  Pa,  St.  100; 
18  Atl.  935;  Hubbard  v,  Martin, 
8  Yerg.  (Tenn.)  498;  Ladd  v.  Mfg, 
Co.,  53  Tex.  172;  Gibson  v.  Bing- 
ham, 43  Vt.  410;  5  Am.  Rep.  289; 
Beard  v.  Beard,  25  W.  Va.  486;  52 
Am.  Rep.  219;  Gage  v.  Allen,  89 
Wis.  98;  61  N.  W.  361,  "The  ul- 
timate fact  to  be  reached  in  this 
case  is  the  state  of  mind  under 
which  the  payments  were  made.  If 
they  were  made  voluntarily,  with  a 
full  knowlcdce  of  all  the  facts  and 


without  fraud  or  imposition,  they 
are  beyond  reclamation.  If,  on 
the  other  hand,  the  money  was  ex- 
torted from  the  appellee  ...  or 
if  fraud  or  imposition  was  prac- 
ticed upon  him,  he  is  entitled  to 
recover  his  money  back  for  the 
plain  reason  that  the  payment  was 
involuntary."  Ligonier  (Town  of) 
v.  Ackerman,  46  Ind.  552,  558;  15 
Am,  Rep.  323;  quoted,  Hollings- 
worth  V.  Stone,  90  Ind.  244. 

2  Rogers  v.  Garland,  8  Mackey 
(D.  C.)   24, 

3  Little  V.  Bowers,  134  U.  S.  547; 
McMillan  v.  Richards,  9  Cal,  365; 
70  Am,  Dee,  655;  Patterson  v.  Cox, 
25  Ind,  261;  Anderson  v.  Cameron, 
—  la.—  ;  97  N.  W.  1085;  (Commis- 
sioners of)  Wabaunsee  County  v. 
Walker,  8  Kan.  431;  Detroit  v, 
Martin,  34  Mich.  170;  22  Am.  Rep. 
512;  McBride  v.  Lathrop,  24  Neb. 
93;  38  N,  W.  32;  Wessel  v.  Mort- 
gage Co.,  3  N.  D.  160;  44  Am.  St. 
Rep.  529;  54  N.  W.  922;  Marietta 
V.  Slocomb,  6  O.  S.  471;  De  La 
Cuesta  V.  Ins.  Co.,  136  Pa.  St.  62, 
658;  9  L.  R.  A.  631;  20  Atl.  505. 

4  Howard  v.  Ins.  Association,  125 
N.  C.  49;  45  L,  R.  A,  853;  34  S.  E. 
199. 

5  Nebraska,  etc.,  Ins.  Co.  v.  Se- 
gard, 29  Neb.  354;  45  N.  W.  681. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1231 

maintain  an  action  against  a  vessel  on  which  the  cargo  insured 
"was  carried,  for  damages,  on  the  theory  that  the  loss  was  due 
to  the  negligence  of  those  in  charge,  after  paying  the  amount 
apportioned  as  the  insurance  company's  share  due  for  salvage.* 
A  was  a  stockliolder  in  a  corporation  which  was  about  to  in- 
crease its  capital  stock,  and  had  a  legal  right  to  subscribe  for  a 
certain  amount  of  such  new  stock  at  par.  The  corporation  re- 
fused to  receive  his  subscription  unless  he  paid  a  bonus  for  the 
right  to  subscribe.  It  was  held  that  he  could  not  recover  the 
amount  thus  paid  in,  since  he  had  an  adequate  remedy.^  He 
could  have  tendered  the  true  value  of  th*e  stock,  and  on  refusal 
of  the  corporation  to  deliver  the  stock  to  him,  he  could  main- 
tain the  action  against  the  corporation  for  the  difference  be- 
tween the  par  value  and  the  market  value  of  such  stock.  Where 
the  statute  provides  for  arbitration  to  estimate  the  value  of  im- 
provements made  upon  realty,  to  be  paid  for  by  one  who  is  re- 
deeming the  land  from  an  execution  sale,  the  voluntary  payment 
of  an  excessive  amount  of  improvements  by  such  redemptioner 
without  arbitration,  cannot  be  recovered.^  If  a  wife  pays  a  debt 
of  her  husband's  after  his  death  out  of  money  which  she  re- 
ceives on  an  insurance  policy  on  his  life,  payable  to  her,  she 
cannot  recover  such  payment.^  An  inmate  of  a  Soldiers'  and 
Sailors'  Home,  who  agrees  to  pay  over  a  part  of  his  pension  to 
such  home,  and  does  pay  it  over,  cannot  subsequently  recover, 
though  the  Home  could  not  have  compelled  such  payment.^* ' 
A  owes  B  a  note  on  which  the  interest  is  payable  in  advance, 
and  A  pays  such  interest  in  advance;  and  subsequently  A  vol- 
untarily pays  the  note  before  maturity.  A  cannot  recover  the 
proportionate  part  of  such  interest  paid  by  him.^^  So  where 
B  has  executed  a  mortgage  which  contains  a  provision  that  the 

6  The  Nicanor,  40  Fed.  361.  lo  Brooks    v.    Hastings,    192    Pa. 

7De   La   Cuesta   v.   Ins.    Co.,    136  St.    378;    43   Atl.    1075;    Bryson  V. 

Pa.  St.  62,  658;  9  L.  R.  A.  631;  20  Home,  etc.,  168  Pa.  St.  352;  31  Atl. 

Atl.  505.  1008. 

sPrichard    v.    Sweeney,    109    Ala.  n  Skelly   v.   Bank,    63    Conn.    83; 

651;   19  So.  730.  38  Am.   St.  Rep.  340;    19  L.  R.  A. 

9  Tompkins  v.  Hollister,  60  Mich.  599;   26  Atl.  474. 
485 ;  34  N.  W.  551. 


1232  PAGE    ON    CONTRACTS. 

mortgagor  shall  pay  the  tax  on  the  mortgage  debt,  and  under 
the  law  he  is  thereby  relieved  from  liability  to  pay  interest 
upon  such  mortgage  debt  he  cannot  recover  the  amount  of  in- 
terest from  the  mortgagee  after  paying  it  voluntarily/^  If 
taxes  unlawfully  assessed  are  paid  with  full  knowledge  of  the 
facts,  and  without  duress,  or  legal  compulsion,  the  money  thus 
paid  cannot  be  recovered,^^  unless  there  is  a  statutory  provision 
therefor.^*  If  a  public  officer  voluntarily  pays  over  to  the  pub- 
lic treasurer,  fees  which  he  has  a  legal  right  to  retain  for  his 
personal  benefit,  he  can  not  recover  such  payments.^^  If  A  is 
the  agent  of  B  to  sell  stock,  and  A  as  such  agent  makes  a  sale 
to  X,  and  takes  the  check  of  X  in  payment,  and  sends  B  his 
personal  check,  A  cannot  recover  from  B,  although  the  check 
which  A  receives  from  X  proves  to  be  worthless.^® 

§798.    Payments  not  voluntary. 

The  general  doctrine  forbidding  recovery  of  voluntary  pay- 
ments has  of  course  no  application  to  payments  which  are  not 
voluntary.  The  general  rule  is,  that  if  A  receives  mone}*  be- 
longing to  B,  which  is  not  paid  voluntarily  by  B,  A  is  bound 
in  law  to  repay  it.^  Thus,  where  A  was  arrested  upon  a  charge 
of  stealing,  and  brought  before  B,  a  trial  justice,  and  B  took 
from  A  the  money  which  A  had  upon  his  person  and  which 
was  alleged  to  be  the  stolen  money,  and  A  is  discharged  upon  a 
preliminary  hearing,  A  can  recover  such  money  from  B.^  So, 
if  an  agent  of  an  express  company  induces  a  bank  to  send  money 
by  express  to  a  fictitious  firm,  which  money  the  agent  receives 
as  agent  for  the  express  company,  and  which  he  embezzles,  the 

i2Harralson   v.    Barrett,    99    Cal.  St.   519;   63  Am.  St.  Rep.   769;   39 

607;   34  Pac.  342.  L.  R.  A.  529;   38  Atl.  1030. 

13  Indianapolis  v,  Vajen,  111  Ind.  i  Pemberton    v.   Williams,    87   111. 

240;     12    N.    E.     311;     Durham    v,  15;    Carter   v.   Riggs,    112    la.    245; 

Board,  95   Ind.    182.  83   N.   W.   905;    Mason   v.   Prender- 

i4Donch  V.  Lake   County,   4   Ind.  gast,  120  N.  Y.  536;  24  N.  E.  806; 

App,  374;  30  N.  E.  204.  Motz  v.  Mitchell,  91  Pa.  St.  114. 

isSelby  v.  United  States,  47  Fed.  2  Welch  v.  Gleason,  28  S.  C.  247; 

800.  5  S.  E.  599. 

le  Pepperday    v.    Bank,     183    Pa. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1233 

bank  can  recover  from  the  express  company  in  an  action  for 
money  had  and  received.^  The  classes  of  payments  which  are 
not  voluntary  may  for  the  most  part  be  grouped  under  tvv^o  gen- 
eral heads :  payment  by  mistake,  and  payment  by  duress  or  com- 
pulsion of  law.  These  topics  will  be  discussed  in  the  following 
sections. 

V.     Payment  Under  Duress  and  Compulsion. 

§799.    Payment  under  duress  and  undue  influence. 

The  nature  of  duress  as  affecting  the  validity  of  contracts 
entered  into  by  reason  thereof  has  already  been  discussed.'^  The 
nature  of  duress  as  determining  the  right  of  a  party  making 
payments  to  recover  them  is  largely  governed  by  the  same  rules 
as  those  by  which  the  right  to  avoid  contracts  is  determined. 
If  payments  are  made  under  what  the  law  regards  as  duress, 
they  are  not  within  the  doctrine  of  voluntary  payments,  and 
may  be  recovered  in  the  absence  of  special  circumstances.^  In 
some  respects,  however,  as  we  shall  see  later,  the  right  to  re- 
cover payments  was  broader  at  Common  Law  than  the  right  to 
avoid  contracts  and  by  some  authorities  the  right  to  recover  pay- 
ments made  under  compulsion  of  law  has  been  treated  as  a 
ground  of  recovery  distinct  from  any  form  of  duress.  They 
will  be   discussed  together  here   as   applications   of  the   same 

3  Southern   Express  Co.   v.   Bank,  Silsbee  v.   Webber,   171   Mass.   378; 

108  Ala.  517;  54  Am.  St.  Rep.  191;  50  N.  E.  555;  Sweet  v.  Kimball,  166 

18  So.  664.     In  order  to  recover,  it  Mass.  332;  55  Am.  St.  Rep.  406;  44 

is  not  necessary  that  the  bank  sur-  N.  E.  243 ;  Cribbs  v.  Sovvle,  87  Mich, 

render  a  draft  which  purports  to  be  340;  24  Am.  St.  Rep.  166;  49  N.  W. 

signed   by   such   fictitious   and   non-  587;    Joannin   v.   Ogilvie,   49   Minn, 

existent  firm  with   a  bill   of  lading  564;  32  Am.  St.  Rep.  581;  16  L.  R. 

attached  thereto.  A.   376;    52   N.   W.    217;    Briggs  v. 

1  See  Ch.  XIII.  Boyd,    56    N.    Y.    289 ;     Adams    v. 

2  Swift  Co.  V.  United  States,  111  Reeves,  68  N.  C.  134;  12  Am.  Rep. 
U.S.  22;  Adams  V.  Schiffer,  11  Colo.  627;  Reinhard  v.  Columbus,  49  O. 
15;  7  Am.  St.  Rep.  202;  17  Pac.  21 ;  S.  257;  31  N.  E.  35;  Fillman  v. 
Stanley  v.  Dunn,  143  Ind.  495;  42  Ryon,  168  Pa.  St.  484;  32  Atl.  89; 
N.  E.  908;  Anderson  v.  Cameron,  Guetzkow  Bros.  v.  Breese,  96  Wis. 
_  la.  — ;  97  N.  W.  1085;  Carter  v.  591;  65  Am.  St.  Rep,  83;  72  N.  W. 
Riggs,  112  la.  245;   83  N.  W.  905;  45. 

78 


1234  PAGE    ON    CONTRACTS. 

general  doctrines.  No  single  definition  of  duress  wbicli  en- 
titles a  party  making  payments  by  reason  thereof  to  recover^ 
can  be  given  in  such  form  as  to  include  all  cases  in  which  the 
doctrine  is  applied,  and  to  exclude  those  in  which  the  doctrine 
is  not  ajoplied.  But  to  constitute  duress  there  must  in  general 
be  at  least  apparent  liability  of  jJerson  or  property  to  seizure,^ 
and  in  the  absence  thereof  mere  protest  against  paying  cannot 
make  it  payment  under  duress.'*  A  payment  made  under  un- 
due influence  may  be  recovered,^  even  though  the  circumstances 
fall  short  of  technical  duress  or  compulsion.  Thus  payment 
made  under  threat  of  a  civil  action  may  be  recovered  where  the 
person  making  the  payment  is  aged,  illiterate  and  Aveak-minded, 
and  his  mind  is  in  fact  overpowered  by  such  threats.^  The  spe- 
cial classes  of  cases  involving  the  question  of  what  is  and  what 
is  not  such  duress  as  to  permit  of  recovery  of  payments  will 
be  discussed  in  the  following  sections. 

§800.     Payment  extorted  by  imprisonment. 

The  elements  of  duress  of  imprisonment  are  substantially 
the  same  for  purposes  of  recovering  payments  as  for  avoiding 
contracts.^  Money  unlawfully  extorted  by  imprisonment,  used 
as  a  means  of  extortion  whether  such  imprisonment^  was  law- 

3Lamson  v.  Boyden,  57  111.  App.  257;  31  N.  E.  35;  Fillman  v.  Ryon. 

232;   Minneapolis,  etc.,  Co.  v.  Cun-  168  Pa.  St.  484;  32  AU.  89;  Reck- 

ningham,  59   Minn.  325;   61  N.  W.  man  v.  Swartz,  64  Wis.  48;   24  N. 

329;   De  la  Cuesta  v.  Ins.  Co.,   136  W.   473.     And   see   Houtz   v.   Uinta 

Pa.  St.  62,  658;  9  L.  E.  A.  631;  20  County,  —  Wyom.  — ;  70  Pac.  840; 

Atl.   505.  where   the  right  to   recover    a   fine 

4  See  §  812.  imposed   by   a    justice   who   had   no 

5  Ingalls  V.  Miller,  121  Ind.  188;  final  jurisdiction  was  held  to  de- 
22  N.  E.  995.  pend  on  that  question  whether  such 

6  Ingalls  V.  Miller,  121  Ind.  188;  payment  was  made  to  procure  re- 
22  N,  E.  995.  lease    from    imprisonment    it    could 

1  See  Ch.  XIII.  be  recovered ;  but  if  merely  to  avoid 

2  Schommer  v.  Farwell,  56  III.  inconvenience  in  the  district  e£>urt 
542;  Voiers  v.  Stout,  4  Bush.  (Ky.)  to  which  an  appeal  ha4  been  al- 
572;  Richardson  v.  Duncan,  3  N.  H.  lowed,  it  could  not. 

508 ;  Reinhard  v.  Columbus,  49  O.  S. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1235 

ful  or  not,  or  by  threats  of  immediate  imprisonment,^  may  he 
recovered.  Thus  money  paid  by  one  wrongfully  arrested  to 
-secure  his  release,*  or  where  an  officer  without  authority  of 
law  takes  a  cash  deposit  to  secure  the  appearance  of  a  prisoner,^ 
may  be  recovered.  So  property  surrendered  by  one  under  threat 
of  imprisonment  if  such  property  is  not  surrendered  may  be 
recovered."  Even  if  the  arrest  or  threatened  arrest  is  itself 
lawful,  money  paid  thereunder  may  be  recovered  if  such  arrest 
was  used  as  a  means  of  extorting  such  payment.*^  If,  however, 
the  imprisonme;at  is  lawful  and  is  not  made  the  means  of  ex- 
tortion, it  does  not  of  itself  constitute  duress,  and  does  not  af- 
ford a  basis  for  recovery  of  payments.^  A  threat  of  imprison- 
ment not  immediate  is  ordinarily  not  duress  f  and  money  paid 
thereunder  cannot  ordinarily  be  recovered  as  paid  under  du- 
ress 'y^^  but  under  special  circumstances,  as  where  the  person  to 
whom  the  threat  is  made  and  against  whom  it  is  directed  is  old, 
weak  and  infirm,  a  payment  extorted  by  such  threats  may 
be  recovered.^^  Since  duress  may  exist  where  the  arrest 
of  a  third  person  in  certain  relations  to  the  promisor  or  payor 
is  made  or  threatened,^^  such  payment  may  be  recovered.^* 
Thns,  money  extorted  from  a  wife  by  a  threatened  imprison- 
ment of  her  husband,  as  under  circumstances  which  W'<;\ild  in- 

3  Baldwin  v.  Hutchison,  8  Ind.  s  pillman  v.  Ryon,  168  Pa.  St. 
App.  454;  35  N.  E.  711;  Foss  v,  484;  32  Atl.  89;  Meaeliem  v.  New- 
Whitehoiise,    94    Me.    491;    48    Atl.      port,  70  Vt.  67;  39  Atl.  631. 

109;  Deshong  v.  New  York,  176  N.  9  See  §  251. 

Y.   475;    68   N.   E.    880.  lo  St.  Louis,  etc.,  R.  R.  v.  Thomas, 

4  Sweet  V.  Kimball,  166  Mass,  85  111.  464;  Hines  v.  Board,  etc., 
332 ;  55  Am.  St.  Rep.  406 ;  44  N.  E.  93  Ind.  266 ;  Hilborn  v,  Bucknam, 
243.  78   Me.   482;    57   Am.   Rep.   816;    7 

sReinhard  v.  Columbus,  49  O.  S.  Atl.  272;   Claflin  v.  McDonough,  35 

257;  31  N.  E.  35.  Mo.  412;  84  Am.  Dec.  54. 

6  Pryor  v.  Morgan,  170  Pa.  St.  n  Cribbs  v.  Sowle,  87  Mich.  340; 
568;    33  Atl.   98.  24  Am.  St.  Rep.  166;  49  N.  W.  587. 

7  Morse  v.  Woodworth,  155  Mass.  12  See  §  259. 

233;   27  N.  E.  1010;  29  N.  E.  525;  is  Gorringe  v.  Reed,  23  Utah  120; 

Richardson  v.  Duncan,  3  N.  H.  508;  90  Am.  St.  Rep.  692;  63  Pac.  902; 
Heckman  v.  Swartz,  64  Wis.  48;  Schultz  v.  Culbertson,  '49  Wis.  122; 
24  N.  W.  473.  4  N.  W.  1070;  46  Wis.  313;  1  N.  W, 

19. 


1236  PAGE    ON    CONTRACTS. 

jure  Lis  health/*  may  be  recovered.  Thus  where  a  husband 
was  threatened  with  lawful  arrest  when  in  broken  health  and 
about  to  go  to  EurojDe  with  his  wife  in  the  hoj)e  of  regaining 
health,  and  arrest  and  detention  would  produce  a  serious  effect 
npon  his  physical  condition,  a  payment  made  by  his  wife  to 
prevent  such  arrest  is  made  under  duress  and  may  be  re- 
covered.^^ The  mere  fear  of  future  imprisonment  without  any 
threat  thereof  is  not  such  duress  as  to  enable  the  party  who 
has  made  the  payment  to  recover  it.^° 

§801.    Payment  extorted  by  wrongful  detention  of  goods. 

The  original  Common  Law  rules  of  duress  did  not  allow  a 
contract  to  be  avoided  if  the  person  entering  into  it  was  induced 
to  do  so  by  a  wrongful  detention  of  goods.^  It  was  more  just 
in  allowing  recovery  of  payments  extorted  by  such  detention. 
If  A's  personal  property  is  unlawfully  detained  by  B,  a  pay- 
ment made  by  A  to  obtain  possession  of  such  property  is  not  a 
voluntary  payment  and  may  be  recovered."  Thus  where  goods 
are  illegally  seized  under  apparent  authority  of  a  writ  of  seques- 
tration,^ or  logs  are  seized  under  an  illegal  claim  for  toll,*  or  a 
ship  is  detained  for  an  illegal  demand  for  tonnage,^  or  a  cargo 
is  detained  for  an  illegal  demand  for  demurrage,  ®    or  payment 

14  Adams  v.  Bank,  116  N.  Y.  606;  Mumford,  60  X.  Y.  498;  Briggs  v. 
15  Am.  St.  :Rep.  447;  6  L.  R.  A.  Boyd,  56  N.  Y.  289;  Riggs  v.  Wil- 
491;  23  N.  E.  7.  son,  30  S.  C.  172;  8  S.  E.  848;  Tay- 

15  Adams  v.  Bank,  116  N.  Y.  606;  lor  v.  Hall,  71  Tex.  213;  9  S.  W. 
15  Am.  St.  Rep.  447;  6  L.  R.  A.  141;  Bufoid  v.  Lonergan,  6  Utah 
491;   23  N.  E.  7.  301;    22   Pac.   164;    affirmed   in   148 

16  Felton   V.    Gregory,    130    Mass.  U.  S.  581. 

176.  3  Clark  v.  Pearce,  80  Tex.  146;  15 

iSee  §  248.  S.  W.  787. 

2  Atlee  V.  Backhouse,  3  M.  &  W.  4  Carson,  etc.,  Co.  v.  Patterson,  33 

633;  Maxwell  v.  Griswold,  10  How.  Cal.  334;  Chase  v.  Dwinal,  7  Greenl. 

(U.  S.)   242;  Lafayette,  etc.,  Ry.  v.  (Me.)  134;  20  Am.  Dee.  352. 

Pattison,    41    Ind.    312;     Chamber-  5  pipley  v.  Gelston.  9  Johns.    (N. 

lain  V.   Reed,    13  Me.   357;    29   Am.  Y.)   201;  6  Am.  Dec.  271. 

Dec.   506 :    Weber  v.  Kirkendall,  44  6  Fargusson  v.  Winslow,  34  Minn. 

Neb.  766;  63  K  W.  35;   Scholey  v.  384;   25  N.   W.  942. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1237 

illegally  exacted  as  tariff  is  paid  to  get  possession  of  goods  im- 
ported into  this  country/  as  where  the  customs  officials  threaten 
to  add  a  penalty  if  the  tariff  demanded  is  not  paid,^  or  goods 
are  seized  on  an  unfounded  claim  and  a  lien  is  asserted  there- 
on," payments  made  to  obtain  possession  of  such  goods  may  be 
recovered.  Such  a  payment  is  made  under  "  moral  compul- 
sion."^" So  where  A  has  delivered  a  printing  press  to  B  under 
a  contract  of  sale  by  the  terms  of  which  it  is  to  remain  A's  prop- 
erty until  B  pays  the  entire  purchase  price,  and  B's  landlord  X 
takes  possession  thereof,  a  payment  by  A  to  X  to  get  possession 
of  such  machine  may  be  recovered.^^  In  some  opinions,  esj)ecial 
stress  is  laid  on  the  fact  that  great  hardship  or  serious  incon- 
venience will  result  to  the  person  whose  property  is  detained  un- 
less he  can  get  possession  of  it,  and  his  right  to  recover  pay- 
ments made  by  him  to  get  possession  of  such  goods.^^  Thus 
where  property  perishable  in  its  nature  and  liable  to  deteriora- 
tion is  withheld,  payment  to  obtain  possession  thereof  and  to 
avoid  damage  has  been  held  to  be  made  under  duress,  as  where 
cattle  are  withheld  from  the  owner,^^  or  where  oysters  have 
been  taken  on  a  writ  of  attachment  wrongfully  obtained.^*  So 
where  A,  an  officer  had  attached  B's  bank  notes  and  refused  to 
redeliver  them  unless  B  allowed  him  to  keep  some  as  an  al- 
leged reward,  and  X,  another  officer,  was  about  to  attach  them, 
and  B  allows  A  to  keep  some  of  them  as  he  had  demanded,  B 
may  recover  such  amount  from  A  as  paid  under  duress.^^  So 
where  a  cargo  of  grain  is  withheld  on  an  unjust  claim  for 
demurrage,  and  the  consignee  will  be  put  to  serious  inconven- 
ience if  the  cargo  is  not  delivered,  a  payment  of  such  demurrage 

-'  Elliott    V.    Swartwout,    10    Pet.  n  Whitlock  Machine   Co.   v.  Hol- 

(U.  S.)   137;  Erhardt  v.  Winter,  92  way,  92  Me.  414;  42  Atl.  799. 

Fed.  918.  i2Fargusson      v.      Winslow,      34 

8  Robertson   v.    Frank    Bros.    Co.,  Minn.  384 ;  25  X.  W.  942. 

132  U.   S.   17.  isBuford    v.    Lonergan,    6    Utah 

9  Chamberlain    v.    Reed,    13    Me.       301;    22   Pac.   1G4;    affirmed   in    148 
357;   29  Am.  Dec.  506.  U.  S.  581. 

10  Chamberlain    v.    Reed,    13    Me.  i*  Spaids  v.  Barrett,  57  111.  289; 
357;  29  Am.  Dec.  506.                                11   Am.  Rep.    10. 

15  Lovejoy  v.  Lee,  35  Vt.  430. 


1238  PAGE    ON    CONTKACTS. 

may  be  recovered  ;^^  on  similar  grounds  the  right  to  recover 
money  paid  to  liberate  one's  tools  of  trade  has  been  placed.^^ 
Elimination  of  these  cases,  however,  leaves  a  respectable  num- 
ber of  authorities  in  support  of  the  proposition  that  money  paid 
to  regain  possession  of  goods  which  have  been  unlawfully  taken 
from  the  owner,  without  his  having  opportunity  to  be  heard  in 
court,  may  be  recovered. 

§802.    Payments  extorted  by  threatened  wrongful  detention  of 
goods. 

The  weight  of  authority  is  that  payments  made  to  prevent 
a  threatened  wrongful  seizure  of  personalty  are  made  under 
duress  and  may  be  recovered.^  Thus,  if  a  justice  renders  a  void 
judgment,  the  case  not  being  within  his  jurisdiction,  and  subse- 
quently execution  issues  and  the  judgment  debtor,  being  sick 
and  in  mental  distress  on  account  of  the  recent  death  of  mem- 
bers of  her  family,  paid  such  execution  to  avoid  a  threatened 
levy,  it  was  held  that  she  might  recover  from  the  judgment 
creditor  who  received  the  money.^  So  money  paid  to  avoid  a 
threatened  wrongful  distraint  of  personalty  may  be  recovred.* 
So  where  a  sheriff  holding  an  execution  threatened  to  levy  un- 
less an  excessive  amount  were  paid  by  the  debtor,  and  the  debtor 
paid  the  amount  demanded,  he  may  recover  such  excess  from 
the  sheriff.^  Duress  by  threatened  seizure  of  goods  has  been 
limited  very  sharply  by  some  authorities  to  cases  where  the 
danger  of  seizure  was  imminent.  In  case  of  payments  to  an 
officer  the  test  of  the  right  to  recover  them  if  not  justly  due 
has  been  held  to  be  whether  or  not  the  officer  has  apparent 
power  to  seize  or  levy  on  the  property  which  he  is  threatening  to 

16  Fargusson  v.  Winslow,  34  2  Hollingsworth  v.  Stone,  90  Ind. 
Minn.  384;   25  N.  W.  942.  244. 

17  Cobb  V.  Charter.  32  Conn.  358 ;  3  Hills  v.  Street,  5  Bing,  37.  Con- 
87  Am.  Dec.   178.  ira,     Colwell    v.     Peden,     3     Watts 

1  Hills  V.  Street,  5  Bing.  37;  Cox  (Pa.)    327,   where   a    hona  fide   dis- 

V.   Welcher,   68  Mich.   263;    13  Am.  tress  was  held  not  to  be  duress. 

St.  Rep.  339 ;  36  N.  W.  69 ;  Taylor  *  Snell  v.  State,  43   Ind.  359. 
V.  Hall,  71  Tex.  213;  9  S.  W.  141. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1239 

take.^  To  constitute  duress  of  goods,  something  more  than  a 
jXDSsible  deprivation  of  property  in  the  future  is  necessary, 
where  this  limitation  on  the  doctrine  of  duress  of  goods  pre- 
vails. Thus  where  a  chattel  mortgage  with  power  of  sale  had 
been  given  to  secure  payment  of  the  price  of  corn  sold  by 
the  mortgagee  to  the  mortgagor,  a  payment  of  the  full  amount 
of  the  purchase  price,  though  some  of  the  corn  is  never  delivered, 
cannot  be  recovered,  though  made  because  of  a  threat  of  the 
mortgagee  to  sell  the  mortgaged  property  under  the  power  of 
sale.^ 

§803.    Payment  to  remove  cloud  from  title  to  realty. 

Duress  of  property  need  not  always  involve  detention  of  per- 
sonalty, however.  If  the  unlawful  acts  of  one  person  cast  a 
cloud  on  the  title  of  another  to  realty,  a  payment  made  to  re- 
move such  cloud  may  be  made  under  duress.^  Thus  a  payment 
made  to  prevent  a  threatened  sale  for  taxes  which  would  cast 
a  cloud  on  the  title  to  realty,^  or  a  payment  made  to  clear  title 
to  realty  from  a  pretended  mechanic's  lien,  so  as  to  raise  a  new 
loan  to  take  up  an  overdue  mortgage  and  other  pressing  claims,^ 
where  the  party  making  such  payment  had  no  other  means  of 
raising  money  than  by  mortgaging  such  realty,  or  payment  ex- 
torted by  threatening  to  sell  realty  under  a  power  of  sale  con- 
tained in  a  mortgage,*  or  payment  of  an  amount  over  and  above 
the  true  amount  of  a  mortgage  debt,^  or  an  unlawful  payment 
of  attorney  fees  exacted  as  a  condition  precedent  to  redemption,^ 

5  Taylor  v.  Hall,  71   Tex.  213;    9  gomery  v.   Cowlitz,    14   Wash.   230; 

S.  W.   141.  44   Pac.   259. 

eVick   V.    Shinn,    49    Ark.    70;    4  2  See  §  811. 

Am.  St.  Rep.  26;  4  S.  W.  60.  sJoannin    v.    Ogilvie,    49    Minn. 

1  American      Baptist      Missionary  564;    32   Am.   St.   Rep.   581;    16   L. 

Union  v.  Hastings,  67  Minn.  303;  69  R.  A.  376;  52  N.  W.  217. 

N.  W.  1078;  Joannin  v.  Ogilvie,  49  4  Close   v.   Phipps,    7    Man.    &    G. 

Minn.  564;  32  Am.  St.  Rep.  581;  16  586;     McMurtrie    v.     Keenan,     109 

L.  R.  A.  376;  52  N.  W.  217;  Shane  Mass.  185. 

V.  St.  Paul,  26  Minn.  543 ;  6  N.  W.  s  Cazenove     v.     Cutler,     4     Met. 

349;   Poth  v.  New  York,  151  N.  Y.  (Mass.)     246. 

16;   45   N.  E.  372;   Bowns  v.  May.  e  Klein   v.    Bayer.   81    Mich.   233; 

120  N,  Y,  357;  24  N.  E.  947;  Mont-  45   N.   W.   991.     Contra,   where   the 


1240  PAGE    ON    CONTRACTS. 

may  be  recovered.  But  payment  of  a  judgment  while  pro- 
ceedings in  error  were  pending  because  the  judgment  was  a 
lien  on  the  realty  of  the  judgment  debtor,  who  was  in  finan- 
cial distress  and  could  not  raise  money  except  by  a  loan  on 
such  realty  and  such  loan  could  be  obtained  only  by  paying 
such  judgment  has  been  held  to  be  a  voluntary  payment."^ 
So  where  A  gave  B  a  mortgage  in  the  form  of  a  deed  to 
secure  his  debt  to  B  and  B  then  refused  to  recognize  A'a 
rights  or  consent  to  A's  selling  his  rights  in  such  realty  unless 
paid  a  large  sum  of  money  over  and  above  A's  indebtedness 
to  B,  and  threatened  prolonged  litigation  if  A  did  not  make 
such  payment,  and  A  had  no  other  way  of  paying  his  debt 
except  by  the  sale  of  such  realty,  it  was  held  that  A 
paid  such  additional  sum  under  duress  and  could  recover 
it.^  In  all  these  cases  no  opportunity  for  a  judi- 
cial hearing  was  given  before  the  title  was  apparently  encum- 
bered. Wrongful  acts  which  do  not  cast  a  cloud  on  the  title 
to  realty  do  not  amount  to  duress  of  realty.®  Thus  a  threatened 
sale  for  illegal  taxes,  where  the  purchaser  has  the  burden  of 
proving  every  step  necessary  to  make  out  a  valid  sale,"  or  a 
threatened  sale  of  the  land  of  one  person  on  an  execution  is- 
sued against  another,^^  do  not  cast  a  cloud  on  the  title  and 
hence  payment  by  reason  thereof  is  not  made  under  duress. 

§804.    Lawful  act  not  duress. 

Outside  of  questions  of  abuse  of  legal  process  in  seizing  per- 
son or  property,  a  lawful  act  does  not  amount  to  duress,  al- 
though by  such  act  a  person  is  induced  to  make  a  payment 
which  he  is  not  willing  to  make.  Thus  to  constitute  duress  of 
goods  the  detention  must  be  unlawful.  The  party  making  pay- 
mortgage  had  been  discharged  by  a  «  First  National  Bank  v.  Sargeant, 
tender  of  the  full  amount  of  the  65  Neb.  594;  91  N.  W.  595. 
mortgage  debt.  Wessel  v.  Mort-  "Stover  v.  Bowman,  45  111.  213; 
gage  Co.,  3  X.  D.  160;  44  Am.  St.  Davies  v.  Galveston.  16  Tex.  Civ. 
Rep.  529;   54  N.  W.  922.                           App.  13;  41  S.  W.  145. 

7  Hipp  V.   Crenshaw,   64   la.  404;  lo  Davies    v.    Galveston,    16    Tex. 

20    N.    W.    492.      (Hence    the    pro-      Civ.  App.  13;  41  S.  W.  145. 
eeedings  in  error  were  dismissed.)  n  Stover  v.  Mitchell,  45  111.  213. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1241 

ment  must  do  everything  necessary  to  entitle  him  to  the  prop- 
erty detained  if  he  wishes  to  recover  excess  payments.  This 
principle  has  been  carried  so  far  that  a  payment  of  excessive 
freight  charges  to  obtain  possession  of  goods  cannot  be  recovered 
where  the  consignee  did  not  tender  the  amount  actually  due, 
which  amount  he  knew,  and  demand  the  property.*  In  this  case 
payment  was  made  to  an  agent  on  his  statement  that  the  com- 
pany would  refund  any  excessive  charges.  Such  agent  did  not, 
however,  have  authority  to  bind  his  principal  by  a  contract  to 
refund.  Thus  where  A  moved  his  office  to  B's  stockyards,  as 
tenant  at  will,  B  agreeing  to  charge  ^lo  rent,  and  B  then  charged 
rent,  which  A  paid  because  all  the  offices  at  such  yards  belonged 
to  B,  no  duress  exists.^ 

§805.     Threat  of  civil  actioiic 

The  principle  that  a  lawful  act  does  not  constitute  duress  in 
the  absence  of  special  circumstances  find  illustration  in  the 
commencement  of  a  civil  action.  The  mere  threat  of  a  civil 
action  is  not  duress  or  legal  compulsion ;  and  a  payment  made 
by  reason  of  such  threat  cannot  be  recovered.^  The  same  prin- 
ciple applies  where  a  civil  action  has  been  instituted  f  accord- 
ingly payment  of  money  on  service  of  summons  is  not  payment 

iGulf    City    Construction    Co.    v.  7   Cush.    (Mass.)    125; -54  Am.  Dec. 

Ky.,  121  Ala.  621;  25  So.  579.  716;     Morse     v.     Woodworth.     155 

2  Minneapolis,    etc.,    Co.    v.    Cun-  Mass.  233;    27   K   E.   1010;    29  N. 

ningham,   59  Minn.  325;   61   N.  W.  E.   525;   Peebles  v.   Pittsburgh,   101 

329.      (Ending  such  tenancy  at  will  Pa,  St.  304;  47  Am.  Eep.  714.   "To 

was  "  nothing  more  than  defendant  pursue    or    threaten    to    pursue    the 

would    have    had    a    legal    right    to  usual  legal   steps   for  the  collection 

do.")  of   a   debt   in   the  manner   provided 

1  Burke   v.   Gould.    105   Cal.   277;  by   law   does   not   constitute    duress 

38    Pae.    733;    Ligonier    (Town   of)  of  property."     Burke  v.  Gould,   105 

V.  Ackerman,  46  Ind.   552;    15  Am.  Cal.  277,  283;   38  Pac.   733. 
Rep.  323;  Muscatine  v.  Packet  Co.,  2  Dawson   v.    Mann,    49    la.    596; 

45  la.  185;  New  Orleans,  etc.,  R.  R.  Benson  v.  Monroe,  7  Cush.   (Mass.) 

V.    Improvement    Co..    109    La.    13;  125;  54  Am.  Dec.  716;  Brummitt  v. 

94   Am.    St.   Rep.    395;    33    So.   51;  McGuire,   107   N.   C.   351;    12   S.   E. 

Parker  V.  Lancaster,  84  Me.  512;  24  191;    Beard    v.    Beard.    25    W.    Va. 

Atl.    952;     Preston    v.    Boston.     12  486;  52  Am.  Rep.  219. 
Pick.    (Mass.)   7;  Benson  v.  Monroe, 


1242  PAGE    ON    CONTEACTS. 

under  duress  and  cannot  be  recovered.^  Indeed  if  any  defense 
to  such  cause  of  action  exists,  the  threatened  action  is  the  very 
means  provided  for  by  law  for  determining  its  validity.  Thus 
if  an  action  in  replevin,*  or  attachment,^  or  a  seizure  in  admir- 
alty for  non-payment  of  an  alleged  claim  for  wharfage,®  or  an 
action  against  a  corporation  for  the  appointment  of  a  receiver,' 
or  an  action  by  a  receiver  to  enforce  a  stock  liability,*  or  a  fore- 
closure suit,**  is  either  begun  or  threatened  it  does  not  of  itself 
amount  to  duress.  Thus  where  an  overdue  note  given  by  A  to 
B  bore  interest  at  ten  per  cent,  but  B  had  agreed  in  writing 
that  it  should  bear  only  eight  per  cent  after  maturity,  and  B 
subsequently  sues  in  foreclosure  and  demands  ten  per  cent  in- 
terest, A  should  set  up  such  agreement  as  a  defense.  If  he  pays 
the  full  amount,  including  interest  at  ten  per  cent,  he  cannot  re- 
cover the  difference.^" 

§806.     Payment  compelled  by  legal  process. 

If  the  property  of  one  is  seized  on  legal  process  procured  by 
another  in  good  faith  and  "  in  pursuit  of  the  ordinary  remedy 
afforded  by  law  "^  a  payment  made  to  procure  the  release  of 
such  property  is  not  made  under  duress  and  cannot  be  recovered 
if  the  right  of  recovery  rests  on  that  ground  alone.^     Thus  if  a 

3  Hamlet   v.   Richardson,   9   Bing.  7  Dustin  v.  Farrelly,  81  Mo.  App. 

644;   Marriot  v.  Hampton,   7   T.  R.  380. 

269.     "Money   paid   under   pressure  s  Holt  v,   Thomas,    105   Cal.   273; 

of-  legal    process    cannot    be    recov-  38  Pae.  891. 

ered."    Moore  v.  Fulham   (1895),  1  9  Burke  v.  Gould,  105  Cal.  277;  38 

Q.  B.  399.  Pac.    733 ;    Savannah    Savings  Bank 

4Brummitt  v.  McGuire,  107  N.  C.  v.  Logan,  99  Ga.  291;  25  S.  E.  692; 

351;    12  S.  E.   191.  Vereycken    v.    Vanden-Brooks,     102 

5  Benson  v.  Monroe.  7  Cush.  Mich.  119;  60  N.  W.  687;  Shuck  v. 
(Mass.)   125;  54  Am.  Dec.  716.  Loan  Association,  63  S.  C.  134;   41 

6  New  Orleans,  etc.,  R.  R.  v.  Im-  S.  E.  28. 

provement  Co.,  109  La.  13;  94  Am.  lo  Vereycken     v.     Vanden-Brooks, 

St.     Rep.     395;     33     So.     51.     The  102  Mich.  119;  60  N.  W.  687. 

■wharfage    fees   were    held    legal    in  i  Kohler  v.  Wells,  26  Cal.  606. 

New    Orleans,    etc.,    R.    R.    v.    Im-  2 "  it  will  not  do  to  hold  that  a 

provement  Co.,  75  Fed.  309;  21  C.  C.  payment   secured    by   none    but    the 

A.  364.  means  provided  by  the  law  itself  is 


IJ^IPLIED    CONTRACTS    AND    QUASI-CONTEACTS,  1243 

resides  in  one  State  and  his  property  is  duly  attached  by  B  in 
another  on  a  claim  which  B  in  good  faith  believes  to  be  a  just 
one,  a  payment  by  A  to  B  to  settle  such  claim  and  to  procure 
the  release  of  such  attachment  cannot  be  recovered.^  So  if 
property  is  taken  in  good  faith  upon  an  attachment  which  is 
not  issued  simply  to  hold  the  property  until  another  attachment 
can  be  levied,  but  is  intended  as  a  regular  means  of  securing  a 
just  debt,  and  the  first  attachment  is  dismissed  because  the  de- 
fendant is  misnamed,  and  a  second  attachment  issues  under 
which  the  officer  continues  to  hold  the  attached  property,  he  is 
not  liable  in  assumpsit  because  he  did  not  return  the  attached 
projjerty  to  the  owner  before  levying  the  second  attachment.* 
A  fraudulent  use  of  legal  process  may  amount  to  duress,  how- 
ever.^ Thus  if  an  attachment  is  levied  not  in  good  faith,  but 
on  a  claim  known  to  be  unfounded  for  the  purpose  of  extorting  a 
payment,  such  payment  if  made  to  procure  the  release  of  such, 
goods  is  "  by  compulsion  "  ^  and  may  be  recovered,  especially 
if  made  by  one  who  is  unable  with  reasonable  diligence  to  leam 
the  facts/ 

§807.    Breach  of  contract  as  duress. 

A  payment  made  to  induce  the  adversary  party  to  perform 
his  contract  is  not  made  under  duress  and  cannot  be  recovered. 
Thus  excessive  payments  made  to  induce  an  irrigation  company 
to  continue  to  furnish  water  ;^  or  payments  made  to  induce  a 
vendor  to  deliver  future  installments  of  coal  according  to  his 
contract,  the  payments  being  the  contract  price  for  the  coal 
already  delivered  which  was  held  not  to  be  of  the  quality  re- 

a  compulsory  or  coerced  one,  there  s  Pitt  v.  Coomes.  2  Ad.  &  El.  459; 

being  no  element  of  fraud  or  other  Cadaval   (Duke  of)  v.  Collins,  4  Ad. 

ingredient     of     oppression     in     the  &    El.    858;     Colwell    v.    Peden,    3 

case."     Dickerman   v.   Lord,   21    la.  Watts   (Pa.)   327. 

338,  343;   89  Am.  Dec.  579.  e  Chandler   v.    Sanger,    114    Mass. 

sKohler   y.    Wells,    26    Cal.    606;  364;   19  Am.  Rep.  367. 

Dickerman  v.  Lord,  21   la.  338;    89  7  Adams  v.  Reeves,  68  N.  C.  134; 

Am.  Dec.  579.  12  Am.  Rep.  627. 

*  Brady  v.  Royce,  180  Mass.  553;  i  Steck  v.  Irrigation  Co.,  4  Colo. 

62  N.  E.  960.  App.  323;  35  Pac.  919. 


12J:4  PAGE    ON    CONTKACTS. 

quired  by  the  contract ;"  or  payments  made  to  an  agent  of  what 
he  claimed  to  be  the  balance  due  him  from  his  principal  to  in- 
duce him  to  deliver  butter  which  was  not  the  principal's  until  it 
was  delivered/  can  none  of  them  be  recovered.  So  a  contractor 
cannot  recover  a  payment  made  by  him  as  due  on  a  forfeiture 
for  failure  to  complete  the  work  in  accordance  with  the  terms 
of  the  contract  on  the  theory  that  it  was  made  under  duress, 
although  the  board  of  public  works,  to  whom  it  was 
made,  would  not  notify  the  council  that  the  work  had  been  ac- 
cepted until  this  payment  had  been  made,  and  until  such  notice 
the  council  would  not  appropriate  the  amount  due  the  contrac- 
to.*  Under  some  circumstances,  however,  a  refusal  to  perform, 
a  contract  may  have  so  disastrous  an  effect  upon  the  business  of 
the  adversary  party,  that  a  payment  made  by  him  to  induce 
performance  of  such  contract,  may  be  held  to  be  made  under 
compulsion.  Thus,  where  a  theatrical  performance  had  been 
advertised,  and  a  short  time  before  it  was  to  begin  the  actor 
refused  to  go  unless  he  was  paid  the  full  amount  of  an  item  in 
dispute  between  himself  and  the  manager,  it  was  held  that  a 
payment  of  such  amount  by  the  manager  was  made  under  "  a 
species  of  constraint,"  and  could  be  recovered.^  B,  a  building 
contractor,  who  was  constructing  a  church  in  Boston,  sent  some 
stone  to  iSTew  York  to  be  cut.  For  this  he  was  fined  five  hundred 
dollars  by  an  association  of  stone  masons.  B  refused  to  make 
such  payment,  and  the  association  threatened  to  cause  a  strike 
among  B's  workmen  unless  such  amount  was  paid.  On  B's  con- 
tinued refusal,  the  association  caused  a  strike,  which  lasted 
for  some  time.  B  was  unable  to  procure  laborers  competent  to 
complete  such  job,  and  he  finally  paid  this  amount  in  order 
to  have  the  strike  declared  off.  Subsequently,  he  brought  suit 
against  the  association  and  those  who  had  handled  the  check  by 

2  Armstrong  v.  Latimer,   165  Pa.      been  held  to  constitute  duress.     See 
St.  398;   30  Atl.  990.  §  255. 

3  Hubbard  V.  Mills,  46  Vt.  243.  s  Dana      v.      Kemble,      17      Pick. 
4Laidlaw  v.  Detroit,  110  Mich.  1;        (Mass.)  545.     In  this  case  the  judg- 

67  N.  W.  967.  But  similar  facts  ment  in  favor  of  the  manager  was 
in  the  formation  of  a  contract  have      reversed   on   the   ground   of   failure 


IMPLIED    CONTKACTS    AND    QUASI-CONTRACTS.  1245 

which  such  payment  was  made  and  received  the  money  therefor. 
The  lower  court  held  that  B  had  no  right  of  action,  Por  this, 
the  Supreme  Court  reversed  the  judgment  of  the  lower  court, 
holding  that  B  had  a  right  of  action,  although  they  were  un- 
decided whether  it  was  in  tort  or  in  assumpsit."  So  payment 
of  illegal  charges  for  water, '^  or  gas,^  made  under  threat  of  cut- 
ting off  the  supply  if  such  illegal  charge  is  not  paid,  or  payment 
of  an  illegal  water  license  charge,**  or  an  illegal  charge  for  rent 
of  a  gas  meter^"  made  under  like  circumstances  may  be 
recovered. 

§808.     Other  forms  of  duress. 

Duress  or  legal  compulsion  is  not  invariably  confined  to  du- 
ress of  person  or  property  although  these  are  the  common  cases. 
Thus  payment  made  by  force  of  a  statute  afterward  held  un- 
constitutional, requiring  a  certain  payment  as  a  condition  prece- 
dent to  the  jurisdiction  of  the  Probate  Court  in  administering 
an  estate,^  may  be  recovered. 

§809.     Dilemma  not  duress. 

The  mere  fact  that  one  makes  a  payment  when  in  doubt  as 
to  his  legal  rights  and  afraid  of  imperiling  them  if  he  refuses 
payment  does  not  constitute  duress.^  This  is  merely  an  illustra- 
tion of  a  mistake  of  law.  The  party  paying  does  not  know 
whether  he  is  bound  by  law  to  pay  or  not,  and  to  save  his  rights 
he  makes  payment.     In  such  case,  if  he  was  not  bound  by  law  to 


of    proof,     and     a    new     trial     or-  8  Indiana,  etc.,  Co.  v.  Anthony,  26 

dered.  Ind.  App.  307 ;  58  N.  E.  868. 

6  Carew  v.  Rutherford,  106  Mass.  »  Westlake   v.   St.   Louis,    77   Mo. 
1;  8  Am.  Rep.  287.     This  case  was  47;  46  Am.  Rep.  4. 
subsequently   settled,    and    was   not  lo  Capital,    etc.,     Co.     v.     Gaines- 
tried  a  second  time.  (Ky.),  49  S.  W.  462. 

7  Panton  v.   Duluth,  etc.,   Co.,   50  i  Mearkle    v.    Hennepin    Co.,    44 
Minn.    175;    36   Am.    St.   Rep.   635;  Minn.  546;  47  N.  W.  165. 

52   N.   W.   527;    St.   Louis   Brewing  i  De   La   Cuesta   v.   Ins.    Co.,    136 

Association    v.     St.     Louis     (Mo.),  Pa.  St.  62,  658;  9  L.  R.  A.  631;  20 

37  S.  W.  525.  Atl.  505. 


1246  PAGE    ON    CONTRACTS. 

pay,  he  has  paid  under  a  mistake  of  law,  and  cannot  recover. 
If  he  was  bound  by  law  to  pay,  he  has  done  only  what  he  should 
have  done  and  cannot  recover. 

§810.    Unfair  advantage  as  duress. 

Payments  made  by  one  who  is  not  on  terms  of  practical 
equality  with  the  person  to  whom  such  payments  are  made  are 
looked  upon,  not  as  voluntary  payments  but  as  payments  made 
under  compulsion.  Where  A  demands  from  B  payment  of  tolls 
which  are  not  legally  due  under  threat  of  drawing  off  water 
from  a  dam  used  by  B,  a  step  which  would  interefere  with  B's 
business  seriously,  and  to  avoid  such  action  B  pays  such  tolls 
he  may  recover  such  payment.^  A,  a  section  foreman  of  a  rail- 
road, extorted  money  from  B,  one  of  the  section  hands,  by  show- 
ing B  a  written  order  from  A's  superior,  X,  directing  A  to  dis- 
charge every  man  who  would  not  pay  over  ten  dollars.  In  order 
to  keep  from  being  discharged,  B  paid  such  amount.  It  was 
held  that  B  could  recover  from  A.^  The  fact  that  A  had  trans- 
mitted such  money  to  X,  did  not  relieve  him  from  the  liability 
to  account  to  B  therefor.  A  pension  attorney  who  charges 
and  collects  a  fee  in  excess  of  that  fixed  by  Federal  Statute 
for  obtaining  a  pension  is  liable  for  such  excess  to  the  person 
by  whom  such  payment  is  made.^  Where  insurance  was  effected 
in  the  names  of  lessor  and  lessee  jointly  and  on  loss,  proof  of 
loss  must  be  made  by  both,  and  the  lessor  takes  advantage  of 
the  financial  necessities  of  the  lessee  to  exact  a  payment  out  of 
the  lessee's  share  of  the  insurance  of  an  amount  which  is  not 
due  to  the  lessee,  such  payment  may  be  recovered  as  made  un- 
der duress.*  A  refusal  of  a  vendee  to  accept  a  deed  unless 
revenue  stamps  are  affixed  thereto  is  not  duress ;  and  the  vendor 
who  buys  such  stamps  from  the  revenue  collector  without  pro- 
test and  without  notifying  him  of  their  intended  use  cannot 

1  Lehigh,  etc.,  Co.  v.  Brown,  100  3  Hall  v.  Kimmer,  61  Mich.  269; 
Pa.  St.  338.  1  Am.  St.  Rep.  575;  28  N.  W.  96. 

2  Bocchino  v.  Cook,  67  N.  J.  L.  4  Guetzkow  Bros.  Co.  v.  Breese,  96 
467;  51  All.  487.  Wis.  591;   65  Am.  St.  Rep.  83;    72 

X.   W.  45. 


IMPLIED    CONTKACTS    AND    QUASI-CONTEACTS.  1247 

recover  from  him.''  In  some  jurisdictions,  it  is  held  that  pay- 
ments of  usurious  interest  are  necessarily  made  under  compul- 
sion, and  hence  may  be  recovered,  even  though  the  contract  has 
been  fully  performed,  and  there  is  no  statute  specifically  pro- 
viding for  recovery.®  A  common  carrier  and  a  shipper  do  not 
stand  upon  terms  of  equality.  The  shipper  is  usually  under 
a  practical  compulsion  to  have  his  property  transported  at 
once.  He  does  not  know,  and  he  has  no  means  of  communicat- 
ing with  the  officers  of  the  road  whose  business  it  is  to  fix  the 
charges  for  transportation.  Accordingly,  payment  by  a  shipper 
of  an  unreasonable  charge,  or  one  in  excess  of  the  amount  fixed 
by  law  is  not  looked  upon  as  one  of  voluntary  payment,  and  the 
shipper  may  recover,'^  even  if  no  protest  is  made  at  the  time 
of  the  over-payment.^  Thus  where  by  law  charges  must  be  uni- 
form, a  shipper  who  has  been  obliged  to  pay  regular  rates  while 
other  shippers  have  received  rebates  may  recover  the  differ- 
ence between  the  rates  paid  by  him  -and  what  he  would  have 
been  obliged  to  pay  had  he  received  the  same  rebate.^  So  if  the 
carrier  has  paid  to  one  shipper  a  jDroportion  of  the  freight 
charges  paid  by  another  shipper,  a  competitor  of  the  former, 
the  latter  may  recover  such  amount  from  the  former.^"  But  it 
has  been  held  that  under  a  statute  permitting  the  refunding  of 
excessive  charges  for  freight  an  action  cannot  be  brought  to  com- 
pel such  refunding."  A  private  individual  and  a  public  officer 
do  not  ordinarily  stand  upon  an  equal  footing.^^     Accordingly, 

5  Chesebrough  v.  United  States,  Frisbie,  32  Vt.  559 ;  West  Virginia, 
192   U.   S.   253.  etc.,  Co.  v.  Sweetzer,  25  W.  Va.  434. 

6  Bexar,  etc.,  Co.  v.  Robinson,  78  ^  Louisville,  etc.,  Ry.  v.  Wilson, 
Tex.  163;  22  Am.  St.  Rep.  36;  9  132  Ind.  517;  18  L.  R.  A.  105;  32 
L.   R.  A.   292;    14   S.   W.   227.     See  N.  E.  311. 

§  521.  9  Cook  V.  Ry.,  81   la.  551 ;  25  Am. 

7  Mobile,  etc.,  Ry.  v.  Steiner,  61  St.  Rep.  512;  9  L.  R.  A.  764;  46 
Ala.    559;    Chicago,    etc..    R.    R.    v.      N.  W.  1080. 

Coal  Co.,  79  111.  121;  Chicago,  etc.,  »oBrundred  v.  Rice,  49  O.  S.  640; 

Ry.   V.    Wolcott,    141    Ind.    267;    50  34  Am.  St.  Rep.  589;  32  N.  E.  169. 

Am.   St.   Rep.    320;    39   N.   E.   451;  n  Randle  v.  Abeel.  88  Fed.  719. 

Lafayette,  etc..  R.  R.  V.  Pattison,  41  12  American      Steamship     Co.     v. 

Ind.  312;  Peters  v.  R.  R..  42  0.  S.  Young,  89  Pa.  St.  186;  33  Am.  Rep. 

275;  51  Am.  Rep.  814;  Beckwith  v.  748;     Marcotte    v.    Allen,    91    Me. 


1248  PAGE    ON    CONTKACTS. 

a  payment  demanded  and  received  of  a  public  officer,  under 
color  of  office,  may  be  recovered  by  the  private  person  makino 
such  payment,  even  if  he  makes  it  under  a  mistake  of  law. 
Thus  where  A  lived  in  a  county  attached  for  certain  purposes 
to  another  at  the  time  that  certain  taxes  were  levied,  but  sub- 
sequently reorganized  as  a  separate  county  before  such  taxes 
were  paid,  and  A  pays  his  taxes  to  the  treasurer  of  such  other 
county,  A  may  recover  such  taxes  from  such  county/^  So  a 
postmaster  who  exacts  an  unauthorized  fee  for  delivering  let- 
ters may  be  made  to  refund  such  payment  in  an  action  for 
money  had  and  received/*  If  the  public  officer  receives  fees 
to  which  he  is  not  entitled,  and  he  know^s  that  the  person  pay- 
ing them  is  ignorant  of  the  law  and  makes  such  payments  be- 
cause he  thinks  he  is  bound  by  law  to  pay  them,  his  act  in  re- 
ceiving such  payment  without  informing  the  other  person  of 
his  rights,  is  looked  upon  as  a  fi'aud,  and  the  party  making  such 
payments  may  recover  them/^  Whenever  a  payment  made  in 
ignorance  of  the  law^  is  induced  by  the  fraud  or  imposition  of 
the  other  party  and  especially  if  the  parties  are  not  on  an  equal 
footing,  an  action  to  recover  it  back  is  maintainable/''  Payment 
made  to  a  public  officer  by  a  private  citizen,  for  services  which 
the  officer  was  not  required  to  render  as  a  part  of  his  public 
duty,  cannot  be  recovered.  Thus,  if  an  auditor  makes  a  special 
charge  for  services  in  preparing  a  bond  which  he  is  not  re- 
quired by  his  office  to  do,  a  payment  therefor  cannot  be  re- 
covered.^^ The  legislature  has  power  to  change  the  Common  Law 
rule  that  money  paid  under  mistake  of  law  cannot  be  recovered, 
and  may  give  a  right  of  action  against  a  public  officer  who  col- 
lects, from  a  private  person,  fees  to  which  he  is  not  entitled  by 
law.^^    If  legal  and  illegal  charges  are  so  blended  by  the  officer 

74;  40  L.  R.  A.  185;  39  Atl.  346.  40  L.  E.  A.  185;  39  Ail.  346;  Bank 

13  Fremont,  etc.,  Ry.  v.  Holt  Coun-      v.  Daniel,  12  Pet.    (U.  S.)    32. 

ty,  28  Neb.  742;  45  N.  W.  163.  "  Eley  v.  Miller,  7  Ind.  App.  529; 

14  Barnes  v.  Foley,   5  Burr.  2711.      34  N.  E.  836. 

iGMarcotte  v.  Allen,   91   Me.  74;  is  Benson   v.    Christian,    129    Ind. 

40  L.  R.  A.   185;   39  Atl.  346.  535;  29  N.  E.  26. 

leMarcotte  v.  Allen,  91  Me.  74; 


IMPLIED    CONTKACTS    AND    QUASI-CONTRACTS.  1249 

making  them,  that  the  legal  cannot  he  separated  from  the  illegal, 
be  may  be  liable  to  pay  all  fees  thus  received.^"  A  borrowed 
money  from  a  school  fund.  The  county  auditor  made  an 
illegal  demand  for  a  payment  as  a  penalty  as  delinquent  inter- 
est. A  paid  such  amount  into  the  county  treasury.  The 
county  attorney  was  paid  for  his  services  in  obtaining  such 
payment  out  of  the  county  revenue  funds.  It  was  held  that 
A  could  not  recover  from  any  of  these  officers ;  since  the  auditor, 
who  had  demanded  the  payment,  did  not  receive  it,  the  treas- 
urer who  received  it  did  not  exact  it;  and  the  county  attorney 
was  not  paid  out  of  such  funds. ^** 

§811.    Application  of  foregoing  principles  to  taxes. 

Payments  unlawfully  coerced  as  taxes  may  be  recovered.* 
On  the  other  hand,  if  a  tax  is  paid  voluntarily  its  illegality  is 
no  ground  for  an  action  to  recover  it.^  While  there  is  practical 
unanimity  of  opinion  upon  these  general  propositions,  there  is 
a  decided  lack  of  harmony  in  the  adjudications  upon  the  ques- 
tion of  what  degree  of  compulsion  amounts  to  a  coercion  so 
that  the  tax  may  be  recovered  if  it  proves  to  be  illegal.  This 
lack  of  harmony  is  in  part  due  to  a  difference  in  the  powers 
granted  by  the  various  states  to  their  taxing  officers  in  making 
summary  collection  of  taxes.  After  eliminating  these  reasons 
for  divergence,  however,  there  remains  a  clear  conflict  of  author- 
ity as  to  what  amounts  to  coercion  of  payment  of  taxes.  Pay- 
ment of  taxes  has  been  held  to  be  made  under  duress  where 


19  Benson  v.   Christian,    129    Ind.  v.  Goodale,  66  N.  H.  424;    30  Atl. 
535;  29  N.  E.  26.  1121;  Raleigh  v.  Salt  Lake  City,  17 

20  Coleman  v.  Goben,  16  Ind.  App.  Utah  130;  53  Pac.  974;   Wyckoff  v. 
346;   45  N.  E.   194.  King  County,  18  Wash.  256;  51  Pac. 

1  Eyerly  v.  Jasper  County,  72  la.  379. 
149;    33    N.    W.    609;    Connelly    v.  2  Dear  v.  Varnum,  80  Cal.  86;  22 

Board,   64  Kan.   168;   67   Pac.  453;  Pac,     76;    Board,    etc.,    v.    Springs 

Newport  v.  Eingo,  87  Ky.  635;    10  Co.,    15    Colo.    App.    274;    62    Pac. 

S.    W.    2;    National    Bank    v.    New  336 ;  Johnson  v.  Atkins,  —  Fla.  — ; 

Bedford,   155  Mass.   313;    29   N.    E.  32  So.  879;  Jeem  v.  Ellijay,  89  Ga. 

532;     Wheeler    v.    Board,     etc.,     87  L54;  15  S.  E.  33;  Odendahl  v.  Rich, 

Minn.   243;   91  N.   W.   890;   Benton  112  la.  182;   83  N.  W.  886;  Monti- 
79 


1250 


PAGE    ON    CONTRACTS. 


arrest  was  threatened;''  or  criminal  proceedings;*  or  where 
the  omission  to  pay  an  excise  tax  was  made  a  crime  f  or  where 
property  is  withheld  f  or  seizure'  or  sale  thereof  is  threatened  f 
such  as  will  cast  a  cloud  upon  the  owner's  title/  or  terminate 
the  owner's  rights  ;^°  as  where  the  collector  threatens  to  sell 
lands  on  a  tax  warrant,  or  the  holder  of  a  tax  title  threatens 
to  claim  a  tax  deed  unless  the  land  is  redeemed/^  If  a  tax 
sale  casts  a  cloud  on  the  title,  money  paid  to  redeem  property 
from  such  sale  is  not  paid  voluntarily  and  may  be  recovered/^ 
Thus,  while  as  a  general  rule,  a  mortgagor  or  one  claiming 
under  him  who  buys  at  a  tax  sale,  cannot  assert  any  claim  by 
reason  thereof  as  against  a  mortgagee,  yet  if  the  purchaser 
at  a  tax  sale  is  the  equitable  owner  holding  under  an  assignee 
of  a  second  mortgagee  and  his   interest   does   not   appear  of 


cello,  etc.,  Co.  v.  Baltimore,  90  Md. 
416;  45  Atl.  210;  Foley  v.  Haver- 
hill, 144  Mass.  352;  il  N.  E.  554; 
Falvey  v.  Board,  etc.,  76  Minn.  257 ; 
79  N.  W.  302;  State  v.  R.  R.,  165 
Mo.  597;  65  S.  W.  989;  Hopkins  v. 
Butte,  16  Mont.  103;  40  Pac.  171; 
Baker  v.  Fairbury,  33  Neb.  674;  50 
N.  W.  950;   Bates  v.  York  County, 

15  Neb.  284;  18  N.  W.  81;  Foster 
V.  Pierce  County,  15  Neb.  48;  17 
N.  W.  261 ;  State  v.  Commissioners, 
56  0.  S.  718;  suh  nomine,  State  v. 
Bader,  47  N.  E.  564;  Sowles  v. 
Soule,  59  Vt.  131;  7  Atl.  715;  Bab- 
cock  V.  Fond  du  Lac,  58  Wis.  230; 

16  N.  W.  625. 

3  Swift  Co.  V.  United  States,  111 
U.  S.  22;  Douglas  v.  Kansas  City, 
147  Mo.  428;  48  S.  W.  851. 

4  Hoefling  v.  San  Antonio,  85  Tex. 
228;  16  L.  R.  A.  608;  20  S.  W.  85. 

5  Ratterman  v.  Express  Co.,  49  O. 
S.  608 ;  32  N.  E.  754.  So  an  inter- 
nal revenue  tax  paid  under  protest 
may  be  recovered.  Spreckels  Sugar 
Refining  Co.  v.  McClain,  192  U.  S. 
397. 

6  Erhardt  v.  Winter.  92  Fed.  918. 


7  Hennel  v.  Board,  etc.,  132  Ind. 
32;  31  N.  E.  462;  Minor  Lumber 
Co.  v.  Alpena,  97  Midi.  499;  56  N. 
W.  926;  St.  Anthony,  etc.,  Co.  v. 
Bottineau,  9  N.  D.  346;  50  L.  R.  A. 
262;  83  N.  W.  212. 

8  Sale  of  realty.  Thompson  v. 
Detroit,  114  Mich.  502;  72  N.  W. 
320;  Whitney  v.  Port  Huron,  88 
Mich.  268;  26  Am.  St.  Rep.  291;  50 
N.  W.  316;  Bowns  v.  May,  120  N, 
Y.  357;  24  N.  E.  947;  Stephan  v. 
Daniels.  27  O.  S.  527;  Whittaker  v. 
Deadwood,  12  S.  D.  608;  82  N.  W. 
202.  Personalty.  Hennel  v.  Board, 
132  Ind.  32;  31  N.  E.  462;  Lyon 
V.  Receiver,  etc.,  62  Mich.  271;  17 
N.  W.  839;  Kelley  v.  Rhoads,  7 
Wyom.  237;  75  Am.  St.  Rep.  904; 
39  L.  R.  A.  594;  51  Pac.  593. 

9  Montgomery  v.  Cowlitz  County, 
14  Wash.  230;  44  Pac.  259. 

10  Gill  V.  Oakland,  124  Cal.  335; 
57  Pac.  150. 

11  Bowns  V.  May,  120  N.  Y.  357; 
24  N.  E.  947. 

12  American,  etc.,  Union  v.  Hast- 
ings, 67  Minn.  303;  69  N.  W.  1078. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1251 

record,  money  paid  to  redeem  from  such  sale  may  be  recov- 
ered/^ So  if  a  levy  on  property^*  or  seizure  of  property  is 
threatened/^  or  by  statute  the  tax  is  made  a  lien  upon  specific 
personalty,  such  as  bank  stock/*'  payment  is  held  to  be  made 
under  compulsion.  So  where  land  cannot  be  conveyed  until 
the  tax  is  paid,^^  or  redemption  from  a  tax  sale  is  necessary,^* 
recovery  has  been  allowed.  Where  the  tax  collecting  officers 
have  power  to  collect  a  tax  by  summary  process  without  giving 
to  the  alleged  delinquent  a  right  to  be  heard  in  court  upon  the 
question  of  the  illegality  of  the  tax,  he  should  not  be  obliged 
in  order  to  protect  his  rights  to  wait  until  his  property  has 
been  actually  seized  before  making  payment.  When  the  cir- 
cumstances are  such  that  unless  he  pays,  his  property  is  liable 
to  summary  process  in  the  ordinary  routine  of  collection  there 
is,  in  justice,  no  reason  for  further  delay  to  protect  his  rights. 
Accordingly  it  has  been  held  that  under  such  circumstances 
payment  is  under  compulsion,^^  even  if  a  considerable  time 
must   elapse  before  the  collectors  are  bound   to  collect  sum- 

13  American,  etc.,  Union  v.  Hast-  eovery  of  taxes  illegally  exacted  if 
ings,  67  Minn.  303;  69  N.  W.  1078.  paid  under  protest,  recovery  of  such 

14  Cox  V.  Welcher,  68  Mich.  263 ;  a  payment  was  allowed  in  Gage  v. 
13  Am  St.  Rep.  339;  36  N.  W.  69;  Saginaw,  128  Mich.  682;  87  N.  W. 
Lindsay  v.  Allen^  19  R.  I.  721;  36  1027.  Hence  the  treasurer  cannot 
Atl.   840.  be  compelled  by  mandamus  to  issue 

15  Powder  River  Cattle  Co.  v.  a  receipt,  illegal  taxes  being  un- 
Custer  County,  45  Fed.  323;  Hennel  paid,  as  the  owner  may  pay  them 
V.  Vanderburgh  Co.,  132  Ind.  32;  under  protest  to  get  his  deed  and 
31  N.  E.  462;  Atchison,  etc.,  Ry.  recover  them.  State  v.  Nelson,  41 
Co.  V.  Atchison  County,  47  Kan.  Minn.  25;.  4  L.  R.  A.  300;  42  N.  W. 
722 ;  28  Pac.  999  ;  Kelley  v.  Rhoads,  548. 

7  Wyom.  237;  75  Am.  St.  Rep.  904;  is  Keehn  v.  McGillicuddy,  19  Ind. 

39  L.  R.  A.  594;  51  Pac.  593.  App.  427;   49  N.  E.  609;  American 

16  Aetna  Ins.  Co.  v.  New  York,  Baptist  Missionary  Union  v.  Hast- 
153  N.  Y.  331;  47  N.  E.  593.  ings,  67  Minn.  303;  69  N.  W.  1078. 

Instate  V.  Nelson,  41  Minn.   25;  is  Howard  v.  Augusta,  74  Me.  79; 

4  L.  R.  A.  300;  42  N.  W.  548.     A  Vaughn  v.  Port  Chester,   135  N.'  Y. 

contrary  view  is  taken  in  Weston  v.  460;   32  N.  E.  137;  Grim  v.  School 

Luce    County,    102    Mich.    528;    61  District,    57    Pa.    St.    433;    98    Am. 

N.  W.  15,  but  subsequently  in  view  Dec.   237;    Allen   v.    Burlington,    45 

of  the  Michigan  statute  allowing  re-  Vt.  202. 


1252  PAGE    ON    CONTEACTS. 

inarily,""  and  even  if  the  warrant  lias  not  yet  issued.^^  In 
some  jurisdictions  the  courts  are  far  less  liberal  in  allovving 
recovery  of  payment  of  taxes.  Payment  of  customs  without 
objection  or  protest  is  held  to  be  voluntary.""  Payment  of 
illegal  taxes  under  protest,  before  the  collector  has  made  any 
demand  therefor,"^  or  before  any  process  has  issued  for  its 
collection,"*  or  before  any  legal  steps  have  been  taken  to  compel 
payment,"^  or  before  the  collector  has  any  power  to  collect  taxes 
by  legal  proceedings  or  summary  process"*'  is  voluntary.  Pub- 
lication of  a  delinquent  tax-list,  under  the  method  of  collecting 
taxes  in  force  in  some  states  does  not  constitute  compulsion."^ 
Where  such  publication  is  one  of  the  steps  leading  up  to  a  sale, 
this  rule  could  not  apply  except  where  the  sale  itself  would 
be  held  not  to  amount  to  compulsion.  Payment  to  avoid  a 
money  penalty  for  non-payment  is  held  to  be  voluntary,^^  though 
in  some  jurisdictions  such  payment  is  held  to  be  voluntary."*  , 
The  reductio  ad  ahsurdum  of  the  former  view  is  found  in  those 
decisions  which  hold  that  payment  made  to  prevent  the 
sale  of  realty  for  a  void  tax  is  voluntary  and  cannot  be  re- 
covered.^" This  holding  is  based  on  the  theory  that  the  owner's 
method  of  testing  the  validity  of  the  tax  is  to  allow  the  sale 
to  proceed  and  then  to  attack  it  whenever  the  attempt  is  made 
to  deprive  of  his  realty  under  it.  A  jurisprudence  which  can 
devise  no  fairer  means  than  this  of  attacking  the  validity  cf  a 

soRumford    Chemical    Works    v.  Newell,    15   R.   I.   233;    2   Atl.    766. 

Ray,  19  R.  I.  456;  34  Atl.  814.  26  Peninsular   Iron  Co.  v.  Crystal 

21  Board,   etc.,    v.   R.   R.,   4   Kan.  Falls,  60  Mich.  79;  26  N.  W.  840. 
App.  772;  46  Pac.  1013.  27  Dear   v.   Varnum,    80   Cal.   86; 

22  Flint,  etc.,  Co.  v.  Bidwell,   123  22  Pac.   76. 

Fed.  200.  28  Decker     v.     Perry     (Cal.),     35 

23ConkIingv.  Springfield,  132  111.  Pac.    1017;    Peninsular   Iron   Co.   v. 

420;  24  N.  E.  67.  Crystal   Falls,   60  Mich.   79;    26   N. 

24  Decker  v.  Perry  (Cal.),  35  W.  840;  Bowman  v.  Boyd,  21  Xev. 
Pac.  1017;  Wilson  v.  Pelton,  40  O.  281;   30  Pac.  823. 

S.  306;   Houston  v.  Feeser,  76  Tex.  29  Stowe    v.    Stowe^    70    Vt.    609; 

365;  13  S.  W.  266.  41   Atl.   1024. 

25  Conkling  v.  Springfield,  132  111.  so  Phelan  v.  San  Francisco.  120 
420;  24  N.  E.  67;  Gould  v.  Board,  Cal.  1;  52  Pac.  38;  Otis  v.  People, 
etc.,     76     Minn.     279;     79     N.     W.  196  111.  542;  63  N.  E.  1053. 

303,     530;     Bunnell     Mfg.     Co.     v. 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1253 

tax,  and  which  has  grown  up  in  a  country  where  not  all  taxes 
are  valid  by  divine  right,  is  indeed  inadequate.  One  who  pays 
for  revenue  stamps  without  notifying  the  collector  of  their 
intended  use  and  without  making  protest  cannot  recover  such 
payment, ^^  It  is  always  possible  for  the  government  to  do 
justice  and  to  order  voluntarily  the  payment  of  taxes  illegally 
exacted.^^  Statutes  authorizing  repayment  of  illegal  taxes  are 
for  the  benefit  of  the  parties  making  such  payments,  and  hence 
even  if  permissive  in  their  terms  are  construed  as  mandatory,^^ 
Moved  by  the  injustice  of  the  rules  in  force  in  many  jurisdic- 
tions, some  legislatures  have  made  more  or  less  liberal  provision 
for  the  recovery  of  payments  of  illegal  taxes. ^*  The  effect  of 
such  statutes  often  is  to  eliminate  the  question  of  duress  en- 
drely,  and  to  allow  recovery  of  payments  of  illegal  taxes  even 
if  made  voluntarily.^^  Thus  a  statute  may  provide  for  re- 
20very  of  illegal  taxes  paid  voluntarily,  if  a  proper  ground  of 
objection  to  such  tax  is  contained  in  the  protest  made  at  the 
time  of  such  payment.^®  The  provisions  of  such  statute  must 
be  complied  to  enable  recovery  thereunder.  If  the  statute  re- 
quires a  specific  protest,  voluntary  payment  under  a  general 
protest  cannot  be  recovered. ^^  A  payment  extorted  by  com- 
pulsion may,  however,  be  recovered  without  complying  with 
these  statutes.^* 

The  general  rules  as  to  recovering  taxes  paid  under  duress 
are  always  subject  to  this  qualification.     If  the  legislature  has 

SI  Chesebrongh   v.   United    States,  Day  v.  Pelican,  94  Wis.  503 ;  69  N. 

192  U.  S.  253.  W.  368. 

32  Farmers',  etc.,  Bank  v.  Vanda-  35  Pacific  Coast  Co.  v.  Wells,  134 
lia,  57  111.  App.  681;  Lange  v.  Sof-  Cal.  471;  66  Pac.  657;  Matter  of 
fell,  33  111.  App.  624.  Adams    v.    Board,    etc.,    154    N.    Y. 

33  De  Pauw  Plate-Glass  Co.  v.  619;  49  N.  E.  144;  Centennial,  etc., 
Alexandria,  152  Ind.  443;  52  N.  E.  Co.  v.  Juab  County,  22  Utah  395; 
608.  62  Pac.   1024. 

34  White  V.  Smith,   117  Ala.  232;  36  \Miite   v.    Millbrook    Township, 
23    So.    525;    Topeka,    etc.,    Co.    v.  60  Mich.   532;   27  N.  W.  674. 
Board,   etc.,   63   Kan.   351;    65   Pac.  37  Peninsular  Iron  Co.  v.   Crystal 
660;     Western    Ranches    v.    Custer  Falls.  60  ]\Iich.  79;  26  N.  W.  840. 
County,  28  Mont.  278;  72  Pac.  659;  ss  Pere  Marquette  R.  R.  v.  Luding- 

ton,  —  Mich.  — ;  95  N.  W.  417. 


1254  PAGE    ON"    CONTRACTS. 

provided  means  for  testing  the  legality  of  a  tax,  without  risking 
loss  of  property,  imprisonment,  and  the  like,  such  method  must 
be  resorted  to.  Payment  made  without  seeking  such  remedy 
will  be  deemed  voluntary.^®  Thus  where  an  application  for 
abatement  may  be  made,  payment  under  protest  without  making 
such  application  cannot  be  recovered.**"  If  an  injunction  to 
restrain  the  collection  of  an  illegal  tax  is  granted,  and  subse- 
quently the  treasurer  threatens  a  sale  of  property  for  such  tax 
the  remedy  of  the  property  owners  is  by  proceedings  in  contempt 
of  court.  Subsequent  payment  of  such  tax  under  such  threat  is 
voluntary  and  cannot  be  recovered.*^  However,  recovery  has 
been  allowed  where  in  addition  the  treasurer  makes  the  false 
statement  that  such  tax  has  been  held  by  ihe  Supreme  Court 
to  be  lawful.*' 

§812.     Local  assessments. 

Payment  of  illegal  local  assessments,  made  under  duress,  may 
be  recovered.^  If  such  payment  is  made  voluntarily  it  cannot 
be  recovered.^  As  in  the  case  of  taxes,  the  conflict  of  authority 
appears  when  we  attempt  to  pass  from  such  general  statements 
to  a  discussion  of  what  constitutes  payment  under  duress.  The 
difference  between   payment   of   assessments   and   payment  of 

39  De  Graflf  v.  Ramsey  County,  Am.  St.  Rep.  508;  43  L.  R.  A.  584; 
46  Minn.  319;  48  N.  W.  1135;  Brad-  77  N.  W.  993;  Poth  v.  New  York, 
ley  V.   Laconia,   66   N.   H.    269;    20      151  N.  Y.  16;  45  N.  E.  372. 

Atl.    331;    Jamaica,   etc.,    Road    Co.  2  Richardson  v.   Denver,    17   Colo. 

V.  Brooklyn.   123  N.  Y.  375;   25  X.  398;  30  Pac.  333;  Hoke  v,  Atlanta, 

E.  476;  Pooley  V.  Buffalo,  122  N.  Y.  107    Ga.   416;    33    S.    E.    412;    New- 

592;   26  N.  E.  16,  624.  comb  v.  Davenport.   86  la,  291;   53 

40  All  Saints  Parish  v.  Brooldine,  N.  W.  232;  Louisville  v.  Anderson, 
178  Mass.-  404;  52  L.  R.  A.  778;  59  79  Ky.  334;  42  Am.  Rep.  220;  Hop- 
N.  E.  1003.                          '  kins  v.  Butte,  16  Mont.  103;  40  Pac. 

41  Trustees  v.  Thoman,  51  0.  S.  171;  Fuller  v.  Elizabeth,  42  N.  J. 
285;  37  N.'e.  523.  L.  427;   United  States  Trust  Co.  v. 

42  Greenbaum  v.  King,  4  Kan.  New  York,  144  N.  Y.  488 ;  39  N.  E. 
332;   96  Am.  Dec.  172.  383;    Redmond    v.    New    l^ork,    125 

1  Magnolia     (Town    of)     v.    Shar-  X.  Y.  632;  26  N.  E.  727;  Whitbeck 

man,  46  Ark.  358;  Gill  v.  Oakland,  v.   Minch,   48  O.   S.   210;    31   N.  E. 

124  Cal.  335:   57  Pac.  150;  McCon-  743;    Bank   v.   Memphis,    107   Tenn. 

ville  V.  St.  Paul,  75  Minn.  383;   74  66;   64  S.  W.  13. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1255 

taxes  is  that  while  the  tax  is  usually  a  personal  debt  enforceable 
out  of  property  generally  and  sometimes  against  the  person,  an 
assessment  rarely  is  a  personal  debt.  Payment  of  assessments 
has  been  held  to  be  under  duress  where  realty  subject  to  the 
lien  thereof  has  been^  or  is  about  to  be  sold^  in  proceedings  to 
enforce  the  lien  of  such  assessments.  Thus  where  proper 
authorities  have  begim  active  proceedings  to  collect  such  assess- 
ments^ or  have  ordered  that  such  proceedings  be  begun,®  pay- 
ment thereof  is  not  voluntary.  On  the  other  hand,  payment 
to  avoid  the  addition  of  interest^  or  of  a  penalty  in  money*  is 
not  made  under  duress.  Even  the  sale  for  a  void  assessment, 
if  it  is  void  and  casts  no  cloud  on  the  title,^  as  where  the 
purchaser  at  the  sale  has  the  burden  of  proving  the  validity  of 
the  sale,^°  has  been  held  not  to  be  compulsion ;  and  a  payment 
compelled  by  threat  of  such  a  sale  is  in  the  law  a  voluntary 
payment.  As  in  the  case  of  taxes  it  must  be  observed  that  a 
method  of  testing  the  validity  of  a  tax  which  requires  a  sale 
of  property  thereunder  is  most  unfair  and  inadequate.  Pay- 
ment under  protest  is  not  necessarily  under  duress.^^  If  a 
means  is  given  by  law  for  testing  the  validity  of  the  assessment 
without  awaiting  the  seizure  and  sale  of  one's  property,^"  as  by 
an  injunction  suit,^^  or  if  the  levy  may  be  resisted  as  illegal,^* 
such  means  must  be  resorted  to:  and  a  failure  so  to  do  shows 
that  in  law  the  payment  is  voluntary.     It  has  been  held  that 

sKeehn  v.  McGillicuddy,   19  Ind.  loDavies    v.    Galveston,     16    Tex. 

App.  427;   49  N.  E.  609.  Civ.  App.  13;  41  S.  W.  145. 

4Poth  V.  New  York,  151  N.  Y.  16;  n  First  National  Bank  v.  Ameri- 

45  N.  E.  372;  Vaughn  v.  Port  Ches-  cus,  68  Ga.  119;  45  Am.  Rep.  476; 

ter,  135  N.  Y.  460;  32  N.  E.  137.  Hawkeye,   etc.,    Co.   v.   Marion,    110 

sPoth   V.   New   York,    151    N.   Y.  la.   468;    81   N.  W.   718;    Whitbeck 

16;  45  N.  E.  372.  v.   Mineh,    48   O.    S.   210;    31    N.    E. 

6  Vaughn  v.  Port  Chester,  135  N.  743;   Peebles  v.  Pittsburgh,   101  Pa. 

Y.  460;   32  N.  E.  137.  St.  304;  47  Am.  Rep.  714. 

7Vanderbeck  v.  Rochester,  122  N.  12  Hoke  v.  Atlanta,  107  Ga.  416; 

Y.  285;  25  N.  E.  408.  33   S.  E.  412. 

8  Decker  v.  Perry   (Cal.),  35  Pac.  i3  \Yhitbeck    v.    Minch.    48    0.    S. 
1017.  210;  31  N.  E.  743. 

9  Phelan    v.    San    Francisco,    120  i*  Union  Pacific  Ry.  v.    (Commis- 
Cal.   1;   52  Pac.  38.  sioners  of)   Dodge  County.  98  U.  S. 

541;  Hoke  v.  A'lanta,  107  Ga.  416; 
33  S.  E.  412. 


1256 


PAGE    ON    CONTRACTS. 


money  paid  on  an  assessment,  illegal  but  not  void  on  its  face, 
cannot  be  recovered  until  the  assessment  has  been  set  aside  in 
a  proceeding  brought  for  that  purpose.^^ 

§813.     License  fees. 

Payment  of  an  illegal  license  fee  made  under  duress  may  be 
recovered.^  A  voluntary  payment  of  an  illegal  license  fee 
cannot  be  recovered."  Here  again  under  harmony  in  general 
propositions  we  find  marked  divergence  of  authority  in  apply- 
ing these  general  propositions  to  specific  cases.  Where  arrest 
is  threatened  for  conducting  a  business  and  the  like  without 
paying  such  license  fee,^  or  according  to  some  authorities,  where 
the  statute  or  ordinance  imposing  such  license  makes  non- 
payment a  crime,  though  no  immediate  arrest  is  threatened,* 
or  where  non-payment  will  result  in  exclusion  from  the  right 
to  do  business  in  the  state  and  no  mode  of  redress  or  opportun- 


15  state  V.  Elizabeth,  51  N.  J.  L. 
485;  18  Atl.  302;  Fuller  v.  Eliza- 
beth, 42  N.  J.  L.  427;  Elizabeth  v. 
Hill,  39  N.  J.  L.  555;  Trimmer  v. 
Rochester,  130  N.  Y.  401;  29  N.  E. 
746.  Contra,  that  it  is  not  neces- 
sary that  such  assessment  be  first 
set  aside  if  valid  on  its  face,  but 
levied  by  assessors  who  had  no 
jurisdiction  to  make  such  levy. 
Bruecher  v.  Port  Chester,  101  N.  Y. 
240;  4  N.  E.  272. 

1  Walsh  V.  Denver,  1 1  Colo.  App. 
523;  53  Pac.  458;  Harrodsburg  v. 
Renfro  (Ky.),  51  L.  R.  A.  897;  58 
S.  W.  795;  Bruner  v.  Clay  City, 
100  Ky.  567;  38  S.  W.  1062;  Catoir 
V.  Watterson,  38  O.  S.  319;  Marshall 
v.  Snediker,  25  Tex.  460;  78  Am. 
Dec.  534;  Newmann  v.  La  Crosse, 
94  Wis.  103;  68  N.  W.  654. 

2  Helena  v.  Dwyer,  65  Ark.  155; 
45  S.  W.  349;  Maxwell  v.  San  Luis 
Obispo.  71  Cal.  466;  12  Pac.  484; 
Wilmington  v.  Wicks,  2  Marv. 
(Del.)   297;  43  Atl.  173;  Tatum  v. 


Trenton,  85  Ga.  468;  11  S.  E.  705; 
(Town  of)  Ligonier  v.  Ackerman, 
46  Ind.  552;  15  Am.  Rep.  323; 
Providence  v.  Shackelford,  106  Ky. 
378;  50  S.  W.  542;  Maysville 
V.  Melton,  102  Ky.  72;  42  S. 
W.  754;  Fuselier  v.  St.  Landry 
Parish,  107  La.  221;  31  So.  678; 
Baker  v.  Fairbury,  33  Neb.  674; 
50  N.  W.  950;  People  v.  Wil- 
merding,  136  N.  Y.  363;  32  N.  E. 
1099;  Shelton  v.  Silverfield,  104 
Tenn.  67;  56  S.  W.  1023;  Noyes  v. 
State,  46  Wis.  250;  32  Am.  Rep. 
710;  1  N.  W.  1;  Van  Buren  v. 
Downing,  41  Wis.  122. 

3  Toledo  V.  Buechle,  21  Ohio  C.  C. 
429;  Douglas  v.  Kansas  City,  147 
Mo.  428;  48  S.  W.  851;  Newmann 
V.  La  Crosse,  94  Wis.  103;  68  N.  W. 
654. 

*  Chicago  v.  Sperbeck,  69  111.  App. 
562.  Contra,  Helena  v.  Dwyer,  65 
Ark.  155;  45  S.  W.  349;  Betts  v. 
Reading,  93  Mich.  77;  52  N.  W. 
940. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1257 

ity  for  a  hearing  is  given/'  such  payment  is  held  to  be  made 
under  duress.  So  the  expense  of  abating  a  nuisance  on  demand 
of  health  authorities  may  be  recovered  by  a  property  owner 
where  the  duty  of  abating  such  nuisance  really  rests  on  the 
sanitary  authorities  and  a  refusal  to  comply  with  the  demand 
Avould  render  the  property  owner  prima  facie  liable  to  a  pen- 
alty.*' In  some  of  the  cases  denying  the  right  to  recover,  the 
voluntary  character  of  the  payment  is  quite  clear.  Thus  pay- 
ment of  a  license  voluntarily  made  to  a  board  which  has  no 
legal  authority  to  issue  such  licenses  cannot  be  recovered.^  So 
a  voluntary  payment  of  a  license  fee  by  one  who  subsequently 
abandons  the  business  because  he  is  unable  or  unwilling  to 
file  a  bond  as  required  by  law  cannot  be  recovered.*  In  other 
cases  a  right  to  recover  is  denied  under  circumstances  which 
seem  to  show  what  to  the  ordinary  mind  looks  very  like  com- 
pulsion. Thus  payment  made  on  receipt  of  a  circular  threat- 
ening to  enforce  the  law/  or  under  threat  of  criminal  prosecu- 
tion/" has  been  held  not  to  be  made  under  duress. 

§814.     Recovery  of  payments  made   on  judgments. —  Judgment 
unreversed. 

The  question  whether  payments  made  on  a  judgment  can  be 
recovered  depends  in  the  first  instance  upon  the  further  question 
whether  such  judgment  has  been  reversed,  set  aside,  and  the 
like,  or  whether  it  has  not.  If  the  judgment  is  not  reversed, 
set  aside,  or  modified  in  a  proper  proceeding  for  that  purpose 
directly  attacking  the  judgment,  it  is  binding  between  the  par- 
ties if  rendered  by  a  court  having  jurisdiction  of  the  parties  and 

5  Scottish,   etc.,    Ins.    Co.    v.   Her-  <5  Andrew     v.     St.     Olave's,     etc. 

riott,  109  la.  606;  77  Am.  St.  Rep.  (1898),  1  Q.  B.  775. 

548 ;  80  N.  W.  665 ;  Douglas  v.  Kan-  7  Tatum  v.  Trenton,  85  Ga.  468 ; 

sas   City,    147   Mo.   428;    48    S.   W.  11   S.  E.  705. 

851;   Western  Union  Telegraph  Co.  s  Curry    v.    Tawas    Township,    81 

V.    Mayer,    28    O.    S.    521.     Contra,  Mich.  355;  45  N.  W.  831. 

Jackson  v.  Newman,  59  Miss.   385;  9  Yates  v.  Ins.  Co.,   200  111.  202; 

42   Am.    Rep.   367;    Austin  v.    Vir-  65  N.  E.  726. 

oqua,  67  Wis.  314;  30  N.  W.  515.  lo  Belts  v.  Reading,  93  Mich.  77; 

52  N.  W.  940. 


1258  PAGE    ON    CONTRACTS. 

the  subject-matter.  Since  matters  concluded  by  such  judg- 
ment cannot  be  relitigated  it  follows  that  money  paid  by  reason 
of  such  judgment  cannot  be  recovered,  even  if  the  judgment  is 
erroneous,  or  should  have  been  rendered  for  the  defeated  party 
on  the  real  merits  of  the  case.  The  enforcement  of  such 
judgment  is  clearly  a  resort  t6  'the  means  provided  by  law  for 
enforcing  liabilities,  and  such  payments  cannot  be  said  to  be 
made  under  duress.^  Thus,  if  money  forfeited  as  bail  has 
been  decreed  by  order  of  court  to  the  county  in  wdiich  the 
cause  of  action  was  brought,  instead  of  to  the  county  to  which 
the  trial  was  transferred,  the  latter  county,  the  party  who  has 
been  prejudiced  by  such  order  should  appeal  from  the 
order :  and  cannot  sue  the  former  county  for  the  money 
thus  paid  in,  while  the  order  stands  unmodified."  Thus  in  a 
condemnation  suit,  A  the  owmer  of  an  undivided  interest  in 
realty  was  awarded  a  certain  sum  of  money  as  damages  for 
his  interest  in  the  realty  appropriated.  A  partition  suit  was 
then  pending  betw^een  A  and  the  other  co-owners.  Subsequently 
the  tract  out  of  ^vhich  the  land  had  been  appropriated  was 
awarded  to  another  co-owner,  B.  It  was  held  that  the  county 
which  had  made  the  payment  in  the  condemnation  proceedings 
could  not  recover  from  A.^  Thus  where  A,  who  had  at  one 
time  been  a  commissioner  of  insolvents,  assumed  to  act  as 
such,  and  required  B  to  give  bond  with  sureties,  which  B  did, 
and  after  the  bond  was  forfeited  A  sued  B  and  such  surety, 
and  obtained  a  judgment  which  was  paid  by  one  of  the  sureties, 
such  surety  cannot  recover  from  A.*  So,  after  a  judgment 
which  includes  usurious  interest,  recovery  of  such  usury  can 

1  Carter  v.  Society,  3  Conn.  455;  Ian   v.    Brown.   4   Humph.    (Tenn.) 

Warren  County  v.  Polk  County,  89  174;   40  Am.  Dec.  635. 

la.  44;   56  N.  W.  281;   Williams  v.  2  Warren  County  v.  Polk  County, 

Shelbourne,   102  Ky.  579;   44  S.  W.  89  la.  44;  56  N.  W.  281. 

110;    Footman    v.    Stetson,    32    Me.  3  Xew  Madrid  County  v.  Phillips, 

17;   52  Am.  Dec.  634;  New  Madrid  125  Mo.  61;  28  S.  W.  321.     In  this 

County  V.  Phillips,  125  Mo.  61;   28  case  A  was  B's  guardian.     No  fraud, 

S.    W.    321;    Gerecke   v.    Campbell,  however,   was   found   to   exist. 

24  Neb.  306;  38  N.  W.  847;  Kirk-  *  Job  v.  Collier,  11  Ohio  422. 


IMPLIED    CONTKACTS    AND    QUASI-CONTEACTS.  1259 

not  be  bad  wbile  tbe  judgment  is  unreversed.^  So  wbere  A 
was  sued  as  surety  on  a  bail  bond,  and  judgment  rendered,  and 
after  such  judgment  be  filed  a  remission  of  the  penalty  executed 
by  the  governor  of  the  state,  but  such  judgment  was  not  set 
aside  or  modified,  it  was  held  that  A  could  not  recover  the 
amount  paid  in  by  him  on  such  judgment.^  Equity  has  allowed 
recovery  of  money  paid  upon  a  Common  Law  judgment  which 
was  obtained  by  fraud,  though  such  judgment  is  not  reversed, 
set  aside  or  modified/  Thus  A  held  a  note  signed  by  the  firm 
B  and  C,  per  C.  A  represented  to  B  that  the  money  for  which 
this  note  was  given  was  loaned  to  the  firm,  and  B  allowed  A 
to  take  a  judgment  on  such  note.  Subsequently  B  enjoined  the 
collection  of  such  judgment  on  the  ground  that  it  was  not  a 
firm  debt ;  but  on  A's  answer  that  it  was  a  firm  debt,  and  that 
the  judgment  was  not  obtained  by  fraud,  the  injunction  was 
dissolved.  B  paid  such  judgment.  After  payment  B  found 
evidence  that  the  money  was  loaned  to  C,  and  used  by  him  to 
discharge  an  individual  debt.  It  was  held  that  on  these  facts 
B  could  recover  from  A  in  equity.*  At  law,  however,  payments 
on  a  judgment  obtained  by  fraud  cannot  be  recovered  until  such 
judgment  is  reversed  or  set  aside.**  A  judgment  is  not  con- 
clusive as  to  matters  arising  after  its  rendition.  Thus,  if  A 
is  compelled  by  judicial  proceedings  to  pay  assessments  for  a 
street  improvement  and  such  improvement  is  thereafter  aban- 
doned, A  can  recover  the  money  thus  paid  in.^" 

§815.     Judgment  reversed. 

A  different   question   arises  where  the   judgment  has  been 
reversed,  set  aside,  modified,  and  the  like.     In  such  cases  a 

B  Footman  v.  Stetson,  32  Me.  17;  9  Ogle  v.  Baker,  137  Pa.  St.  378; 

52  Am.  Dec.  634;  Thatcher  v.  Gam-  21  Am.   St.  Rep.  886;   20  Atl.  998. 

men,   12  Mass.  268.  (Where   the  judgment   was  entered 

6  Williams  v.  Shelbourne,  102  Ky.  on  a  warrant  of  attorney  contained 
579;  44  S.  W.  110.  in  a  -forged  note.) 

7  West    V.    Kerby,    4    J.    J.    Mar.  loMcConville     v.     St.     Paul,     75 
(Ky.)  55.  Minn.   383;    74  Am.   St.  Rep.   508; 

8  Ellis  V.   Kelly,   8    Bush.    (Ky.)  43  L.  R.  A.  584;  77  N.  W.  993. 
621. 


12G0  ,  PAGE    ON    CONTRACTS. 

payment  made  upon  such  judgment  can  be  recovered  (1)  if  made 
under  duress  and  not  voluntarily,  and  if  the  judgment  is  re- 
versed upon  the  merits,  or  (2)  if  the  judgment  of  reversal  con- 
tains an  order  of  restitution/  If  the  property  of  the  judgment- 
debtor  is  seized  and  sold  on  execution  and  the  proceeds  paid 
over  to  the  judgment-creditor,  the  judgment-debtor  may  recover 
such  amount  from  the  judgment-creditor."  The  same  principle 
applies  where  money  in  the  hands  of  an  officer  of  the  court  is 
distributed  by  such  officer  under  an  erroneous  order  or  decree. 
Upon  reversal,  the  party  who  was  entitled  to  such  fund  may 
recover  from  the  person  to  whom  it  is  paid.^  If  the  law 
permits  execution  to  issue  on  a  judgment  while  appeal  or  pro- 
ceedings in  error  are  pending,  money  paid  by  reason  of  such 
execution  may  be  recovered  if  the  judgment  is  reversed  there- 
after.* Thus  if  the  execution  is  levied,  and  payment  is  made 
to  stop  the  sale,^  or  if  an  execution  has  issued  but  has  not 
been  levied  and  payment  is  made  to  prevent  a  levy,^  such  pay- 
ment is  under  compulsion  and  may  be  recovered.  So  recovery 
has  been  allowed  where  the  execution  was  forwarded  by  mail 
to  the  debtor,  and  the  amount  for  which  it  issued  was  paid 
in  by  him.'^  On  the  same  principle  a  payment  made  after  a 
creditor's  bill  has  been  filed  in  equity  to  enforce  the  lien  of 
the  judgment  on  certain  realty  may  be  recovered  after  reversal, 
the  court  finding  as  a  fact  that  such  payment  was  compelled  by 
the  action,  and  was  not  made  voluntarily  in  settlement  of  the 
claim.*     The  same  relief  has  been  given,  though  in  another 

1  Green  v.  Stone,  1  Har.  &  J.  s  Stevens  v.  Fitch,  11  Met. 
(Md.)    405.  (Mass.)      248.     Contra,     Gould     v. 

2  Crane  v.  Rimey,  26  Fed.  15;  McFall,  118  Pa.  St.  455;  4  Am.  St. 
Field  V.  Anderson^  103  111.  403;  Rep.  606;  12  Atl.  336.  (In  this 
Smith  V.  Zent,  83  Ind.  86;  43  Am.  case  the  jiidofment  was  reversed  for 
Rep.  61;   Sturm  v.  Fleming,  31  W.  technical   reasons.) 

Va.  701;  8  S.  E.  263.  6  Lewis   v.    Hull,    39    Conn.    116; 

sMetzner  v.  Bauer,  98  Ind.  425;  Travelers'  Ins.  Co.  v.  Heath,  95  Pa. 

In  re  Home  Provident,  etc.,  Associa-  St.  333, 

tion,  129  X.  Y.  288 ;  29  N.  E.  323.  7  United   States  Bank  v.  Bank,   6 

4  United  States  Bank  v.  Bank.   6  Pet.    (U.  S.)    8. 

Pet.     (U.    S.)     8;    Wright    v.    Nos-  « Chapman  v.  Sutton,  68  Wis.  657; 

trand.   100  N.  Y.  616;   3  N.  E.  78;  32  N.  W.  683. 
Travelers'  Ins.  Co.  v.  Heath,  95  Pa. 
St.  333. 


IMPLIED    CONTKACTS    AXD    QUASI-CONTKACTS.  1261 

form,  where  payments  have  been  made  upon  a  decree  in  equity, 
■which  fixes  the  amount  of  the  debt  and  orders  a  sale  of  the 
realty.  Where  such  decree  has  been  reversed  because  the 
amount  of  the  debt  was  ascertained  erroneously  by  the  trial  court, 
payments  on  the  original  decree  should  be  credited  upon  the 
subsequent  decree.®  In  some  cases  the  court  does  not  think  it 
necessary  to  indicate  more  than  that  money  was  paid  on  a  writ 
of  execution  without  indicating  whether  a  levy  was  made  or 
not,  on  the  ground  that  in  either  case  payrnent  was  made  by 
duress."  If  execution  has  not  issued,  but  may  issue  at  the 
option  of  the  judgment-creditor,  there  is  some  conflict  of  author- 
ity on  the  question  whether  payment  of  the  judgment  is  volun- 
tary. In  some  jurisdictions  it  is  held  that  if  the  judgment- 
debtor  pays  such  judgment  before  execution  issues  he  does 
not  do  so  voluntarily.^^  Where  this  view  obtains,  such  pay- 
ments may  be  recovered,^^  even  if  the  surety  who  pays  the 
judgment  against  himself  and  his  principal  takes  a  formal 
assignment  of  the  judgment  to  keep  it  alive  against  the  prin- 
cipal.^^ Eelief  is  also  given  in  such  cases  on  a  rule  by  the 
court  to  which  such  cause  is  sent  on  reversal  to  show  cause  why 
restitution  should  not  be  made.^*  In  other  jurisdictions  pay- 
ment of  a  judgment  on  which  execution  has  not  issued  is  not 
under  duress,^^  even  if  execution  is  threatened,^^  and  such  pay- 

9  Effinger  v.  Kenney,  92  Va.  245;      ment   should  have   been   coerced   by 
23  S.  E.  742.  execution."     Scholey   v.   Halsey,    72 

10  As    where    the    return    "  money      N.  Y.   578. 

made:    paid    by   John    Heath,"    left  1 3  Gates      v,      Brinkley,      4      Lea 

it  in  doubt  whether  a  levy  had  been  (Tenn.)    710. 

made  or  not.     Travelers'  Ins.  Co.  v.  i*  Gregory   v.   Litsey,    9    B.   Mon. 

Heath,  95  Pa.  St.  333.  (Ky.)  43;  48  Am.  Dee.  415. 

11 "  He    may    as     well    pay     the  is  Groves  v.  Sentell,  66  Fed.  179; 

amount  at  one  time  as   at  another  Cohen  v.  Laundry  Co.,  99  Ga.  289; 

and  save  the  expense  of  delay."  Pey-  25   S.   E.  689 ;    Estes  v.  Thompson, 

ser  v.  Mayor,  70  N.  Y.  497,  501;  26  90  Ga.  698;    17  S.  E.  98;  Lowis  v. 

Am.  Rep.  624;   quoted  in  Chapman  Brewing  Co.,  63  111.  App.  345;  Gould 

V.   Sutton,  68   Wis.  657;    32  N.  W.  v.  McFall,   118  Pa.  St.  455;   4  Am. 

683.  St.   Pep.   606;    12   Atl.   336. 

12  Scholey    v.    Halsey,    72    N.    Y.  lo  Perryman  v.  Pope,  94  Ga.  672; 

578.     "It  is  not  necessary  in  order  21   S.  E.  715. 
to  maintain  the  action  that  the  pay- 


1262  PAGE    ON    CONTKACTS. 

ment,  therefore,  cannot  be  recovered.  Hence  a  payment  of  a 
judgment  in  which  excessive  attorney's  fees  have  been  awarded, 
made  in  order  to  clear  the  title  to  realty  so  that  a  new  loan 
could  be  effected,  cannot  be  recovered.^'  So  if  a  judgment  is 
jDaid  voluntarily  while  appeal  or  error  proceedings  are  pending, 
such  payment  cannot  be  recovered  even  thougji  the  decree  ap- 
pealed from  is  modified  or  reversed.^^  When  Ivalmbach  v. 
Foote  first  came  before  the  Supreme  Court"  it  was  held  that 
a  payment  under  a  threatened  levy  made  to  the  attorney  of 
the  plaintiff  and  retained  by  him  for  his  own  use  could  be 
recovered  from  him.  The  judgment  below  was  reversed  and 
the  cause  remanded.  When  it  came  before  the  Supreme  Court 
a  second  time  the  evidence  showed  that  no  threat  of  levy 
was  made,  that  the  party  making  the  payment,  a  surety  of  the 
principal  debtor  made  the  payment  voluntarily  and  took  an 
assignment  of  the  judgment  against  his  principal,  which  was 
afterwards  reversed,  and  that  the  attorney  who  collected  the 
money  paid  it  over  to  his  client,  not  even  retaining  his  fees. 
It  was  then  held  that  such  payment  could  not  be  recovered."" 
Thus,  where  A's  land  is  sold  as  the  property  of  B,  and  while 
an  appeal  is  pending  A  voluntarily  pays  the  amount  necessary 
to  redeem  such  realty,  A  cannot  recover  such  payment  when  the 
decree  under  Avhich  the  realty  was  sold  is  reversed.'^  But 
where  no  opportunity  to  make  a  defense  is  given  to  the  judg- 
ment-debtor, as  where  a  cognovit  judgment  is  taken,  payment 
or  giving  a  new  security  may  be  considered  as  made  under 
duress.^^  Where  the  officer  who  is  about  to  serve  the  execution 
has  an  agreement  with  the  judgment-creditor  to  receive  half  the 
proceeds  collected,  and  such  agreements  are  illegal,  it  has  been 
held  that  because  of  such  interest,  a  payment  or  security  given 

"Estes  V.  Thompson,  90  Ga.  698;  i9  79  Mich.  236;  44  N.  W.  603. 

17  S.  E.  98.  2oKalmbach    v.    Foote,    86    Mich. 

18  Weaver  v.  Stacy,  93  la.  683;  62  240;  49  N.  W.  132. 

N.  W.   22;    Kalmbach   v.   Foote,   86  21  Weaver  v.  Stacy,  93  la.  683;  62 

Mich.  240;  49  N.  W.  132;  Ditman  v.  N.  W.  22. 

Raule,    134    Pa.    St.    480;     19    All.  22  Knox  County  Bank  v.  Doty,  9 

676.  O.  S.  506;  75  Am.  Dec.  479. 


IMPLIED    CONTRACTS    AND    QUASI-CONTBACTS.  1263 

to  avoid  such  unlawful  levy  is  given  under  duress.^^  Whether 
the  judgiuent-debtor's  right  of  action  for  involuntary  payments 
always  accrues  on  reversal  is  a  question  on  which  there  is  a 
divergence  of  authority.  In  some  cases  the  right  of  the  debtor 
to  recover  is  denied  if  the  money  belongs  in  good  conscience  to 
the  creditor.'*  Money  which  is  paid  in  satisfaction  of  a  judg- 
ment cannot  be  recovered  where  the  judgment  is  reversed,  not 
upon  the  merits,  but  upon  mere  technicalities,  as  where  the 
judgment  was  reversed  because  the  judgment-creditor  who  took 
a  default  judgment  had  omitted  to  make  proof  in  proper  form,"^ 
or  because  it  was  held  that  the  judgment  creditor  had  tech- 
nically waived  his  right  to  recover."®  On  reversal  of  a  judg- 
ment in  foreclosure,  as  being  excessive  in  amount,^^  the  trial 
court  attempted  to  evade  the  reversal  by  the  Supreme  Court, 
by  reducing  and  modifying  its  original  judgment  nunc  pro  tunc; 
while  this  innovation  in  procedure  was  held  erroneous,"^  it  was 
held  that  the  defendant  could  not  recover  from  the  plaintiff 
for  the  rents  during  the  time  that  plaintiff  was  in  possession 
as  purchaser  under  the  erroneous  order  of  sale,  since  "  his  only 
remedy  is  to  have  them  applied  on  the  mortgage  debt."^^  In 
other  cases  the  court  has  ordered  restitution  as  a  matter  of 
course,  and  has  declined  to  prejudge  the  result  of  a  new  trial 
following  reversal  in  a  proceeding  to  recover. ^'^  A  suit  in 
assumpsit  has  been  held  to  lie  where  an  action  by  an  insurance 
company  against  its  agent  for  premiums  collected  by  him  had 

23  Van  Dusen  v.  King,   106  Mich.  W.    873.     In    these    cases,    however, 

133;    64  N.  W.  9.     This   is  "fraud  the  payment  is  looked   upon  as,  to 

and  coercion."     It  is  "  not  so  much  some  extent,  a  voluntary  payment. 

a  question  of  individual  right  as  of  27  For    judgment    of   reversal    see 

public  policy."  London,    etc..    Bank    v.    Bandmann, 

24Cowdery     v.     Bank,     139     Cal.  120  Cal.  220;  65  Am.  St.  Rep.  179; 

298;   96  Am.  St.  Rep.  115;   73  Pac,  52  Pac.  583. 

196;    Teasdale   v.    Stoller,    133    Mo.  28  Cowdery  v.  Bank,  139  Cal.  298; 

645;    54   Am.   St.   Rep.   703;    34   S.  96  Am.  St.  Rep.  115;  73  Pac.  196. 

W.    873.  29  Cowdery  v.  Bank,  swpra  (quota- 

25  Gould   V.   McFall,    118    Pa.    St.  tion:  139  Cal.  309;  96  Am.  St.  Rep. 
455;    4   Am.   St.  Rep.   606;    12  Atl.  124;   73  Pac.  196). 

336.  30  £'^  parte  Walter,  89  Ala.  237; 

26  Teasdale    v.    Stoller,     133    Mo.       18    Am.    St.    Rep.    103;    7    So.   400. 
645;    54   Am.   St.   Rep.   703;    34    S.       (In   this   case   the   trial    court   was 


126-i  PAGE    ON    CONTRACTS. 

resulted  in  judgment  whicli  lie  had  been  compelled  to  pay: 
and  this  judgment  had  subsequently  been  reversed,  not  because 
the  premiums  did  not  belong  to  the  company,  but  because  the 
company,  not  having  complied  with  the  statute  authorizing  it 
to  do  business  in  that  state,  was  not  allowed  to  enforce  rights 
growing  out  of  such  business.^^  Under  the  former  practice 
recovery  of  what  a  judgment-debtor  had  lost  by  reason  of  the 
judgment  was  effected  by  a  writ  of  restitution,  if  the  record 
disclosed  what  he  had  lost  or  by  an  action  in  scire  facias  if  it 
did  not.^'  Under  modern  practice  the  reversing  court  may 
order  restitution,^^  even  if  the  judgment  is  reversed  because  the 
trial  court  lacked  jurisdiction.^*  Even  where  a  judgment  has 
been  reversed  on  the  ground  that  the  trial  court  had  no  juris- 
diction,^^ the  trial  court  may  retain  the  case  for  the  purpose 
of  enforcing  restitution.^®  If  the  judgment  of  reversal  contains 
an  order  of  restitution  the  judgment-debtor  may  recover  in- 
dependent of  any  question  whether  payment  by  him  was  volun- 
tary or  involuntary.^"  Such  question  of  voluntary  payment 
should  be  raised  as  a  ground  for  refusing  to  reverse.  The  judg- 
ment of  reversal  and  restitution  "  establishes  beyond  further 
question  the  right  of  plaintiff  in  error  to  be  restored  to  all 
things  which  he  has  lost  by  reason  of  the  erroneous  judgment. 
Its  justice  cannot  be  rejudged  in  any  collateral  proceeding."^* 

compelled    by    mandamus    to    order  as  Brook   v.   Fuel   Co.,    139   U,    S.- 

restitution    after    reversal    without  216.      (Since,  except  in  case  of  nego- 

reference   to   the  probable   result   of  tiable  instruments  and  the  like,  an 

a    new   trial.)      Murray   v.    Berdell,  assignee  could  not  bring  an   action 

98  N.  Y.  480.  in  the  United  States  courts  on  the 

31  Travelers'  Ins.  Co.  v.  Heath,  95  ground  of  being  a  citizen  of  another 
Pa.  St,  333.  state   from    that   in   which    the    de- 

32  Anonymous,       2       Salk,       588;  fendant    was    domiciled    unless    his 
United  States  Bank  v.  Bank,  6  Pet.  assignor  could  have   so  brought   an 

(U.  S.)   8.  action.) 

ssEx  parte  Morris,   9   Wall.    (U.  se  Xorthwestern       Fuel       Co.      v. 

S.)    605;    Morris's   Cotton,    8   Wall.  Brock.  139  U.  S.  216. 

(U.S.)  507 ;  Market  National  Bank  s- Hiler   v.   Hiler.    35   O.    S.   645; 

V.   Bank,   102   N.   Y.   464;    7   X.   E.  Breading  v.  Blocher,  29  Pa.  St.  347. 

302.  38  Breading  v.  Blocher,  29  Pa.  St. 

34  O'Reilly  v.  Henson,  97  Mo.  App.  347,  349 ;  quoted  in  Hiler  v.  Hiler^ 

491;   71   S.  W.   109.  35   0.   S.   645. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1265 

An  action  in  scire  facias  or  a  writ  of  restitution  are  neither 
indispensable  at  modern  practice.  A  direct  action  for  money 
had  and  received  may  be  maintained.^*  This  right,  however, 
has  been  limited  in  some  states  to  cases  where  no  order  of 
restitution  was  made  on  reversal.^^  The  fact  that  restitution 
is  asked  and  refused  in  the  proceedings  which  result  in  reversal 
does  not  prevent  a  separate  action  in  assumpsit.*^  The  statu- 
tory method  of  restitution  is  not  exclusive  and  does  not  prevent 
an  action  in  assumpsit.^^  Trespass,  however,  will  not  lie  if  the 
judgment  upon  which  the  execution  issued  under  which  the 
judgment  debtor's  property  was  taken  and  sold  was  merely 
erroneous  and  not  void.  The  debtor's  remedy  is  in  assumpsit.*^ 
The  right  of  action  for  money  paid  exists  in  favor  of  the  real 
party  in  interest  whose  money  has  been  paid  to  the  judgment 
creditor,  even  if  he  is  not  a  party  of  record.**  It  lies  against 
the  judgment  creditor  to  whom  or  on  whose  behalf  money  has 
been  paid.  Thus  if  money  of  a  judgment  debtor  is  applied 
to  paying  witness  fees  which  should  have  been  paid  by  the 
judgment  creditor,  the  debtor's  action  on  reversal  is  against  the 
sheriff  and  he  cannot  recover  from  the  witness.*^  In  an  action 
for  money  had  the  debtor  may  recover  the  amount  of  the  pro- 
ceeds of  his  property,  if  it  has  been  sold  on  execution,  paid 
over  to  or  on  behalf  of  the  judgment  creditor.*^  If  the  property 
sells  for  less  than  its  value,  or  its  seizure  has  caused  other  dam- 
age to  the  judgment  debtor,  it  is  evident  that  this  right  of  re- 
covery is  inadequate.     Accordingly  in  some  jurisdictions  the 

39  Eaun  V.  Reynolds,  18  Cal.  275;  43  Field  v.  Anderson,  103  111. 
Haebler   v.   Myers,    132   N.   Y.   363;      403. 

28   Am.   St.  Pep.   589;    15  L.   R.  A.  44  Stevens      v.      Fitch,      11      Met. 

588;    30   N.   E.   963;    Clark   v.   Pin-  (Mass.)   248. 

ney,  6  Cow.   (N.  Y.)   298.  45  Gray   v.    Alexander,    7   Humph. 

40  Duncan  v.  Kirkpatrick,  13  S.  &  (Tenn.)    16. 

P.    (Pa.)    292.  46  Thompson  V.  Reasoner,  122  Ind. 

41  Travelers'  Ins.  Co.  v.  Heath,  95  454;  7  L.  P.  A.  495;  24  N.  E.  223; 
Pa.  St.  333.  Martin    v.    Woodruff,    2    Ind.    237; 

42  Haebler  v.  Myers,  132  N.  Y.  Peck  v.  McLean,  36  Minn.  228;  1 
363;  28  Am.  St.  Pep.  589;  15  L.  P.  Am.  St.  Pep._^  665;  30  N.  W.  759; 
A.  588 ;  30  N.  E.  963.  Lewis  v.  Ry.,  97  Wis.  368 ;  72  N.  W. 


976. 


80 


1266  PAGE    ON    CONTRACTS. 

judgment  debtor  is  not  limited  to  this  measure  of  damages,  but 
may  recover  the  value  of  his  property  so  seized  on  execution.*' 

VI.     Payment  Obtained  by  Fraud. 

§816.     Payment  obtained  by  fraud. 

As  has  already  been  stated^  one  who  has  been  induced  to  enter 
into  a  contract  by  the  fraud  of  the  adversary  party,  has  an 
election  of  remedies,  one  of  which  is  to  avoid  the  contract 
and  recover  what  he  has  parted  with  or  a  reasonable  compensa- 
tion therefor.  Where  fraud  exists,  we  have  few  of  the  com- 
plications that  limit  recovery  of  payments  made  by  mistake. 
The  chief  question  that  makes  this  branch  of  the  subject  difficult 
is  the  extent  of  the  right  to  waive  tort  and  sue  in  contract. 
If  money  has  been  paid  under  such  contract,  the  right  of  the 
party  defrauded  to  waive  the  tort  and  recover  such  payment  on 
the  theory  of  an  implied  contract,  in  general  assumpsit,  is  very 
generally  recognized.^  Thus  one  who  pays  money,  deceived  by 
fraudulent  representations  of  the  adversary  party  with  reference 
to  the  mortgage  which  the  latter  is  selling  to  the  former,  may 
recover  such  payment  in  assumpsit.^  So  if  a  vendor  is  induced 
by  fraudulent  representations  to  accept  securities  in  payment 
for  his  goods,  he  may  credit  the  value  of  such  securities  on  the 
purchase  price  of  such  goods  and  sue  in  assumpsit  to  recover 
the  difference.*     So  money  paid  by  drawee  on  a  draft  accepted 

47  Reynolds    v.    Hosmer,    45    Cal.  Va.  385;  22  S.  E.  73;  Burke  v,  Ry., 

616;    Gould    v.    Sternberg,    128    111.  83  Wis.  410;  53  N.  W.  692. 

510;  15  Am.  St.  Rep.  138;  21  N.  E.  3  Cornell  v.  Crane,  113  Mich.  460; 

628;  McJilton  v.  Love,  13  111.  486;  71   N.  W.   878;   Robinson  v.  Welty, 

Smith  V.  Zent,  83  Ind.  86;   43  Am.  40  W.  Va.  385;  22  S.  E.  73.     So  of 

Rep.  61.  ^    purchase    of    a    bond.     Ripley   v. 

iSee  §  131.  Chase,    78   Mich.    126;    18    Am.    St. 

2Hanrahan  v.  Provident  Associa-  Rep.  428;  43  N.  W.  1097. 

tion,  67  N.  J.  L.  526;   51  Atl.  480;  *  Blalock  v.  Phillips,  38  Ga.  216; 

affirming   66   N.   J.   L.   80;    48   Atl.  Hidey  v.   Swan,   111  Mich.   161;    69 

517;   Jackson  v.  Hough,  38  W.  Va.  N.    W.    225;    Willson    v.    Foree,    6 

236;   18  S.  E.  575;  Weis  v.  Ahren-  Johns.     (N.    Y.)     110;    5    Am.    Dec. 

beck,   5  Tex.   Civ.   App.   542;   24   S.  195. 
W.  356;   Robinson  v.  Welty,  40  W. 


IMPLIED    CONTEACTS    AND    QUASI-CONTRACTS.  1267 

"  against  indorsed  bills  of  lading  "  attached  to  the  draft,  may 
be  recovered  when  these  bills  of  lading  were  in  fact  fictitious.^ 
Money  paid  by  shippers  to  a  carrier  of  goods  in  excess  of  charges 
made  to  other  shipj)ers  of  similar  goods  by  such  carrier,  in- 
duced by  the  statement  of  such  carrier  that  it  gave  no  lower 
rates,  may  be  recovered.**  Recovery  exists  in  cases  of  fraud 
though  the  party  guilty  of  fraud  is  thus  securing  from  the  party 
who  seeks  recovery,  the  payment  of  a  debt  due  from  a  third 
party.     Thus  A  had  embezzled  money  from  a  railway  company 

B.  B's  agent  represented  to  X  that  payment  of  a  certain  sum 
would  make  good  such  shortage  and  enable  A  to  retain  his 
position.  In  fact  the  shortage  was  much  greater,  and  A  was 
discharged.  It  was  held  that  X  could  recover  such  payment 
from  B.^  Money  paid  for  realty,  under  a  contract  voidable 
for  fraud  may  be  recovered  if  a  reconveyance  is  tendered.^  If 
payment  is  obtained  by  fraudulent  representation  of  fact  as  to 
the  existence  of  liability,  such  payment  may  be  recovered,  even 
though  no  contract  existed  between  the  parties.**  Thus,  if  an 
agent  obtains  money  as  commissions  from  his  principal  by 
fraudulently  representing  that  certain  parties  to  whom  he  had 
sold  on  credit  were  solvent,  such  payment  may  be  recovered.^** 
So  if  A  obtains  money  from  B  under  a  contract  to  use  it  in 
making  a  joint  purchase,  which  contract  A  has  no  intention  of 
performing  ;^^  or  if  A  obtains  money  from  B  by  falsely  claim- 
ing to  be  the  holder  of  B's  note,  which  he  has  in  fact  transferred, 
and  on  which  he  then  declines  to  pay  such  money,^'  such  pay- 
ments may  be  recoverd.     A  volunteer  cannot  recover  on  this 

5  Guaranty  Trust  Co.  v.  Grotrian,  23  N.  E.  615;  Ingalls  v.  Miller,  121 
114  Fed.  433;  57  L.  R.  A.  689;   52       Ind.   188;    22   N.   E.   995;    Frick  v. 

C.  C.  A.  235.  Larned,  50  Kan.  776;  32  Pac.  383; 

6  Cook  V.  Ry.,  81  la.  551 ;  25  Holland  v.  Bishop,  60  Minn.  23 ;  61 
Am.  St.  Rep.  512;  9  L.  R.  A.  764;  N.  W.  681;  Gillespie  v.  Evans,  10 
46  N.  W.  1080.  S.  D.  234;   72  N.  W.  576. 

7  Burke  v.  Ry.,  83  Wis.  410;  53  lo  Frick  v.  Larned,  50  Kan.  776; 
N.  W.  692.  32    Pac.   383. 

8  McKinnon  v.  Vollmar,  75  Wis.  n  Holland  v.  Bishop,  60  Minn. 
82;   17  Am.  St.  Rep.   178;  6  L.  R.  23;   61   N.  W.  681. 

A.  121;  43  N.  W.  800.  12  Gillespie    v.    Evans,    10    S.    D. 

9  People  V.   Foster,    133    111.   496;       234;   72  X.  W.  576. 


1268  PAGE    ON    CONTKACTS. 

theory,  however.  The  right  of  recovery  is  limited  to  the  party 
making  the  payment  or  his  legal  representatives.  A  obtained 
a  loan  of  money  from  B  through  B's  agent  X,  by  fraud.  B 
was  thereafter  dissatisfied,  and  X,  being  under  no  legal  liability, 
repaid  him  the  amount  advanced  and  took  -A's  security.  It  was 
held  that  X  could  not  recover  from  A  in  quasi-contract.^^ 
This  right  of  recovery  cannot  be  made  a  means  of  collecting 
damages  in  tort.  Only  the  person  who  receives  the  payment 
is  liable.  Thus  A,  agent  of  X,  by  fraudulent  representations, 
induced  B  to  enter  into  a  contract  with  X  and  to  pay  money 
thereunder  to  X.  B  cannot  recover  from  A  for  money  had  and 
received.^*  By  statute  in  some  states  assumpsit  may  be  brought 
against  the  person  guilty  of  deceit,  even  if  no  money  was  paid  to 
him  or  for  his  benefit  under  such  transaction.^^  Recovery 
may  be  had  where  payments  are  induced  by  constructive 
fraud.^®  Thus  where  bonds  of  a  corporation  are  in  effect, 
though  under  a  disguise  in  outward  form,  sold  to  its  directors 
at  a  discount,  the  amount  of  such  discount  may  be  recovered 
from  such  purchasers.^^  If  goods  are  sold  under  a  contract 
induced  by  fraud,  we  have,  by  reason  of  the  divergent  theories 
concerning  the  right  to  waive  tort  and  sue  in  assumpsit, ^^  two 
views:  one  that  the  vendor  may  waive  the  tort  and  sue  in 
assumpsit,^^  and  one  that  he  cannot  sue  in  assumpsit,  but  must 
sue  either  in  replevin  or  trover.^*  A  constructed  for  B  an 
apparatus  for  making  gas.  Soon  afterwards  it  was  destroyed 
by  fire.  On  B's  fraudulent  statement  that  this  was  the  fault 
of  the  gas  apparatus,  A  agreed  to  do  certain  repairing,  without 
charge.  After  making  such  repairs,  A  learned  of  B's  fraud 
and  brought  suit  in  assumpsit  for  a  reasonable  compensation. 


isSteiner  v.  CHsby,  103  Ala.  181;  i7  Fitzgerald  v.  Construction  Co., 

15   So.  612.  41  Neb.  374;  59  N.  W.  838. 

14  Minor    v.    Baldridge,    123    Cal.  is  See  §  840  et  seq. 

187;   55  Pac.  783.  i»  Where    credit    is    obtained    by 

15  Hallett  V.  Gordon,  122  Mich.  fraud  the  vendor  may  sue  in  as- 
573;  82  N.  W.  827;  modifying  on  sumpsit  at  once.  Crown  Cycle  Co. 
rehearing  122  Mich.  567;  81  N.  W.  v.  Brown,  39  Or.  285;  64  Pac.  451. 
556.  20  Jones    v.    Brown,    167    Pa.    St. 

16  See  Ch.  XI.  395;   31  Atl.  647. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1269 

It  was  held  that  he  could  recover."^  The  right  to  recover  in 
assumpsit  assumes  that  on  discovering  the  fraud  the  party  de- 
frauded elects  to  disaffirm  the  express  contract.  If  he  elects 
to  affirm,  he  cannot  sue  in  general  assumpsit.  Thus  a  de 
frauded  vendor  who  affirms  the  contract,  cannot  thereafter  sue 
the  vendee  for  the  amount  realized  by  him  on  a  resale.^^ 

VII.     Payment  by  Misrepresentation. 

§817.     Payment  by  misrepresentation. 

Payment  made  under  misrepresentation  presents  fewer  diffi- 
culties than  payment  by  mistake.  In  cases  of  mistake  both 
parties  are  innocent,  though  one  may  be  negligent.  In  pay- 
ment by  misrepresentation,  the  party  receiving  the  payment  has 
by  his  false  statement  caused  such  payment  to  be  made.  Though 
he  is  innocent  of  intentional  wrong-doing,  and  is  not  guilty  of 
a  tort,  such  payment  may  be  recovered.^  Thus,  where  A  in- 
duced B  to  pay  money  a  second  time,  by  stating  that  B  had 
not  delivered  it  the  first  time,"  or  if  a  creditor  induces  an 
illiterate  debtor  to  make  an  overpayment  by  stating  that  an 
amount  was  due  on  a  debt  on  which  part  payments  had  been 
made  larger  than  was  in  fact  due  f  or  if  A  induces  B  to  pay 
him  a  thousand  dollars  by  claiming  an  interest  in  B's  land, 
when  in  fact  A  had  none  ;*  or  if  A  obtains  money  from  B  for 
certain  realty  by  an  innocent  misrepresentation  as  to  the  identity 
of  such   realty;^  or  if   an   administrator  obtains   payment  of 

21  Citizens',  etc.,   Co.  v.   Granger,  dollars  for  A,  which  A  claimed  not 
118  111.  266;  8  N.  E.  770.  to  have   received. 

22  Bedier  V.  Fuller,  116  Mich.  126;  3  steere    v.    Oakley,    186    Pa.    St. 
74  N.  W.  506.  582;  40  Atl.  815. 

1  Putnam  v.  Dungan,  89  Cal.  231;  «  Putnam  v.  Dungan,  89  Cal.  231; 

26  Pac.  904;   Blue  v.  Smith,  46  111.  26  Pac.  904. 

App.  166;   Fisher  v.  During,  53  Mo.  5  Thwing  v.  Lumber  Co.,  40  Minn. 

App.    548;    Montgomery    County   v.  184;  41  N.  W.  815;  Buckley  v.  Pat» 

Fry,  127  N.  C.  258;  37  S.  E.  259.  terson,    39    Minn.    250;    39    N.    W. 

2Houser  v.  McGinnas,  108  N.  C.  490;  McKinnon  v.  Vollmar,  75  Wis. 

631;    13    S.   E.    139.     B   was   acting  82;    17  Am.  St.  Rep.   178;   6  L.  R. 

as      express     messenger      and      had  A.  121 ;   43  N.  W.  800. 
charge  of  a  package  of  five  hundred 


1270 


PAGE    O^r    CONTRACTS. 


excessive  fees  by  misrepresenting  the  amount  thereof  f  such  pay- 
ments may  be  recovered  even  though  no  fraud  is  found  to  exist. 
If  fraud  exists,  the  right  to  recover  in  some  form  of  action  is 
still  clearer.  As  fraud  is  a  tort,  however,  the  question  becomes 
one  of  the  right  to  waive  a  tort  and  sue  in   quasi-contract.'' 

VIII.     Payment  under  mistake  of  fact. 

§818.     Payment  under  mistake  of  fact. 

A  person  who,  under  a  mistake  of  material  fact,  makes  a 
payment  which  he  is  not  under  legal  liability  to  make,  can 
recover  the  money  thus  paid,  if  the  other  elements  necessary 
in  an  action  to  recover  payments  are  present.^     In  other  words. 


6  Blue  V.  Smith,  46  111.  App.  166. 

7  See  §  840  et  seq. 

1  Kelly  V.  Solari,  9  M.  &  W.  54; 
Adams  v.  Henderson,  168  U.  S.  573; 
United  States  v.  Barlow,  132  U.  S. 
271;  Espy  v.  Bank,  18  Wall.  (U.  S.) 
604;  Hardigree  v.  Mitchimi.  51  Ala. 
151;  Lutz  V.  Rothschild  (Cal.)  ;  38 
Pae.  360;  Putnam  v.  Dungan,  89 
Cal.  231;  26  Pae.  904;  Corson  v. 
Berson,  86  Cal.  433;  25  Pae.  7; 
Hogben  v.  Ins.  Co.,  69  Conn.  503; 
61  Am.  St.  Rep.  53;  38  Atl.  214; 
Mansfield  v.  Lynch,  59  Conn.  320; 
12  L.  R.  A.  285;  22  Atl.  313;  Peo- 
ple V.  Foster,  133  111.  496;  23  N.  E. 
615;  Tuller  v.  Fox,  46  111.  App. 
97;  Blue  v.  Smith,  46  111.  App.  166; 
Stotsenburg  v.  Fordice,  142  Ind. 
400:  41  N.  E.  313,  810;  Stokes  v. 
Goodykoontz,  126  Ind.  535;  26  N. 
E.  391;  Cross  v.  Herr,  96  Ind.  96; 
Tarplee  v.  Capp,  25  Ind.  App,  56; 
56  N.  E.  270;  Chickasaw,  etc.,  Ins. 
Co.  V.  Weller,  98  la.  731 ;  68  N.  W. 
443;  Cook  V.  Ry.,  81  la.  551;  25 
Am.  St.  Rep.  512;  9  L.  R.  A.  764; 
46  N.  W.  1080;  Rhodes  v.  Lambert 
(Ky.),  58  S.  W.  60S;  Lyon  v.  Ma- 
son,  etc.,   Co.,    102   Ky.   594;    44   S. 


W.  135;  Gould  v.  Emerson,  160 
Mass.  438;  39  Am.  St.  Rep.  501; 
35  N.  E.  1065;  Garland  v.  Bank, 
9  Mass.  408;  6  Am.  Dec.  86;  Con- 
nell  V.  Hudson,  53  Mo.  App.  418; 
Jordan  v.  Harrison,  46  ]\Io.  App. 
172;  Wood  V.  Sheldon,  42  N.  J. 
L.  421;  36  Am.  Rep.  523;  Martin 
V.  Bank,  160  N.  Y.  190;  54  N.  E. 
717;  Sharkey  v.  Mansfield,  90  N.  Y. 
227;  43  Am.  Rep.  161;  Kingston 
Bank  v.  Eltinge,  40  N.  Y.  391 ;  100 
Am.  Dec.  516;  Ward  v.  Ward,  12 
Ohio  C.  D.  59;  McKibben  v.  Doyle, 
173  Pa.  St.  579;  51  Am.  St.  Rep. 
785;  34  Atl.  455;  Boaz  v.  Upde- 
grove,  5  Pa.  St.  516;  47  Am.  Dec. 
425;  Phetteplace  v.  Bucklin,  18  R. 
I.  297;  27  Atl.  211;  Glenn  v.  Shan- 
non, 12  S.  C.  570;  Caldwell  v. 
Maxfleld,  7  S.  D.  361;  64  N.  W. 
166;  Dickens  v.  Jones,  6  Yerg. 
(Tenn.)  483;  27  Am.  Dec.  488; 
Guild  V.  Baldridge,  2  Swan  (Tenn.) 
295;  Neal  v.  Read.  7  Baxt.  (Tenn.) 
333  ;  Cleveland  School  Furniture  Co, 
V.  Hotchkiss,  89  Tex.  117;  33  S.  W. 
855 ;  Alston  v.  Richardson.  51  Tex. 
1;  Peterson  v.  Bank,  78  Wis.  113; 
47  N.  W.  368;   BuflFalo  v.  O'Malley, 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS. 


1271 


such  pajments  are  not  looked  on  as  voluntary  payments.^  The 
right  of  recovering  payments  made  under  a  mistake  of  fact  is 
especially  clear  where  government  funds  have  thus  been  ex- 
pended/ though  the  right  to  recover  such  funds  does  not  rest 
solely  on  the  ground  of  mistake.* 

§819.     Illustrations  of  mistake  of  fact. 

The  term  "  mistake  of  fact  "  has  been  held  in  cases  involving 
the  right  to  recover  payments  to  include  mistakes  as  to  the  title 
to  realty/  the  existence  of  a  lien  thereon/  the  solvency  of  an 
estate/  as  where  such  insolvency  is  producd  by  the  subsequent 
presentation  and  allowance  of  claims  whose  existence  was  not 
known  to  the  executor  when  he  overpaid  the  legatee  from  whom 
he  is  now  seeking  to  recover  the  excess/  the  amount  of  the 
assets  of  a  firm/  the  release  of  an  indorser  by  omission  of  the 
holder  of  a  check  to  present  it  for  payment/  and  the  validity  of 


61  Wis.  255;  50  Am.  Rep.  137;  20 
N.  W.  913.  "  Where  money  is  paid 
upon  the  supposition  that  a  specific 
fact,  which  it  .  is  supposed  would 
entitle  the  other  to  maintain  an  ac- 
tion, is  true,  which  fact  is  not  true, 
an  action  will  lie  to  recover  the 
money  back,  '  upon  the  ground  that 
the  plaintiff  has  paid  money  which 
he  was  under  no  obligation  to  pay, 
and  which  the  party  to  whom  it 
was  paid  had  no  right  either  to  re- 
ceive or  retain,  and  which,  had  the 
true  state  of  facts  been  present  in 
his  mind,  at  the  time,  he  would  not 
have  paid.'"  Ingalls  v.  Miller;  121 
Ind.  188,  190;  22  N.  E.  995;  quoted 
in  Stotsenburg  v.  Fordice,  142  Ind. 
490,  494;  41  N.  E.  313,  810. 

2  See  §  798. 

3  Kelly  V.  Solari,  9  Mees.  &  W. 
54;  United  States  v.  Barlow,  132 
U.    S.    271. 

4  See   §    796. 

1  Adams  v.  Henderson.   1G8  U.   S. 


573 ;  Shaw  v.  Mussey.  48  Me.  247. 

-  Hardigree  v.  Mitchum,  51  Ala. 
151,  Rhodes  v.  Lambert  (Ky.),  68 
S.  W.  608. 

3  Mansfield  v.  Lynch,  59  Conn. 
320;  12  L.  R.  A.  285;  22  Atl.  313; 
Wolf  V.  Beaird,  123  111.  585;  5 
Am.  St.  Rep.  565;  15  N.  E.  161; 
Blue  v.  Smith,  46  111.  App.  166; 
Tarplee  v.  Capp,  25  Ind.  App.  56; 
56  N.  E.  270;  Bliss  v.  Lee,  17  Pick. 
(Mass.)    83;    Rogers    v.   Weaver,    5 

Ohio  536.  But  such  payment  can- 
not be  recovered  until  after  a  ju- 
dicial determination  that  the  estate 
is  insolvent.  Union,  etc..  Bank  v. 
Jefferson.  101  Wis.  452;  77  N.  W. 
889. 

4  Wolf  v.  Beaird,  123  111.  585;  5 
Am.  St.  Rep.  565;  15  N.  E:  161. 

5  Stokes  V.  Goodykoontz,  126  Ind 
535;  26  N.  E.  391. 

6  Martin  v.  Bank,  160  N.  Y.  190; 
54  N.  E.   717. 


1272  PAGE    ON    CONTKACTS. 

sales  of  furniture  on  which  commissions  were  paid  under  the 
belief  that  such  sales  were  valid. ^  Payment  of  illegal  street 
assessments  made  in  ignorance  of  the  facts  making  them  illegal 
may  he  recovered.*  If  A  pays  money  to  B,  in  performance  of 
a  contract  between  them,  under  the  mistaken  belief  on  A's  part 
that  B  has  performed  such  contract  fully,  A  may  recover  such 
payment.®  Thus,  where  B  had  agreed  to  plaster  a  house  for 
A,  and  A  paid  him,  believing  that  such  work  had  been  done, 
he  may  recover  the  money  thus  paid,  where  the  contract  is  of 
such  inferior  quality  as  to  be  valueless.^**  A  agreed  to  sell  fish 
for  B,  at  ten  per  cent  commission,  and  to  guarantee  the  pur- 
chase price  on  sales  made  by  him.  Before  making  such  con- 
tract with  A,  B  had  sold  some  of  the  fish  to  X.  Memoranda 
of  the  amounts  delivered  to  the  different  vendees  were  turned 
in  to  A,  and  A  paid  to  B  the  amount  due  thereon,  less  his  ten 
per  cent  commission.  In  this  way  A  paid  B  for  the  fish  which 
B  had  sold  to  X.  On  X's  refusal  to  pay  A,  A  sued  B  for  such 
amount.  It  was  held  that  A  could  recover.^^  X's  will  provided 
that  A  should  have  control  of  X's  estate  until  B  reached  the 
age  of  eighteen,  when  A  was  to  pay  B  a  certain  part  of  the 
estate ;  and  if  B  died  before  reaching  such  age,  the  entire 
estate  was  to  fall  to  A.  A  voluntarily  paid  B  B's  share  before 
B  reached  the  age  of  eighteen.  Subsequently  B  died  before 
reaching  such  age  of  eighteen.  A  was  allowed  to  recover  on 
the  ground  that  the  payment  was  made  under  a  mistake  of  fact» 
in  that  B  did  not  know  that  A  would  die  before  the  age  of 
eighteen.^^  Wliere  a  city  engineer  by  mistake  estimated  the  are? 
paved  at  about  three  thousand  square  yards  more  than  it  reallj 
was,  and  in  reliance  upon  such  estimate,  the  city  paid  the  con* 

7  Cleveland,  etc.,  Co.  v.  Hotehkiss,  "  Xollman    v.    Evenson,    5    N.    D. 
89  Tex.   117;   33  S.  W.  855.  344;   65  N.  W.  686. 

8  ]\Iutual    Life    Ins.    Co.    v.    New  i"  Xollman   v.    Evenson,    5   N.    D. 
York,  144  N.  y.  494;  39  N.  E.  386;  344;  65  N.  W.  686. 

Tripler  v.  New  York,  139  N.  Y.  1;  n  Blanchard    v.    Low,    164    Mass. 

34   N.   E.    729;    same    case,    125   N.  118;   41  N.  E.   118. 

Y.  617;   26  N.  E.  721;  Redmond  v.  12  Semmig    v.    Merrihew,    67    Vt. 

New  York,  125  N.  Y.  632;  26  N,  E.  38;    30  All.  691. 

727. 


IMPLIED    COXTRACTS    AND    QUASI-CONTEACTS.  1273 

tractor  for  the  entire  amount  of  the  engineer's  estimate,  at  the 
rate  of  one  dollar  a  square  yard,  it  was  held  that  the  city  could 
recover  from  the  contractor  on  learning  of  the  mistake.^^  So  if 
A  pays  a  note  to  B  under  the  mistaken  belief  that  A  has  executed 
such  note,  A  may  recover.^* 

§820.     Mistakes  in  computation. 

A  mistake  as  to  the  amount  due  on  a  debt,^  even  where  the 
facts  as  to  the  amount  of  principal  and  payments  are  known, 
but  the  amount  due  can  be  ascertained  only  by  a  long  arith- 
metical calculation,^  is  a  mistake  of  fact,  and  a  payment  made 
by  reason  thereof  may  be  recovered.  Thus,  where  the  parties 
make  a  mistake  in  computing  the  price  to  be  paid  for  property, 
in  accordance  with  a  contract  of  sale,^  or  make  a  mistake  in 
computing  the  amount  due  on  a  mortgage,*  or  by  mistake  com- 
pute at  eight  per  cent  interest  on  a  note  which  by  its  terms 
bears  interest  at  six  per  cent,^  or  otherwise  erroneously  com- 
pute the  interest  due  f  or  where  a  principal  and  agent  make  a 
mistake  in  computing  their  mutual  accounts  f  or  where  by 
mistake  the  same  item  is  paid  twice  ;^  or  where  a  payment  is 
made  under  mistake  in  computing  the  weight  of  the  articles 
sold,  on  which  weight  the  payment  is  based,^  money  paid  under 
such  mistakes  may  be  recovered.  A  and  B,  tenants  in  common 
in  land,  were  arranging  a  voluntary  partition,  and  A  was  to 
take   that   half  of  the   land   upon  which   improvements   were 

i3Dulutli  V.  McDonnell,  61  Minn.  3  Norton  v.  Bohart,  105  Mo.  615; 

288;  63  N.  W.  727.  16  S.  W.  598. 

i*Lewellen    v.    Garrett,    58    Ind.  4  Klein   v.   Bayer,    81    Mich.   233; 

442;   26  Am.  Rep.  74.  45  N.  W.  991. 

1  Gould    V.    Emerson,    160    Mass.  5  Stotsenburg  v.  Fordice,  142  Ind. 

438;  39  Am.  St.  Eep.  501;   35  N.  E.  490;    41   N.   E.   313,   810. 

1065;    Peterson    v.    Bank,    78    Wis.  « Montgomery  County  v.  Fry,  127 

113;  47  N.  W.  368.  N.   C.   258;    37   S.   E.   259. 

2Worley   v.   Moore,    97    Ind.    15;  7  Spencer   v.    Goddard,    62    X.    H. 

Montgomery  County  v.  Fry,   127  N.  702. 

C.    258;    37    S.    E.    259;    Steere    v.  8  Johnson  v.  Saum,  —  la.  — :   98 

Oakley,    180    Pa.    St.    582.;    40    Atl.  N.  W.  599. 

815.  9Mc.Rae,    etc.,    Co.   v.    Stone,    119 

Ga.  516;  46  S.  E.  668. 


1274  PAGE    ON    CONTRACTS.    • 

erected,  and  pay  to  B  the  amount  necessary  to  equalize  his 
share.  By  a  mistake  in  the  computation,  A  paid  to  B  the 
entire  value  of  the  buildings  upon  this  tract,  instead  of  one- 
half  their  value.  It  was  held  that  A  could  recover  the  amount 
thus  paid  in  by  him  in  excess  of  the  amount  necessary  to  equal- 
ize his  share  with  B's." 

§821.     Recovery  of  payment  on  forged  instrument. 

Whether  recovery  of  payment  on  a  forged  instrument  can 
be  had  from  one  who  has  taken  such  instrument  for  value  and 
in  good  faith  is  a  question  which  arises  not  infrequently,  and 
on  which  there  is  an  unfortunate  conflict  of  authority.  Under 
one  theory  a  bank  is  bound  to  know  the  signatures  of  its  de- 
positors; and  if  it  pays  a  forged  check,  signed  by  the  name 
of  a  depositor  it  cannot  recover  the  money  thus  paid,  if  the 
payee  has  acted  with  reasonable  prudence  and  in  good  faith.^ 
Thus,  where  A  indorsed  a  forged  check  of  which  he  was  the 
innocent  holder,  to  B,  and  B  presented  it  at  the  bank  and 
received  payment,  and  the  bank  on  discovering  the  fact  of  the 
forgery  demanded  repayment  of  B,  and  B  complied  with  the 
demand,  it  was  held  that  B  had  made  such  payment  voluntarily 
and  that  he  could  not  recover  from  A."  This  rule  is  not  always 
placed  on  the  ground  that  the  bank  was  negligent.     Sometimes 

10  Reed  v.  Horn,  143  Pa.  St.  323;  348;   First  National  Bank  v.  Bank, 

22  Atl.  877.  151    Mass.    280;    21    Am.    St.    Rep. 

1  United  States  Bank  v.  Bank,  10  450:   24  N.  E.  44;   Germania  Bank 

Wheat.   (U.  S.)   333;  Levy  v.  Bank,  v.   Boutell,   60  Minn.    189;    51   Am. 

4   Dall.    (Pa.)    234;    s.   c,    1    Binn.  St.  Rep.  519;   27  L.  R.  A.  635;   62 

(Pa.)    27;    Chicago   First   National  N.  W.  327;  Bank  v.  Bank,  58  0.  S. 

Bank  v.  Bank,  152  HI.  296;  43  Am.  207;  65  Am.  St.  Rep.  748:  41  L.  R. 

St.  Rep.  247;   26  L.  R.  A.  289;   38  A.  584;  50  N.  E.  723.    (Distinguish- 

N.  E.  739;   First  National  Bank  v.  ing  Ellis  v.  Trust  Co.,  4  0.  S.  628; 

Bank,    107    la.    327;    44    L.    R.    A.  64  Am.  Dec.   610,   as  decided  under 

131;   77  N.  W.  1045;  Deposit  Bank  a    local   custom.)      Moody   v.   Bank, 

V.  Bank.  90  Ky.  10;  7  L.  R.  A.  849;  19    Tex.    Civ.   App.   278;    46    S.   W. 

13    S.    W.    339;    Commercial,    etc.,  660;  Bank  v.  Bank,  10  Vt.  141;   33 

Bank  v.  Bank,  30  Md.   11;   96  Am.  Am.   Dec.    188. 

Dec.   5.54;    Neal   v.  Coburn,   92   Me.  2  Xeal    v.    Coburn,    92    Me.     139; 

139;   69  Am.  St.  Rep.  495:   42  Atl.  69  Am.  St.  Rep.  495:  42  Atl.  348. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1275 

the  reason  assigned  is  that  between  two  equally  innocent  parties 
the  loss  must  lie  where  it  falls.  Another  line  of  cases  holds 
that  if  the  drawee  bank  is  free  from  all  negligence  except  that 
of  paying  the  check  in  reliance  on  the  indorsement  of  the 
holder,  it  may  recover  such  payment.^  The  right  to  recover  is 
very  materially  affected  by  the  negligence  of  either  party.  If 
the  bank  which  forwards  the  forged  check  was  negligent  and 
could  by  the  use  of  due  diligence  have  discovered  the  forgery, 
the  bank  which  pays  such  forged  check  may  recover  from  the 
bank  which  forwards  it.*  If,  on  the  other  hand,  the  drawee 
bank  omits  to  give  reasonably  prompt  notice  of  the  fact  of  the 
forgery  it  cannot  recover  the  pa^Tuent  even  if  such  recovery 
would  have  been  permitted  otherwise.^  In  jurisdictions  in 
which  the  payee  bank  is  ordinarily  allowed  to  recover,  only 
reasonably  prompt  notice  is  necessary.^  The  right  of  recovery 
has  been  recognized  under  special  circumstances.  A  sent  a 
check  to  B  on  a  bank,  X.  C,  a  person  of  almost  the  same  name 
as  B,  obtained  the  check,  endorsed  it  with  his  own  name  and 
deposited  it  with  the  bank  Y,  which  forwarded  it  to  X,  but 
did  not  show  that  it  was  collecting  it  as  agent  merely.  X  paid 
Y  and  Y  paid  C.  A  then  sued  the  bank  X  in  Minnesota  to 
recover  the  amount  of  his  deposit  without  deducting  this  check. 
X  gave  notice  to  Y,  which  was  located  in  Massachusetts,  of  the 
pendency  of  this  action.  Y  did  not  defend  and  judgment  was 
rendered  against  X.  X  then  sued  Y  and  recovered  the  pay- 
ment. The  ground  of  recovery  was  based  on  the  theory  that 
the  judgment  was  conclusive  against  Y.'^  As  the  bank,  even  if 
bound  to  know  the  signature  of  the  depositor,  is  not  charged 

3  First  National  Bank  v.  Bank,  s  United  States  v.  Bank,  6  Fed. 
4  Ind.  App.   355;    51   Am.   St.  Eep.      134. 

221;   30  N.  E.  808;   Corn  Exchange  6  Schroeder  v.  Harvey.  75  111.638. 

Bank  v.  Bank,  91  N.  Y.  73;  43  Am.  7  First    National    Bank    v.    Bank, 

Rep.   655;    People's   Bank   v.   Bank,  182  Mass.  130;  94  Am.  St.  Rep.  637; 

88  Tenn.  299;  17  Am.  St.  Rep.  884;  65  N.  E.  24    (citing  on  the  proposi- 

6  L.  R.  A.  724;   12  S.  W.  716.  tion  that  the  judgment  was  binding 

4  Canadian  Bank  v.  Bingham,  30  on  the  other  bank :  Knickerbocker  v. 
Wash.  484;  60  L.  R.  A.  955;  71  Wilcox,  83  Mich.  200;  21  Am.  St. 
Pac.  43.  Rep.  595;  47  N.  W.  123;  and  Kon- 

itsky  V.  Meyer,  49  N.  Y.  571). 


1276  PAGE    ON    CONTKAC'TS. 

with  knowledge  of  the  contents  of  all  instruments  executed  by 
him,  money  paid  out  on  an  altered  check  may  be  recovered.^ 
Accordingly  jjayment  of  a  genuine  check  on  a  forged  indorse- 
ment may  be  recovered."  So  if  a  bank,  in  reliance  upon  the 
representations  of  a  person  as  to  his  identity,  delivers  a  check 
to  him  which  he  indorses  with  the  name  of  the  person  whom 
he  represents  himself  to  be,  and  delivers  to  A,  to  whom  the 
bank  pays  it,  the  bank  making  the  payment  cannot  recover  from 
A  if  the  representations  as  to  the  identity  of  the  indorser  are 
false  and  the  indorsement  is  forged.^*'  A  altered  a  check  on 
the  drawee  bank,  X%  raising  the  amount  and  deposited  it  with 
a  bank,  Y,  which  sent  it  to  X  through  the  clearing  house.  X 
paid  Y  and  Y  paid  A.  On  learning  of  the  alteration  X  sued 
Y.  It  was  held  that  no  recovery  could  be  had.^^  Under  any 
theory,  no  recovery  can  be  had  unless  the  bank  making  the 
payment  can  show  that  it  has  suffered  a  loss.  If  it  has  the 
means  of  charging  such  checks  against  the  account  of  its  de- 
positor, it  cannot  maintain  an  action  to  recover  such  payment.^^ 

§822.     Recovery  of  payment  causing  overdraft. 

If  a  bank  pays  a  check  which  overdraws  a  depositor's  account, 
some  authorities  hold  that  the  bank  cannot  recover  from  payee  if 
he  does  not  know  that  such  check  will  make  an  overdraft.     The 


8 Espy  V.  Bank,  18  Wall.   (U.S.)  Rep.  349;   Hensel  v.  Ey.,  37  Minn. 

614;   Parke  v.  Roser,   67  Ind.   500;  87;    33  N.  W.  329;    First  National 

33  Am.  Rep.  102;  National  Bank  v.  Bank  v.  Bank,  56  Xeb.   149;   76  N. 

Bank,    122    N.    Y.    367;    25    N.    E.  W.  430;  Shaffer  v.  McKee,  19  0.  S. 

355.  526;  Rouvant  v.  Bank,  63  Tex.  610. 

9  First    National    Bank    v.    Bank,  lo  Land    Title    and    Trust    Co.    v. 

152  111.  296;  43  Am.  St.  Rep.  247;  Bank,  196  Pa.  St.  230;  79  Am.  St.. 

26  L.  R.  A.  289;   38  N.  E.  739;   af-  Rep.  717;   50  L.  R.  A.  75;   46  Atl. 

firming  40  111.  App.  640;  First  Na-  420. 

tional   Bank  v.   Bank,   4   Ind.   App.  n  Crocker-Woolworth         National 

355;  51  Am.  St.  Rep.  221;  30  N.  E.  Bank  v.  Bank,  139  Cal.  564;  96  Am. 

808;   First  National  Bank  v.  Bank,  St.  Rep.   169;   63  L.  R.  A.  245;   73 

182   Mass.    130;    94    Am.    St.    Rep.  Pae.  456. 

637;    65    N.    E.    24;    Carpenter    v.  12  Land,  etc.,  Co.  v.  Bank,  196  Pa. 

Bank,  123  Mass.  66;  National  Bank  St.  230;   79  Am.  St.  Rep.  717;    50 

V.    Bangs,    106    Mass.    441;    8    Am.  L.  R.  A.  75;  46  Atl.  420. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1277 

reasons  given  for  such  holding  are  different  in  different  juris- 
dictions. In  some  recovery  is  denied  because  the  bank  is 
chargeable  with  knowledge  of  the  amount  of  depositors'  funds 
in  its  hands.^  "  The  bank  always  has  the  means  of  knowing 
the  state  of  the  account  of  the  drawer,  and  if  it  elects  to  pay 
the  paper,  it  voluntarily  takes  upon  itself  the  risk  of  securing 
it  out  of  the  drawer's  account  or  otherwise.  If  there  has  ever 
been  any  doubt  upon  this  point  there  should  be  none  hereafter  ;"^ 
in  others  because  the  mistake  is  as  to  a  collateral  matter.^ 
Under  this  rule,  where  A  gave  B  a  check  on  a  bank  which  B 
deposited  in  the  same  bank,  receiving  credit  therefor  on  his 
pass-book,  the  bank  cannot  on  the  same  day  return  the  check 
and  cancel  the  credit  to  B  because  A's  account  was  overdrawn.* 
Such  a  deposit  is  treated  as  a  payment.  Accordingly  where  a 
difterent  theory  obtains  and  such  a  deposit  is  held  to  be  for 
collection  only,  not  amounting  to  a  payment  by  the  bank  of 
the  check  thus  deposited,  the  bank  may  erase  the  credit  given 
for  a  check  on  discovering  that  the  drawer  has  no  funds.^  In 
Massachusetts  a  payment  of  a  check  without  the  bank's  examin- 
ing the  drawer's  account,  which  had  not  been  reduced  during  the 
preceding  month,  was  held  to  be  made  with  such  negligence  as 
to  preclude  recovery.®  Under  different  circumstances  a  recov- 
ery has  been  allowed.  B,  an  agent  of  a  bank,  Y,  sold  goods 
which  had  been  pledged  to  Y,  and  put  the  proceeds  in  the  bank, 
Y,  in  his  own  name.  B  then  drew  a  check  payable  to  A  upon 
the  bank  Y.  A  deposited  this  in  the  bank  X,  and  X  paid  it  to 
Y.  Under  the  rules  of  the  clearing  house,  checks  which  were 
not  good  could  be  returned  if  not  retained  after  one  P.  M. 

1  Manufacturers'    National    Bank  trust  funds  which  he  could  not  re- 
V.  Swift,  70  Md.  515;    14  Am.  St.  tain,  and  the  facts  of  such  deposit 
Rep.    381;    17    Atl.    336;    Oddie   v.  were  all  known  to  the  bank. 
Bank,  45  N.  Y.   735;    6   Am.   Eep.  s  Chambers  v.  Miller,  13  C.  B.  N. 
160.  S.  125. 

2  Oddie  V.   Bank,   45   N.    Y.    735,  4  Oddie  v.  Bank,  45  N.  Y.  735 ;  6 
742;  6  Am.  Rep.  160.    In  Merchants'  Am.  Rep.  160. 

National  Bank  v.  Swift,  supra,  the  5  National,  etc.,  Co.  v.  McDonald, 

depositor's    account    proved    insuffi-  51  Cal.  64;   21  Am.  Rep.  697. 

cient    because    a    deposit    made    by  6  Boylston  National  Bank  v.  Rich- 

him  and  put  to  his  credit  was  of  ardson,  101  Mass.  287. 


1278  PAGE    ON    CONTEACTS. 

Before  the  bank  X  had  paid  B,  but  after  it  had  given  B 
credit  for  the  amount  of  this  check  upon  his  book,  Y  demanded 
repayment  of  this  amount  from  X.  On  X's  refusal  Y  sued. 
It  was  held  that  Y  could  recover  the  amount  of  such  check 
less  the  amount  of  B's  deposit  in  the  bank  actually  belonging 
to  B.^  If  the  payee  knows  that  the  check  makes  an  overdraft 
and  the  bank  pays  in  ignorance  of  such  fact,  the  bank  has  been 
allowed  to  recover  from  the  payee/ 

§823.    No  recovery  for  mistake  as  to  collateral  matter. 

In  order  to  permit  recovery  of  a  payment,  however,  the  mis- 
take of  fact  must  not  be  as  to  some  collateral  matter,  but  must 
affect  the  very  existence  of  the  liability  which  the  payment 
was  intended  to  discharge.^  If  a  liability  of  any  sort  exists 
payment  thereof  cannot  be  recovered  on  account  of  some  mistake 
in  the  inducement."  Thus,  where  A  owes  B,  and  C  takes  A's 
check,  thinking  it  good,  and  pays  B  personally,  C  cannot  recover 
such  payment  from  B  if  A's  check  proves  worthless.^  So 
where  A  is  indebted  to  B  and  by  mistake  as  to  some  other  liabil- 
ity pays  B  on  a  different  non-existent  claim,  A  cannot  recover 

7  Merchants'  National  Bank  v.  ing  a  fact  which,  even  if  it  were  as 
Bank,  139  Mass.  513;  2  N.  E.  89.  it   is  supposed   to  be,  would   create 

8  Martin  v.  Morgan,  3  Moore  (C.  no  legal  obligation,  but  merely  op- 
P.  &  Ex.)  635;  Peterson  v.  Bank,  erate  as  an  inducement  upon  the 
52  Pa.  St.  206 ;  91  Am.  Dec.  146.  mind  of  the  party  paying  the  money, 

1  Aiken  v.  Short,  1  Hurl.  &  N.  the  other  party  being  without  fault, 
210;  Garretson  v.  Joseph,  100  Ala.  would  not  justify  a  recovery  as  for 
279;  13  So.  948;  Langevin  v.  St.  money  had  and  received."  Langevin 
Paul,  49  Minn.  189;  15  L.  R.  A.  v.  St.  Paul,  49  Minn.  189,  196;  15 
766;  51  N.  W.  817;  Southwick  v.  L.  R.  A.  766;  51  N.  W.  817. 
Bank,  84  N.  Y.  420;  Pepperday  v.  2  Pensacola,  etc.,  R.  R.  v.  Braxton, 
Bank!  183  Pa.  St.  519;  63  Am.  St.  34  Fla.  471;  16  So.  317.  "The  mis- 
Rep.  769;  39  L.  R.  A.  529;  38  Atl.  take  must  be  to  such  an  extent  as 
1030;  Buffalo  v.  O'Malley,  61  Wis.  will  amount  to  destruction  of  the 
255;  50  Am.  Rep.  137;  20  N.  W.  consideration."  Ashley  v.  Jennings, 
913.  "  A  mistake  where  that  is  the  48  Mo.  App.  142,  147. 
foundation  of  the  action  must  re-  ^  Garretson  v.  Joseph.  100  Ala. 
late  to  a  fact  which  is  material,  279;'  13  So.  948;  Pepperday  v. 
essential  to  the  transaction  between  Bank,  183  Pa.  St.  519;  63  Am.  St. 
the  parties.  A  payment  made  under  Rep.  769;  39  L.  R.  A.  529;  38  Atl. 
the  influence  of  a  mistake  concern-  1030. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1279 

such  payment  from  B  until  A's  indebtedness  to  B  is  satisfied.* 
Thus  where  A  had  a  claim  against  a  railroad  for  killing  cattle, 
and  after  he  had  presented  his  claim  he  received  a  voucher, 
which  the  railroad  paid,  he  is  not  obliged  to  repay  such  sum 
until  his  claim  is  settled,  even  though  such  order  was  intended 
for  another  man  of  the  same  name  and  was  paid  under  mistake 
as  to  the  identity  of  the  person  asking  payment.^  So  if  A  owns 
two  lots  and  B  a  third  adjoining  A's,  and  the  city  brings  suit 
to  enforce  an  assessment  on  such  lots  and  takes  a  decree  for  the 
assessment  against  the  three  lots  jointly,  A  cannot  redeem  his 
lots  alone,  but  must  redeem  B's  as  well.  Hence  if  A  redeems 
all  three,  thinking  that  B's  lot  belongs  to  A,  this  is  a  mere 
matter  of  inducement  and  A  cannot  recover  from  the  city  the 
amount  due  on  B's  lot  alone.  This  is  true  especially  after  the 
city  has  paid  over  the  money  received  at  the  tax-sale,  from 
which  sa,le  A  was  redeeming  his  land,  to  the  contractors,®  A 
endorsed  several  instruments  for  B,  thinking  them  in  effect 
promissory  notes.  As  they  fell  due,  and  were  not  paid  by  B, 
A  paid  those  first  maturing  to  C,  the  holder  thereof,  under  the 
belief  that  A  was  liable  as  endorser.  A  resisted  payment  of  the 
last  instruments  of  the  series  and  established  his  non-liability.'^ 
A  then  sued  C  to  recover  the  payment  made  by  him  to  C  on 
the  first  instrument  of  the  series.  It  was  held  that  he  could 
not  recover,  even  though  he  had  been  mistaken  in  his  belief 
that  upon  paying  such  instruments  he  would  be  subrogated  to 
the  security  held  therefor.*  By  mistake  of  fact,  is  meant  mis- 
take as  to  the  fact  creating  or  relieving  from  liability,  and  not 
mistake  as  to  the  evidence  by  which  such  fact  was  to  be  proven. 


4  Pensacola,  etc.,  E.  R.  V.  Braxton,  s  Alton  v.  Bank,  157  Mass.  341; 
34  Fla.  471;  16  So.  317;  Ashley  v.  34  Am.  St.  Rep.  285;  18  L.  R.  A. 
Jennings,  48  Mo.  App.   142.  144;  32  N.  E.  228.     The  court  said 

5  Pensacola,  etc..  R.  R.  v.  Braxton,  that  the  right  of  subrogation  was 
34  Fla.  471;   16  So.  317.  "A   collateral   matter    and   no   part 

6  Langevin  v.  St.  Paul,  49  Minn,  of  his  principal  contract  by  which 
189;  15  L.  R.  A.  766;  51  N.  W.  he  makes  himself  surety.  The  ex- 
817.  istence  of  that  right  is  not  the  im- 

7  First  National  Bank  v.  Alton,  plied  foundation  of  the  principal 
60  Conn.  402;  22  Atl.  1010.  contract." 


1280  PAGE    ON    CONTKACTS. 

Thus  where  A  paid  a  debt  and  subsequently  lost  the  receipt, 
and  on  demand  of  his  creditor  paid  the  debt  again,  it  was  held 
that  A  could  not  recover  such  payment  after  he  had  found  his 
receipt,  and  was  thus  able  to  prove  that  he  had  paid  it  before.'* 
Payment  of  a  judgment  not  a  lien  on  the  homestead,  made  be- 
cause the  judgment  debtor,  by  reason  of  a  mistake  in  his  ab- 
stract of  title  thinks  it  is  a  lien  thereon  and  that  he  cannot 
borrow  money  on  his  homestead  unless  such  debt  is  paid,  is 
not  under  mistake.^** 

§824.     Negligence  of  party  making  payment. —  Held  not  to  bar 
recovery. 

Where  payment  is  made  by  one  who  is  under  no  legal  liabil- 
ity, under  mistake  of  fact  as  to  the  existence  of  such  liability, 
the  weight  of  authority  is  that  such  payment  may  be  recovered, 
even  if  the  party  making  it  could  have  discovered  his  mistake 
if  he  had  used  proper  diligence.^  The  mere  fact  that  the 
party  making  the  payment  had  the  means  of  knowing  the  facts 
does  not  prevent  him  from  recovering.^  It  is  not  the  means 
of  knowledge  possessed  by  the  party  making  the  payment,  but 
his  actual  knowledge  or  ignorance  of  material  facts  that  de- 
termines his  right  to  recover.^     So,  where  A  paid  money  for 

9  Marriott   v.   Hampton,    7    T.   R.  Doyle,  173  Pa.  St.  579;   51  Am.  St. 

269.  Rep.  785;   34  Atl.  455;   Hummel  v. 

loLathrope  v.  McBride,   31    Neb.  Flores    (Tex.  Civ.  App.).  39  S.  W. 

289;    47   N.   W.   922.     Nor   is  such  309;    City   National   Bank  v.   Peed 

payment  imder  duress.  (Va.),  32  S.  E.  34. 

1  Union  National  Bank  v.  McKey,  2  Indianapolis  v.  McAvoy,  86  Ind. 

102  Fed.  662;  Brown  v.  Tillinghast,  587;  McKibben  v.  Doyle.  173  Pa.  St. 

84    Fed.    71;    Merrill    v.    Brantley,  579;   51  Am.  St.  Rep.  785;   34  Atl. 

133  Ala.  537;    31   So.  847;   Ruther-  455. 

ford   V.   Mclvor,    21    Ala.    750;    In-  s "  The   possession    of   the    means 

dianapolis  v.  McAvoy,  86  Ind.  587 ;  of  knowledge  by  the  party  who  paid 

Metropolitan  Life  Ins.  Co.  v.  Bow-  the   money   can   be   regarded   as   af- 

ser,    20    Ind.    App.    557;    50   N.    E.  fording  a  strong  observation  to  the 

86;    Douglas   County   v.   Keller,   43  jury  to  induce  them  to  believe  that 

Neb.    635;    62    N.    W.    60;    Mayer  he  had  an  actual  knowledge  of  the 

V.     New     York,     63     N.     Y.     455;  circumstances;  but     .     .     .     there  is 

Houser    v.    McGinnas,     108    N.    C.  no   conclusive   rule   of  law  that  be- 

631;    13    S.    E.    139;    McKibben    v.  cause    a    party    has    the    means    of 


IMPLIED    CONTRACTS    AND    QUASI-CONTKACTS.  1281 

a  party-wall,  relying  on  B's  claim  of  ownership,  A  may  recover, 
though  A  had  the  means  of  learning  of  B's  want  of  title.*  So 
A,  a  mortgagee  of  a  cotton  crop,  whose  mortgage  secures  a 
debt  greater  than  the  value  of  the  crop,  who  knows  that  B  holds 
a  second  mortgage  on  the  same  crop,  and  who  buys  from  B 
such  crop  and  pays  for  it,  may  recover  from  B  the  money  thus 
paid  where  he  did  not  know  that  it  was  the  same  crop,  even  if 
he  could  have  learned  such  fact  by  due  diligence.^  Thus  where 
a  sheriff  made  a  levy  upon  property  which  had  been  taken  on 
a  prior  attachment,  and  hearing  nothing  from  such  prior  at- 
taching officer  or  creditor,  sold  such  property  and  paid  the 
proceeds  over  to  the  party  whose  execution  the  sheriff  was 
serving,  and  the  latter  was  aftei'wards  obliged  to  pay  over  the 
amount  for  which  the  prior  attachment  was  issued,  it  was  held 
that  he  might  recover  the  amount  of  such  payment  from  the 
execution  creditor  to  whom  he  had  paid  the  entire  amount.*' 
Accordingly  one  who  has  known  a  fact  but  has  forgotten  it, 
and  under  such  forgetfulness  makes  a  payment,  may  recover 
such  payment.^  Thus  where  A,  acting  as  clerk  for  B,  an 
express  messenger,  delivered  a  package  of  money  to  C  and  forgot 
to  make  a  note  or  take  a  receipt  of  it,  and  C,  after  A  had  forgot- 
ten the  facts,  claimed  that  he  had  not  received  the  money,  and 
thereupon  A  and  B  contributed  to  make  up  the  amount  and 
paid  the  express  company,  which  paid  C,  A  was  allowed  on 
learning  of  his  mistake  to  recover  the  amount  from  C* 

§825.     Negligence  held  to  bar  recovery. 

There  is,  however,  some  authority  for  the  proposition  that 
one  paying  under  mistake  of  fact,  which  he  could  have  dis- 

knowledge  he  has  the  knowledge  it-  s  Merrill    v.    Brantley,    133    Ala. 

self."     2  Chitty  Cont.  (11  Am.  Ed.)  537;   31   So.  847. 

930;    quoted    in    Brown    v.    College  6  Glenn  v.  Shannon,  12  S.  C.  570. 

Corner,  etc.,  Co.,  56  Ind.  110;  which  7  Kelly  v.   Solari,  9  M.  &  W.  54; 

in  turn  is  quoted  in  Stotsenburg  v.  Houser  v.  McGinnas,  108  N".  C.  631 ; 

Fordice,    142    Ind.    490;    41    N.    E.  13    S.   E.    139;    Guild  v.  Baldridge, 

313,  810.  2   Swan.    (Tenn.)    295. 

4McKibben  v.  Doyle.  173  Pa.  St.  «  Houser  v.  McGinnns,  108  N.  C. 

579;   51  Am.  St.  Rep.  785;   34  Atl.  631;  13  S.  E,  139. 
455. 

81 


1282  PAGE    ON    CONTRACTS. 

covered  by  due  diligence  cannot  recover  such  payment/  So  a 
debtor  who  makes  a  payment  under  a  mistake  of  a  fact  v^^hich 
he  would  have  known  had  he  used  ordinary  diligence  in  exam- 
ining his  receipts,  cannot  recover."  So  it  has  been  held  that 
as  an  executor  has  the  means  of  knowing  the  solvency  of  the 
estate,  he  cannot  recover  a  payment  made  under  a  mistake  of 
fact  as  to  such  solvency.*  So  an  administrator  who  believing 
that  the  estate  of  his  principal  is  solvent  pays  a  note  of  such 
principal  cannot  recover  a  payment  in  excess  of  the  dividend 
which  such  estate  pays  from  a  surety  on  such  note,  although 
the  surety  would  have  been  obliged  to  pay  the  note  had  the 
administrator  not  done  so,  and  though  the  loss  will  fall  on  the 
administrator  personally.*  'No  relief  can  be  had  for  mistake 
of  a  fact  which  knowledge  of  which  the  party  making  the  mis- 
take was  specially  charged.^  Thus  where  A  and  B,  wdio  were 
to  furnish  timber  to  X  agree  that  it  should  all  be  furnished  in 
A's  name,  and  he  should  draw  the  money  and  pay  B,  and  A 
drew  some  of  the  money,  giving  credit  for  the  rest,  and  paid 
B  a  greater  proportion  of  the  cash  paid  in  than  corresponded  to 
the  share  of  timber  furnished  by  B,  though  less  than  was  due 
B  for  the  timber,  it  was  held  that  A  was  bound  to  know  how 
much  timber  B  had  furnished  as  compared  with  A,  and  hence 
that  A  could  not  recover  an  excess  of  payment,  even  assuming 
that  B  was  entitled  only  to  his  proportionate  share  of  the  cash 
paid  in.*'  Where  it  was  the  sheriff's  duty  to  look  up  municipal 
liens  and  assessments  upon  property  which  he  has  sold  before 
distributing  the  funds,  a  sheriff  who  overlooks  a  lien,  and  pays 
money  to  the  mortgagee,  cannot  recover  from  such  mortgagee 

1  Alton  V.  Bank,  157  Mass.  341;  400;  Carson  v.  McFarland,  2  Rawle 
34  Am.  St.  Rep.  285;  18  L.  R.  A.  (Pa.)  118;  19  Am.  Dec.  627;  Shri- 
144;  32  N.  E.  228.  Bnimmitt  v.  ver  v.  Garrison,  30  W.  Va.  456;  4 
McGuire,   107   N.   C.   351;    12   S.   E.  S.  E.  660. 

191;    Stevens   v.   Head,    9   Vt.    174;  4  Proudfoot    v.    Clevenger,    33    W. 

31  Am.  Dee.  617;  Proudfoot  v.  Clev-  Va.  267;    10  S.  E.  394. 

enger,  33  W.  Va.  267;  10  S.  E.  394.  s  gimmons  v.  Looney,  41   W.  Va. 

2  Brummitt  v.  MoGnire,  107  N.  C.  738:  24  S.  E.  677. 

351;  12  S.  E.  191.  «  Simmons  v.  Looney,   41   W.  Va. 

3  Paine  v.  Drnry,  19  Pick.  (Mass.)       738;  24  S.  E.  677. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1283 

the  amount  which  the  sheriff  is  afterwards  compelled  to  pay 
to  the  city/  A  payment  by  a  mistake  of  fact,  of  which  fact 
the  party  making  the  payment  has  constructive  notice  cannot 
be  recovered.  Thus  where  a  city  elected  to  take  part  of  the 
land  under  lease  for  public  use,  and  by  the  statute  such  elec- 
tion conveyed  the  legal  title  in  such  part  to  the  city,  a  lessee, 
who  after  such  election  has  paid  the  entire  rent  to  his  lessor, 
cannot  recover  from  him  an  amount  proportioned  to  the  value 
of  the  property  thus  taken  by  the  city;  since,  even  if  he  has 
no  actual  notice  of  such  election  he  is,  as  a  party  to  the  pro- 
ceeding, bound  to  take  notice.^ 

§826.     Innocent  payee  must  be  placed  in  statu  quo. 

If  the  person  to  whom  the  money  is  paid  by  mistake  receives 
it  in  good  faith  and  without  knowledge  of  the  mistake  under 
which  it  is  paid,  he  cannot  be  compelled  to  repay  it  unless  he 
can  be  placed  in  statu  quo}  If  he  has  paid  the  money  over  to 
those  who,  as  far  as  he  is  concerned  are  entitled  to  it'  he  cannot 
be  compelled  to  refund.  If  he  has  otherwise  altered  his  posi- 
tion in  reliance  on  such  payment  he  is  not  liable  therefor.^ 
Thus  where  A,  a  mortgagor,  believes  that  certain  realty  which 
A  and  B,  the  mortgagee,  intended  to  include  under  the  mort- 
-gage,  is  covered  thereby,  and  in  that  belief  A  pays  money  to  B 

TKrumbhaar  v.  Yevvdall,   153  Pa.  Paul,   49   Minn.    189;    15   L.   R.    A. 

St.  476;   26  Atl.  219.     In  this  case  766;  51  N.  W.  817;  Behring  v.  Som- 

the  mortgagee  had  subsequently  al-  erville.   63  N.  J.   L.   568;    49  L.  E. 

tered   his   position,   on   the   assump-  A.  578 ;  44  Atl.  641 ;  Krumbhaar  v. 

tion  that  there  were  no  assessment  Yewdall.    153   Pa.   St.   476;    26   Atl. 

liens    upon    such    property,    and    he  219;  Richley  \.  Clark.  11  Utah  467; 

could  not   be   placed  in   statu   quo.  40  Pac.  717. 

The  court,  however,  rest  their  opin-  sLangevin  v.   St.  Paul.   49  Minn, 

ion   on  the   ground   that   the  mort-  189;    15   L.    R.   A.    766;    51    N.   W. 

gagee    took    the    payment    in    good  817. 

faith,  and  had  done  nothing  to  mis-  3  Krumbhaar  v.  Yewdall.   153  Pa. 

lead  the  sheriff.  St.  476;  26  Atl.  219.      (In  this  case 

8  McCardell  v.  Miller.  22  R.  I.  96 ;  defendant      was     held     not     liable, 

46  Atl.  184.  though  his  immunity  was  placed  on 

1  Welch    V.    Goodwin,    123    Mass.  other  grounds.) 
71 ;  25  Am.  Rep.  24  ;  Langevin  v.  St. 


1284  PAGE    ON    CONTRACTS. 

to  secure  a  release  of  such  realty  from  such  mortgage,  and 
subsequently  in  a  foreclosure  suit  such  payment  is  credited  on 
the  debt  and  B's  rights  are  fixed  by  decree,  A  cannot  there- 
after recover  from  B.*  The  opinion  of  the  majority  was  based 
on  the  theory  that  in  such  cases  the  more  negligent  of  the  two 
should  suffer.  One  judge  dissented  for  the  reason  that  B  knew 
of  such  mistake  before  the  decree  was  rendered,  but  still  al- 
lowed such  payment  to  be  credited  on  his  debt.  Thus  A,  the 
owner  of  a  note  and  mortgage  assigned  it  to  B  by  assignment  of 
record,  but  kept  the  mortgage.  Subsequently  A  assigned  it 
again  to  C,  who  had  no  actual  notice  of  the  assignment  to  B. 
X,  the  mortgagor,  paid  C's  interest  in  the  mortgage  to  C.  Sub- 
sequently X  was  obliged  to  pay  the  entire  debt  to  B.  X  then 
sued  C  to  recover  the  amount  paid  to  C,  but  it  was  held  that 
X  could  not  recover.^  The  rule  that  a  party  who  is  guilty  of 
negligence  in  not  ascertaining  facts  and  so  makes  a  payment 
under  a  mistake  of  fact  cannot  recover^  applies  with  the  greatest 
force  where  he  has  by  his  negligence  misled  the  adversary  party, 
who  has  altered  his  position  and  cannot  be  placed  in  statu 
quo.''  Thus  A  was  the  agent  of  B,  the  railroad  company.  X 
was  A's  cashier,  and  had  worked  in  that  capacity  for  A's 
predecessor.  The  rules  of  the  railroad  required  prompt  settle- 
ment each  month  of  all  money  received  for  freight.  X  was  an 
embezzler  when  A  entered  on  his  employment ;  but  A  allowed. 
X  to  neglect  the  rule  requiring  prompt  payment  and  to  transmit 
money,  really  received  as  cash  on  recent  freight  accounts,  as 
payments  on  older  accounts.  X's  defalcation  was  thus  con- 
cealed for  a  time.  When  it  was  discovered,  the  railroad  com- 
pany claimed  that  the  shortage  had  arisen  since  A's  employ- 
ment began ;  and  A,  believing  such  claim,  paid  X's  shortage. 
The  delay  in  discovering  the  shortage  caused  the  release  of  a 

4Ricliley  v.  Clark,  11  Utah  467;  mortgage  which  he  was  holding  aa 

40  Pac.  717.  collateral.) 

5  Behring  v.   Somerville,  6.3  N.  J.  6  See  §  825. 

L.   568;   49   L.   R.   A.   578;   44  Atl.  7  Fegan  v.   Ry.,   9   N.   D.   30;    81 

641.      (C    in    reliance    on    X's    pay-  X.  W.  39. 
tnent    had    released    the    note    and 


IMPLIED    COXTRACTS    AiXD    QUASI-CONTRACTS.  1285 

surety  on  X's  bond,  by  lapse  of  time.  It  was  held  that  A,  on 
learning  that  X's  shortage  was  created  before  A's  employment 
began,  could  not  recover  the  payment  from  the  railroad.® 

§827.     Mistake  need  not  be  mutual. 

While  the  mistake  under  which  payments  whose  recovery  are 
allowed  are  made  may  be  mutual,^  it  is  not  necessary  to  recovery 
that  it  should  be  mutual.^  The  doctrine  of  mutuality  of  mis- 
take applies  primarily  to  mistakes  in  expression,^  and  has  no 
application  to  payment  by  mistake.  The  cases  occasionally 
cited  to  show  its  necessity  in  the  law  of  payments  are  cases  in 
which  a  bona  fide  payee  has  so  altered  his  position  that  he  can- 
not be  placed  in  statu  quo. 

IX.     Payment  by  mistake  of  law. 

I§828.    Payment  by  mistake  of  law. 

Money  paid  with  full  knowledge  of  all  material  facts,  imder 
mistake  of  law,  cannot  be  recovered  in  the  absence  of  other 
reasons  for  allowing  such  recovery.^  The  sanie  principles  ap- 
ply where  there  is  full  knowledge  of  facts  but  one  party  subse- 

sFegan  v.  Ry.,  9  N.  D.  30;  81  K  kins    Co.,    87    Ky.    605;    9    S.    W. 

W.  39.  497;    Coburn  v.  Neal,  94   Me.   541; 

1  Worley  v.  ]\Ioore,  97   Ind.   15.  48   Atl.    178;    Bragdon   v.   Freedom, 

2  Stotsenburg.  V.  Fordice,  142  Ind.  84  Me.  431;  24  Atl.  895;  Freeman  v. 
490;  41  N.  E.  313,  810.  Curtis,    51    Me.    140;    81    Am.   Dec. 

3  See  §  84.  564 ;  Baltimore  v.  Lefferman,  4  Gill 
iBilbie  v.  Liimley,   2  East.   469;      425;  45  Am.  Dec.  145;  Taber  v.  New 

Holt  V.  Thomas,    105   Cal.   273;    38  Bedford,    177   Mass.   197;    58   N.   E. 

Pae.   891;   Brumagin  v.  Tillinghast,  640;  Alton  v.  Bank,  157  Mass.  341; 

18  Cal.  265;  79  Am.  Dec.  176;  Mor-  34  Am.   St.  Rep.   285;    18  L.  R.  A. 

gan    Park     (Village    of)    v.    Knopf,  144;    32   N.  E.   228;    Forbes  v.   Ap- 

199    111.    444;    65    N.    E.    322;    Mc-  pleton.  5  Cush.  115;  Lamb  v.  Rath- 

Whinney  v.  Logansport,  132  Ind.  9;  burn,  118  Mich.  666;  77  N.  W.  268; 

31   N.  E.  449;   Painter  v.  Polk  Co.,  Erkens  v.  Nicolin,  39  Minn.  461;  40 

81    la.  242;    25   Am.   St.   Rep.   489;  X.  W.  567;  Needles  v.  Burk.  81  Mo. 

47   N.   W.   65;    Cherokee   County  v.  569;    51    Am.    Rep.    251;    Kane    v. 

Hubbard,  8  Kan.  App.  500;   55  Pac.  Dauernheim,  60  Mo.  App.  64;  Straf- 

557;    Louisville,    etc.,    Ry.    v.    Hop-  ford  Savings  Bank  v.  Church,  69  N. 


1286  PAGE    ON    CONTKACTS. 

quently  wishes  to  avoid  the  transaction.'  Payments  of  this 
sort  are  merely  examples,  and  the  most  common  kind,  of  volun- 
tary payments,  and  fall  within  the  rule  that  voluntary  pay- 
ments cannot  be  recovered. 

§829.     Illustrations. —  Total  failure  of  consideration. 

The  principle  that  payments  made  under  a  mistake  of  law 
cannot  be  recovered  applies  to  payments  made  by  one  who  was 
under  no  legal  liability  to  make  them,  and  who  receives  nothing 
in  return  therefor,  although  by  reason  of  his  mistake  of  law  he 
believes  that  by  such  payments  he  is  discharging  a  legal  liabil- 
ity.^ Thus  one  who  pays  under  an  erroneous  construction  of 
the  contract,^  as  a  misconstruction  as  to  the  rate  of  interest  after 
maturity,^  or  mistaking  the  liability  of  indorsers,*  or  believing 
that  he  is  legally  liable  for  his  minor  child's  tort,^  cannot  recover 
such  payment.  So  if  the  holder  of  the  legal  title  of  stock  pays 
an  assessment  thereon  after  insolvency,*'  or  if  an  executor,  mis- 
taking the  law  as  to  lapsed  legacies,  pays  to  an  adopted  child  of 

H.    582;    44    Atl.    105;    Camden    v.  244,  580;   52  N.  W.  1062;   54  N.  W. 

Green,  54  N.  J.  L.  591;   33  Am.  St.  603;    Hubbard   v.    Martin,    8    Yerg. 

Rep.   686;    25   Atl.    357;    Newburgh  (Tenn.)    498;    Sbriver   v.   Garrison, 

Savings  Bank  v.  Woodbury,  173  N.  30  W.  Va.  456;  4  S.  E.  660;   Beard 

Y.   55;    65   N.   E.   858;    Vanderbeck  v.   Beard,   25   W.   Va.  486;    52   Am. 

V.  Rochester,  122  N.  Y.  285;   10  L.  Rep.  219;  Birkhauser  v.  Schmitt,  45 

R.  A.  178;  25  N.  E.  408;   Flynn  v.  \Yis.  316;   30  Am.  Rep.  740. 

Hurd,  118  N.  Y.  19;  22  N.  E.  1109;  2  Buckley   v.    Redmond,    95    Mich. 

Devereux  v.  Ins.  Co.,  98  N.  C.  6;   3  282;  54  N.  W.  771;   Haeg  v.  Haeg. 

S.   E.   639;    Commissioners   v.   Com-  53  Minn.  33;  55  N.  W.  1114. 

missioners,  75  N.  C.  240;  Matthews  1  Strafford       Savings      Bank      v. 

V.   Smith,  67   N.   C.   374;   First  Na-  Church,  69  X.  H.  582;  44  Atl.  105. 

tional    Bank   v.    Taylor,    122   N.    C.  2  Cincinnati  v.  Coke  Co.,  53  O.  S. 

569;   29  S.  E.  831;   Phillips  v.  Mc-  278;   41  N.  E.  239. 

Conica,  59  O.  S.  1 ;  69  Am.  St.  Rep.  s  Rector  v.  Collins,  46  Ark.   167: 

753;    51    N.    E.   445;    Cincinnati   v.  55  Am.  Rep.  571. 

Coke   Co.,   53   O.   S.   278;    41   N.  E.  4  First  National   Bank  v.   Taylor, 

239;    Railroad   Co.   v.   Iron   Co.,   46  122  N.  C.  569;   29  S.  E.  831. 

O.  S.  44;   1  L.  R.  A.  412;   18  N.  E.  5  Xeedles  v.  Burk,  81  Mo.  569;  51 

486;    Mays   v.    Cincinnati.    1    O.    S.  Am.   Rep.   251. 

269;  Robinson  V.  Charleston,  2  Rich.  6  Holt  v.   Thomas,    105   Cal.   273; 

L.    (S.   C.)    317;   45  Am.  Dec.   739;  38  Pac.  891. 

Evans   v.   Hughes    County,    3   S.   D. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1287 

testator's  deceased  daughter  a  legacy  wLicli  had  lapsed  by  the 
death  of  such  daughter  before  testator/  such  payments  cauiiot 
be  recovered.  Thus  A  believed  that  he  was  liable  as  indorser  on 
a  check,  whereas  under  the  facts  known  to  him  he  was  not  liable 
as  a  matter  of  law.  He  made  a  payment  on  such  supposed  lia- 
bility and  agreed  to  pay  the  rest.  Subsequently  he  resisted  lia- 
bility on  this  promise  successfully,^  and  then  sued  to  recover  the 
payment  already  made.  As  such  payment  was  made  under  a 
pure  mistake  of  law,  no  recovery  could  be  had.**  So  a  husband 
who  as  administrator  of  his  deceased  wife  delivers  certain  se- 
curities to  her  son  as  his  distributive  share  cannot  afterwards 
assert  an  interest  in  them  as  husband.^*'  So  in  the  absence  of 
duress,  one  who  pays  a  license  fee  in  excess  of  the  amount  fixed 
by  law,^^  or  pays  an  unauthorized  tax,  no  duress  existing,^"  can- 
not recover  the  amount  so  paid.  So  a  public  officer  who  pays 
into  the  treasury  fees  which  he  is  entitled  to  retain  cannot  re- 
cover them.^^ 

§830.     Doctrine  that  payments  by  mistake  of  law  may  be  recov- 
ered. 

In  some  jurisdictions  recovery  of  money  paid  under  a  mis- 
take of  law  may  be  recovered  where  the  party  to  whom  it  is  paid 
is  in  no  way  entitled  thereto.^     Thus  an  executor  who  pays  a 

T  Phillips  V.  McConica,   59   O.    S.  Yates  v.  Ins.  Co.,  200  111.  202;   65 

1;    69  Am.  St.  Rep.   753;    51   N.  E.  N.  E.  726;  Manistee  Lumber  Co.  v. 

445.  Springfield  Township,  92  Mich.  277; 

sNeal  V.  Coburn,  92  Me.  139;  69  52  N.  W.  468. 
Am.  St.  Rep.  495;  42  Atl.  348.  is  Wesson    v.    Collins,     72    Miss. 

9  Coburn    v.    Neal,    94    Me.    .541;  844,  850;   18  So.  360,  917. 

48  Atl.  178.  1  Mansfield    v.    Lynch,    59    Conn. 

10  Hughes  V.  Pealer,  80  Mich.  540;  320;  12  L.  R.  A.  285;  22  Atl.  313; 
45  N.  W.  589.  In  this  case  the  Lyon  v.  Mason  &  Foard  Co.,  102  Ky. 
court  found  as  a  fact  that  the  hus-  594;  44  S.  W.  135;  Bruner  v.  Stan- 
band  knew  his  rights.  ton,    102    Ky.   459;    43    S.    W.   411. 

11  Camden  v.  Green,  54  N.  J.  L.  "  We  mean  distinctly  to  assert  that 
591;  33  Am.  St.  Rep.  686;  25  Atl.  when  money  is  paid  by  one  under  a 
357.  mistake  of  his  rights  and  his  duty, 

12  Louisville,  etc.,  Ry.  v.  Marion  and  which  he  was  under  no  moral  or 
County,  89  Ky.  531;  12  S.  W.  1064;  legal  obligation   to  pay,   and  which 


1288  PAGE    ON    CONTKACTS. 

legacy  under  an  erroneous  construction  of  the  will,'  or  who  pays 
debts  in  full  under  a  mistaken  belief  that  certain  other  debts  of 
whose  existence  he  knows  are  not  legally  enforceable  because 
not  proved  by  writing  signed  by  decedent/  may  recover  such 
payments,  or  the  amount  thereof  in  excess  of  what  should  have 
been  paid.  So  where  one  pays  a  license  fee  under  the  mistaken 
belief  that  the  ordinance  imposing  it  is  valid  may  recover  such 
payment.*  Where  a  public  officer  permits  one  in  ignorance  of 
the  law  to  pay  license  fees  for  burial  permits,  which  fees  were 
not  authorized  by  law  it  has  been  held  that  such  payments  may 
be  recovered  as  made  by  fraud. ^  If  A  attempts  to  effect  insur- 
ance, and  without  any  fraud  on  A's  part  the  insurance  never 
takes  effect,*'  as  where  a  mortgagee  by  mistake  of  law  takes  out 
insurance  on  the  mortgaged  property  believing  that  it  protects 
his  interest,'^  or  without  fraud  the  insured  makes  a  warranty 
broken  when  made,  such  as  one  concerning  his  occupation,*  or 
the  location  of  the  property  insured, **  A  may  recover  the  pre- 
miums paid.  If  the  agent  of  the  insurance  company  has  misled 
both  the  insurance  company  and  the  insured,  the  right  of  the 
insured  to  recover  the  premiums  paid  in  is  clear.^"  To  keep 
them  "  would  be  an  act  of  bad  faith  and  of  the  grossest  injustice 

the  recipient  has  no  right  in  good  live  departments  of  the  government 

conscience  to  retain,  it  may  be  re-  under    which    he   lives."     Louisville 

covered    back    in    an    action    of   in-  v.    Anderson,-  79   Ky.   334,   340;    42 

debitattis    assumpsit,    whether    the  Am.  Rep.  220;  quoted  in  Bruner  v. 

mistake  be  one  of  law  or  fact;  and  Stanton,    102   Ky.   459,   461;    43    S. 

this    we    insist   may    be    done    both  W.  411. 

upon  the  principles  of  Christian  mo-  5  Marcotte   v.   Allen,    91    Me.   74; 

rals  and  the  Common  Law."  North-  40  L.  R.  A.  185;  39  Atl.  346. 

rop   V.   Graves,   19   Conn.   548,   554;  s  Metropolitan    Life    Ins.    Co.    v. 

50  Am.  Dec.  264;   quoted  in  Mans-  Bowser,  20  Ind.  App.  557;  50  N.  E. 

field  V.  Lynch,  59  Conn.  320,  327 ;  12  86. 

L.  R.  A.  285;  22  Atl.  313.  7  Waller  v.  Assurance  Co.,  64  la. 

2  Northrop    v.    Graves,    19    Conn.  101;  19  N.  W.  865. 

548;   50  Am.  Dec.  264.  « McDonald  v.   Ins.  Co.,  68  N.  H. 

3  Mansfield    v.    Lynch,    59    Conn.  4  ;  73  Am.  St.  Rep.  548  ;  38  Atl.  500. 
320;  12  L.  R.  A.  285;  22  Atl.  313.  9  Jones  v.  Ins.  Co.,  90  Tenn.  604; 

4  Bruner  v.  Stanton,  102  Ky.  459;  25  Am.  St.  Rep.  706;   18  S.  W.  260. 
43    S.    W.    411.     "He    is    not    pre-  loNew    York    Life    Ins.    Co.    v. 
sumed  to  know  more  than  those  who  Fletcher,  117  U.  S.  519. 
constitute  the  legislative  and  execu- 


IMPLIED    CONTEACTS    AND    QUASI-CONTRACTS.  1289 

and  disbonestv.""  This  right  of  recovery  of  payment  made 
under  mistake  of  law  is  limited  to  eases  where  such  payment 
should  not  have  been  made  in  morals  and  in  good  conscience. 
The  mere  non-existence  of  legal  liability  is  not  enough  to  justify 
recovery.  Thus  a  husband  conveyed  land  to  his  wife,  B,  and 
she  agreed  as  part  of  the  consideration  to  assume  a  debt  of  his. 
By  reason  of  her  coverture  such  agreement  had  no  validity. 
Subsequently  she  paid  such  debt.  It  was  held  that  she  could 
not  thereafter  recover  it,  even  though  such  payment  could  not 
have  been  compelled. ^^ 

§831.     Mistake  of  law  coupled  with  other  operative  facts. 

Other  reasons  may,  however,  enable  the  party  who  has  paid 
money  under  mistake  of  law  to  recover  it.  Thus  where  the  pay- 
ment is  obtained  by  B's  knowing  A's  mistake  and  taking  ad- 
vantage of  it;^  or  by  actively  causing  A  to  make  such  mistake,^ 
or  by  B's  using  A's  mistake  as  a  means  of  exerting  undue  in- 
fluence over  A,^  A  may  recover  the  money  so  paid.  So  where 
the  probate  judge  rendered  services  in  settling  a  will  contest, 
contrary  to  a  statute  which  forbade  a  probate  judge  to  practice 
law,  payment  made  to  him  by  his  client  in  ignorance  of  the  law 
and  under  his  influence  may  be  recovered.*  The  principle  that 
a  payment  made  by  one  person  under  a  mistake  of  law,  and  re- 
ceived by  one  who  knows  that  the  other  party  is  paying  by  rea- 
son of  such  mistake,  may  be  recovered,  is  not  limited  to  cases  of 
payment  to  a  public  officer.  Payment  under  such  facts  may  be 
recovered  from  a  private  person  to  whom  such  payment  is  made.^ 
In  case  of  a  known  mistake  of  law  mere  silence  may  be  fraud.^ 

11  Ins.  Co.  V.  Wilkinson,  13  Wall.  N.   E.   230;    Baehr  v.   Wolf,   59   111. 

(U.  S.)  222,  233;  quoted  in  McDon-  470. 

aid  V.  Ins.  Co.,  68  N.  H.  4,  6;    73  4  E\'ans  v.  Funk,  151  111.  650;   38 

Am,  St.  Rep.   548;   38  Atl.  500.  N.  E.  230. 

i2Ruppell  V.  Kissel    (Ky.),  74  S.  5  Freeman  v.  Curtis,  51  Me.   140; 

W.  220.  81  Am.  Dec.  564;  Jordan  v.  Stevens, 

iToland  v.  Corey,  6  Utah  392;  24  51  Me.  78;  81  Am.  Dec.  556. 

Pac.  190.  6  Downing    v.    Deaborn,    77    Me. 

2  Kinney  v.  Dodge,   101   Ind.   573.  457:   1  Atl.  407. 

3  Evans  v.  Funk,  151  111.  650;  38 


1290  PAGE    ON    CONTRACTS. 

Under  the  civil  code  of  California  §  1578,  payment  under  a  mis- 
take of  law,  which  is  shared  substantially  by  all  the  parties,  may 
be  recovered/  So  where  the  mortgagee's  attorney  advises  the 
mortgagor  that  as  the  mortgage  covers  the  rents  and  profits,  the 
mortgagee  is  entitled  to  the  proceeds  of  the  crops,  and  the  mort- 
gagor accordingly  pays  over  the  proceeds  of  the  crop,  such  pay- 
ment is  made  under  a  mistake  of  law  shared  by  all  parties  and 
may  be  recovered.^ 

X.     Money  Laid  out  and  Expended. 

§832.     Money  paid  for  use  of  another. —  Voluntary  payment. 

Money  paid  to  the  use  of  another  cannot  be  recovered  unless 
there  is  a  promise,  either  express  or  implied,  to  repay  it.^  If  A 
voluntarily  pays  B's  debt  to  C,  with  full  knowledge  of  the  facts, 
under  no  compulsion,  and  without  B's  previous  request  or  sub- 
sequent ratification,  A  cannot  recover  the  money  thus  paid  from 
C  as  money  paid  to  C's  use.^  Thus,  if  an  agent  pays  a  note  of 
his  principals  out  of  his  own  money,  without  their  authority, 
he  cannot  collect  from  one  of  the  makers  who  does  not  assent  to 
such  payment.^  So  if,  without  any  compulsion  of  law,  A  has 
paid  taxes  on  B's  property,  A  cannot  recover  from  B.  Thus  a 
lessee  who  has  paid  taxes  on  the  leased  property  which  the  lessor 
should  have  paid,  but  has  not  done  so  at  lessor's  request  nor  be- 
cause lessor  has  refused  to  pay  such  taxes,  cannot  recover  for 
such  taxes  from  lessor  where  he  has  for  years  paid  the  full 

'Gregory   v.    Clabrough's    Execu-  provement  Co.,  38  W.  Va.  390;   45 

tors,  129  Cal.  475;  62  Pac.  72.  Am.  St.  Rep.  872;  23  L.  R.  A.  120; 

8  Gregory    v.    Clabrough's    Execu-  18  S.   E.  456. 

tors,  129  Cal.  475;  62  Pac.  72.  2  Flynn  v.   Hurd,   118   K   Y.    19; 

1  Kenan  v.  Holloway,  16  Ala.  53;  22  N.  E.  1109;  Kershaw  County  v. 

50   Am.   Dec.    162;    Helm    v.    Smith  Camden,  33  S.  C.  140;  11  S.  E.  635; 

Fee   Co.,   76   Minn.   328;    79   N.   W.  Crumlish    v.    Improvement    Co.,    38 

313;    Contoocook    Fire    Precinct    v.  W.  Va.  390;  45  Am.  St.  Rep.  872; 

Hopkinton,   71   N.  H.   574;    53   Atl.  23  L.  R.  A.  120;  18  S.  E.  456. 

797;   Flynn  v.  Hurd,  118  N.  Y.  19;  3  Peoples',  etc.,  Bank  v.  Craig,  63 

22  N.  E.  1109;  Peoples',  etc.,  Bank  O.  S.  374;   52  L.  R.  A.  872;   59  N, 

V.  Craig.  63  O.  S.  374;  52  L.  R.  A.  E.    102. 
872;  59  N.  E.  102;  Crumlish  v.  Im- 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1291 

amount  of  the  rent  without  demanding  repayment  for  such 
taxes,  or  deducting  the  amount  thus  paid  from  the  rent.*  So  a 
remainder-man  who  has  the  property  assessed  to  him  instead  of 
to  the  life  tenant  and  has  paid  taxes  thereon  with  the  knowledge 
of  the  life  tenant  but  not  at  his  request,  cannot  recover  from 
him  the  amounts  thus  paid.^  One  having  no  interest  in  realty 
which  could  be  affected  by  a  tax  is  a  volunteer  as  to  taxes  paid 
by  him  and  cannot  recover.''  If  taxes  on  B's  land  are  paid  by  A 
under  mistake  of  fact,  A  may  recover  from  B.  Thus  where  B 
had  acquired  title  by  adverse  possession,  and  A,  the  original 
owner,  not  knowing  of  such  adverse  possession  continues  to  pay 
taxes  on  such  realty,  B  may  recover  from  A  the  amount  thus 
paid.^  So  if  A  is  legally  liable  for  taxes  which  as  between  B 
and  A  it  is  B's  duty  to  pay,  A  may  recover  from  B  the  amounts 
so  paid.^  If  the  claim  which  A  pays  to  C  is  not  one  which 
should  have  been  enforced  against  B  legally,  it  is  still  clearer 
that  A  has  no  right  to  recover  from  B  in  the  absence  of  previous 
request  or  subsequent  ratification.  Thus  B  had  ordered  cab- 
bages to  be  shipped  to  A  by  C,  a  common  carrier,  in  a  ventilated 
fruit  car  not  to  be  iced.  The  car  was  not  iced  when  forwarded 
from  the  place  of  shipment;  but  at  some  time  in  the  transit  it 
was  iced,  probably  by  C's  agents,  without  authority  from  B.  A 
paid  to  C  the  charges  for  icing  the  car.  It  was  held  that  A 
could  not  recover  from  B  for  such  payment.''  B  had  agreed  to 
deliver  four  hundred  cords  of  wood  to  A,  to  be  transported  by  A 
to  Milwaukee.  When  B  came  to  deliver  such  wood  to  be  loaded, 
he  found  that  about  sixty  cords  of  wood,  of  such  grade  that  it 
did  not  comply  with  the  terms  of  the  contract,  was  piled  in 
front  of  the  wood  which  he  intended  to  ship  under  his  contract. 
In  order  to  save  the  cost  of  handling  this  sixty  cord  load  twice, 
B  agreed  with  C,  the  captain  of  the  vessel,  to  transport  this  load 

4  Western,     etc.,     Ry.     v.     State  7  Merrill  v.  Tobin,  82  la.  529;  48 

(Ga.),  14  L.  R.  A.  438.  N.   W.   1044. 

sHuddleson    v.    Washington,    136  s  See  §  838. 

Cal.    514;    69   Pac.    146.  9  Earl  v.  Commission  Co.,  70  Ark. 

6  Rushton   V.  Burke,  6  Dak.  478;  61;   66   S.   W.   148. 
43  N.  W.  815. 


1292  PAGE    ON    CONTEACTS. 

of  wood  at  B's  dock  at  Milwaukee.  C,  however,  instead  of 
doing  this,  delivered  this  sixty  cord  load  of  other  wood  to  A  at 
A's  yard.  A  refused  to  accept  this  load  of  wood  under  the 
contract,  but  paid  to  C  the  freight  for  such  transportation.  It 
was  held  that  A  could  not  recover  such  amount  from  B.^°  If 
A  voluntarily  pays  B's  debt  to  C,  and  B  refuses  to  reimburse 

A,  A  cannot  recover  such  payment  from  C,"  Thus,  where  a 
married  woman  voluntarily  delivers  notes  which  belong  to  her 
separate  estate  in  payment  of  her  husband's  debt,  she  cannot 
subsequently  recover  the  notes  or  the  proceeds  thereof  from  the 
person  to  whom  they  are  delivered  in  payment,^^  The  rule, 
that  when  he  voluntarily  pays  the  debt  of  another,  cannot  re- 
cover from  such  other,  has  no  application  where,  instead  of  pay- 
ing the  debt,  the  person  who  advances  the  money  takes  the  as- 
signment of  the  claim.  A  trust  company,  B,  had  arranged  with 
a  packing  company,  C,  that  C  should  keep  a  certain  deposit  with 

B,  and  that  B  should  pay  tickets  which  were  issued  for  the  pay- 
ment of  live  stock  bought  by  C.  C's  deposit  with  B  was  not  to 
be  used  in  payment  of  such  advances,  but  B  was  to  forward  to 
C  a  statement  of  the  money  thus  advanced,  and  C  was  to  remit 
the  amount  thereof  to  B.  Subsequently,  the  trust  company 
asked  A,  a  bank,  to  advance  money  to  pay  these  tickets.  A  did 
so,  taking  the  assignment  of  the  tickets.  B  subsequently  be- 
came insolvent.  It  was  held,  as  between  A  and  C,  that  A  had  a 
right  to  recover  from  C  the  amount  advanced  by  A  upon  such 
tickets  which  were  assigned  over  to  A." 

§833.     Exceptions  to  doctrine  of  voluntary  services  and  payments. 
—  Funeral  expenses. 

Certain  duties  imposed  by  law  are  of  such  character  as  to  be 
easily  evaded  contrary  to  the  policy  of  the  law,  if  the  general 
principles  forbidding  recovery  in  cases  of  voluntary  payments, 

10  Sanderson  v.  Brick  Co.,  110  12  Gillespie  v.  Simpson  (Ark.), 
Wis.   618;    86  N.   W.   169.  18  S.  W.  1050. 

11  Boyer  v.  Richardson,  52  Neb.  is  Sioux  National  Bank  v.  Packing 
156;   71  N.  W.  981.  Co.,  63  Fed.  805. 


IMPLIED    CONTKACTS    AND    QUASI-CONTRACTS.  1293 

services  or  furnishing  goods  are  applied.  These  cases  form  an 
exception  to  these  general  principles.  The  common  feature  of 
these  exceptional  cases  is  that  from  their  nature,  strong  reasons 
of  public  policy  demand  prompt  action,  and  to  secure  this  action 
in  cases  of  the  neglect  or  omission  of  the  person  primarily  liable, 
any  other  person  taking  such  action  may  recover  therefor  from 
the  person  or  fund  primarily  liable.  In  cases  of  the  latter  class 
the  person  to  whom  support  is  furnished  would  perish  or  hold 
his  existence  only  on  the  precarious  tenure  of  charity  if  obliged 
to  await  the  result  of  a  direct  action  to  compel  the  person  legally 
liable  for  such  support  to  perform  his  legal  duty  even  if  an  ap- 
propriate action  existed  in  every  case.  Hence  a  right  of  action 
in  implied  assumpsit  is  given  to  the  person  furnishing  such  sup- 
port. Since  the  Common  Law  remedy  in  such  cases  was  an 
action  in  general  assumpsit,  these  rights  of  action  are  classed 
with  implied  contract,  though  there  is  usually  no  genuine  agree- 
ment. Funeral  expenses  form  a  prominent  class  of  cases  illus- 
trating this  general  principle.  In  the  absence  of  an  executor  or 
administrator,  or  his  omission  to  act,  a  third  person  who  pays 
for  funeral  expenses  or  renders  them  because  of  the  necessities 
of  the  particular  case  and  not  as  an  officious  intermeddler  may 
recover  from  the  decedent's  estate  a  reasonable  compensation 
therefor.^  Thus  the  widow  may  recover  the  amount  expended 
by  her  for  grave  clothes  and  undertaker's  expenses  for  the  burial 
of  her  husband.^  So  a  son  of  the  deceased,  who  not  knowing 
that  the  latter  had  any  property,  bought  a  cemetery  lot  which 
was  larger  than  necessary,  but  there  was  nothing  to  show  that  a 
smaller  lot  could  have  been  bought,  may  be  reimbursed  out  of 
his  parent's  estate.^  So  one  who  furnishes  a  reasonable  amount 
of  flowers  at  decedent's  funeral,  at  the  request  of  decedent's 

iFogg  V.  Holbrook,   88  Me.   169;  510;  26  S.  E.  127;  O'Reilly  v.  Kelly, 

33  L.  R.  A.  660;  33  Atl.  792;  Mar-  22  R.  I.  151;   50  L.  R.  A.  483;   46 

pie   V.    Morse,    180    Mass.    508;    62  Atl.  681. 

N.    E.    966;    Booth    v.    Radford,    57  2  France's  Estate,  75  Pa.  St.  220. 

Mich.  357;  24  N.  W.  102;  Sullivan  v.  3  Marple  v.  Morse,  180  Mass.  508; 

Horner,   41   N.   J.   Eq.   299;    7   Atl.  62  N.  E.  906. 
411;   Ray  v.  Honeycutt,    119  N.  C. 


1294  PAGE    ON    CONTRACTS. 

sister-in-law  who  had  been  acting  as  his  housekeeper  may  re- 
cover therefor  out  of  decedent's  estate.*  Funeral  expenses  paid 
by  one  before  appointment  of  an  administrator  should  be  cred- 
ited upon  his  debt  due  to  decedent,  and  may  be  set-off  against 
such  debt  in  a  subsequent  suit  by  the  administrator.^  So  if  A, 
an  executor  of  B's  will,  pays  the  funeral  expenses  of  C,  a  legatee 
under  C's  will,  who  dies  in  poverty,  A  may  credit  such  payment 
on  C's  legacy.*'  A  different  question  arises  where  a  husband 
pays  his  wife's  funeral  expenses  and  seeks  reimbursement  out  of 
her  estate.  At  Common  Law  the  husband  was  liable  for  these 
expenses,  and  in  paying  them  he  was  discharging  his  own  legal 
obligation.  Accordingly,  he  could  not  be  reimbursed  out  of  his 
wife's  estate  ;^  and  if  her  executor  has  paid  such  expenses  he 
may  deduct  them  from  the  husband's  share  of  his  wife's  estate, 
as  money  paid  out  to  the  husband's  use.^  In  -some  states  stat- 
utes have  made  funeral  expenses  a  debt  of  the  decedent's  estate, 
and  have  provided  for  their  payment.  Under  such  statutes 
some  courts  have  held  that  a  husband  who  pays  the  funeral  ex- 
penses of  his  wife  is  entitled  to  reimbursement  out  of  her  estate.^ 
Without  deciding  this  question,  it  has  been  held  that  a  son  who 
pays  his  mother's  funeral  expenses  and  who  is  afterwards  ap- 
pointed her  executor,  may  credit  himself  with  such  expenses  in 
his  account  as  against  the  objection  of  his  sister  that  such  ex- 
penses should  have  been  paid  by  the  husband  of  the  decedent.^** 
The  estate  of  the  deceased  wife  is  liable  by  such  statute  even  if 
the  ultimate  liability  rests  upon  her  husband.^^  If  the  corj^se 
were  to  remain  unburied  until  the  person  primarily  liable  for 

4  O'Reilly  v.  Kelly,  22  R.  I.  151;  »  Morrissey  v.  Mulhern,  168  Mass. 
50  L.   R.  A.  483;   46  Atl.   681.  412;  47  N.  E.  407;  Constantinides  v. 

5  Phillips  V.  Phillips,  87  Me.  324;  Walsh,  146  Mass.  281;  4  Am.  St. 
32    Atl.    963.  Rep.  311;  15  N.  E.  631;  Moulton  v. 

6  Wilson  V.  Staats,  33  N.  J.  Eq.  Smith,  16  R.  I.  126;  27  Am.  St.  Rep, 
524.  728;   12  Atl.  891. 

7  Matter  of  Weringer,  100  Cal.  lo  McClelland  v.  Filson,  44  O.  S, 
345;  34  Pac.  825;  Staple's  Appeal,  184;  58  Am.  Rep.  814;  5  N.  E.  861. 
52  Conn.  425;  Waesch's  Estate,  166  n  Gould  v.  Moulahan,  53  N.  J.  Eq. 
Pa.   St.  204;   30  Atl.   1124.  341;  33  Atl.  483. 

8  Brand's  Executor  v.  Brand,  109 
Ky.  721;   60  S.  W.  704. 


IMPLIED    CONTKACTS    AND    QUASI-CONTEACTS.  1295 

funeral  expenses  were  compelled  to  do  his  duty,  it  would  be  an 
outrage  to  public  decency  even  if  an  appropriate  action  for  that 
purpose  existed.  Hence  a  right  of  action  in  assumpsit  is  given 
-^0  the  person  who  buries  the  corpse  or  pays  for  the  funeral  ex- 
()enses.  This  right  of  action  is  accordingly  limited  to  cases 
where  the  person  primarily  liable  either  omits  to  act  voluntarily 
or  is  so  situated  that  he  has  no  opportunity  to  act.  One  who 
intermeddles  officiously  cannot  recover.  Thus  where  a  stranger 
took  possession  of  money  of  the  decedent  and  out  of  that  fund 
paid  the  funeral  expenses,  he  cannot  set  off  such  expenses  as  a 
credit  in  an  action  against  him  by  the  executor  of  the  decedent. ^^ 

§834.    Liability  of  husband  for  wife's  necessaries. 

Another  class  of  cases  illustrating  this  general  principle  exists 
where  one  who  furnishes  necessaries  to  a  wife  whose  husband  re- 
fuses or  omits  to  supply  them  may  recover  from  him.^  While 
this  liability  is  often  explained  on  the  theory  of  the  wife's  im- 
plied agency  as  if  it  were  a  genuine  implied  contract,  it  is  wider 
than  that.  If  the  husband  does  not  supply  his  wife  with  neces- 
saries he  is  liable  even  if  the  circumstances  negative  his  assent, 
as  where  he  deserts  her,"  or  drives  her  away.  So  he  is  liable 
even  if  she  is  incapable  of  acting  as  agent,  as  where  she  is  in- 
sane.^ So  the  husband  is  liable  where  the  circumstances  show 
that  the  party  furnishing  the  necessaries  had  no  intention  of 
contracting  with  the  husband,  as  where  he  does  not  know  that 
the  woman  is  married,*  as  long  as  he  does  not  furnish  necessaries 
on  the  exclusive  credit  of  the  woman.  The  fact  that  the  mar- 
ried woman  has  property  of  her  own  does  not  defeat  her  hus- 
band's liability  for  her  necessaries  as  long  as  such  necessaries 

12  Shaw  V.  Hallihan.  46  Vt.  389;  2  Prescott   v.   Webster,    175   Mass. 

14   Am.   Rep.   628.  316;    56  X.  E.   577;    East   v.   King, 

iSt.  Vincent's  Hospital  v.  Davis,  77  Miss.  738;  27  So.  608. 
129  Cal.  20;  61  Pac.  477;  St.  John's  3  St.  Vincent's  Institution  v.  Da- 
Parish  V.  Bronson,  40  Conn.  75;   16  vis,  129  Cal.  20;  61  Pac.  477. 
Am.  Rep.  17;  Rariden  v.  Mason,  30  4  St.  Vincent's  Institution  v.  Da- 
fnd.  App.  425;  65  N.  E.  554;  Thorpe  vis,   129   Cal.   20;    61   Pac.  477. 
V.  Shapleigh,  67  Me.  235;  Eames  v. 
Sweetser,  101  Mass.  78. 


1296  PAGE    ON    CONTEACTS. 

are  not  fiirnishe^^  on  her  credit  alone.'^  The  liiisband  is  not  lia- 
ble uniest.  he  has  refused  to  furnish  his  wife  with  necessaries,* 
and  to  make  provision  therefor.  Even  if  the  husband  and  wife 
have  separated,  he  is  not  liable  to  third  persons  for  her  support 
as  long  as  he  has  made  a  reasonable  provision  therefor.^  So  if 
a  husband  is  willing  to  support  an  insane  wife,  and  demands 
her  custody  in  good  faith,  the  authorities  of  an  asylum  who  re- 
fuse to  surrender  her  cannot  thereafter  recover  from  him.* 
However,  if  the  husband  refuses  to  allow  his  wife  to  live  with 
him,  she  is  not  bound  to  receive  support  at  a  place  indicated  by 
him,  but  may  select  any  reasonable  place  where  the  expense  of 
her  support  is  not  disproportionate  to  her  husband's  income  and 
he  is  bound  to  support  her  there.^  If  the  separation  is  due  to 
the  wife's  aggression  her  husband  is  not  liable  for  her  support.^" 
The  husband  is  not  liable  unless  the  goods  furnished  are  neces- 
saries.^^ What  are  necessaries  is  in  many  cases  a  relative  term, 
depending  on  the  social  standing,  financial  condition  and  style 
of  living  of  the  parties.  It  imdoubtedly  includes  board,  lodging 
and  necessary  clothing,^^  medical  attendance  of  a  regular  physi- 
cian,^^ services  of  a  dentist,^*  and  in  proper  cases,  services  of  an 
attorney  where  necessary  for  her  protection,  especially  where 
her  husband  prefers  unfounded  charges  against  her.^^  Legal 
services  in  a  divorce  suit,  however,  are  in  many  jurisdictions 
fixed  by  the  court  before  which  the  divorce  is  pending  and  a?e 

sOtt  V.  Hentall,  70  N.  H.  231;  51         9  Kirk    v.    Chinstrand,    85    Minn. - 

L.  R.  A.  226;  47  Atl.  80.  108;  56  L.  R.  A.  333;  88  N.  W.  422. 

6  S.  E.  Olson  Co.  V.  Youngquist,  lo  Peaks  v.  Mayhew,  94  Me.  571 ; 
76  Minn.  26;   78  N.  W.  870;  Bergh  48  Atl.  172. 

V.  Warner,  47  Minn.  250;  28  Am.  St.  n  S.  E.  Olson  Co.  v.  Youngquist, 

Rep.  362;  50  N.  W.  77.  72  Minn.  432;    75  N.  W.   727;    af. 

7  Crittenden  v.  Schermerhorn.  39  firmed.  76  Minn.  26;  78  N.  W.  870. 
Mich.  661;  33  Am.  Rep.  440;  Har-  12  Oltman  v.  Yost,  62  Minn.  26U 
shaw  V.  Merryman,  18  Mo.  106;  Cory  64  N.  W.  564. 

V.  Cook,  24  R.  I.  421;  53  Atl.  315;  is  Bevier  v.  Galloway,  71  111.  517; 

Hunt  V.  Hayes,  64  Vt.  89;   33  Am.  Tebbetts  v.  Hapgood,  34  K  H,  420. 

St.  Rep.  917;   15  L.  R.  A.  661;   23  "Freeman  v.  Holmes,  62  Ga.  556. 

Atl.    920.  15  Conant  v.  Burnham,   133  Mass. 

8  St.  Vincent's   Institution  v.  Da-  503;  43  Am,  Rep.  532. 
vis,  129  Cal.  17;  61  Pac.  476. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1297 

provided  for  by  an  allowance  of  alimony/*'  Reasonable  funeral 
services  for  burying  the  body  of  a  married  woman  are  neces- 
saries chargeable  against  her  husband/^  Where  alimony  has 
been  allowed  and  j^aid  a  husband  is  not  liable  to  persons  who 
thereafter  furnish  his  wife  with  necessaries.^^  Money  loaned 
to  a  married  woman  and  by  her  expended  for  necessaries  is  not 
treated  as  a  necessary  at  Common  Law  and  her  husband  is  not 
liable  therefor.^^  But  in  equity  one  who  has  loaned  money  to  a 
married  woman  may  recover  from  her  husband  so  much  thereof 
as  has  been  actually  expended  by  her  for  necessaries  at  a  reason- 
able price,  if  the  circumstances  are  such  that  he  could  have  re- 
covered for  the  necessaries  had  he  furnished  them  directly  to 
her.^"  But  this  rule  has  been  held  not  to  apply  where  the  hus- 
band has  by  reason  of  sickness  been  unable  to  furnish  neces- 
saries to  his  wife  ;"^  and  has  been  denied  altogether.""  The  prin- 
ciple here  involved  is  analogous  to  that  controlling  in  loans  to 
an  infant.  ^^ 

§835.     Liability  of  parent  for  necessaries  of  minor  child. 

Another  class  of  cases  exists  where  one  who  supplies  neces- 
saries to  a  minor  child  whose  parent  refuses  or  omits  to  supply 
them,  may  recover  from  such  parent.  If  the  child  is  living  with 
his  parent,  such  parent  has  a  wide  discretion  as  to  the  style  of 
living  io  be  adopted  by  his  family.  He  is,  therefore,  liable  only 
in  a  very  clear  case  of  omission  to  supply  necessaries,  unless  he 

16  Williawis  V.  Monroe,  18  B.  Mon.  i9  Knox  v.  Biishnell,  3  C.  B.  N.  S. 
(Ky.)  514;  Wolcott  v.  Patterson,  334;  Zeigler  v.  David,  23  Ala.  127; 
100  Mich.  227;  43  Am.  St.  Rep.  456;  Marshall  v.  Perkins,  20  R.  I.  34; 
24  L.  R.  A.  629;  58  N.  W.  1006;  78  Am.  St.  Rep.  841;  37  Atl.  301. 
Weseott  V.  Hinckley,  56  N.  J.  L.  20  Harris  v.  Lee,  1  P.  Wms.  482; 
343;    29   Atl.    154.  Kenyon   v.    Farris,    47    Conn.    510; 

17  Sears  v.  Giddey,  41  Mich.  590;  36  Am.  Rep.  86. 

32  Am.  Rep.  168;  2  N.  W.  917;  Glea-  21  Leuppie    v.    Osborn,    52    N.    J. 

son   V.    Warner,   78   Minn.   405;    81  Eq.  637;  29  Atl.  433. 

li.  W.  206.  22  Skinner    v.    Tirrell,    159    Mass. 

18  Bennett  v.  O'Fallon,  2  Mo.  69;  474;  38  Am.  St.  Rep.  447;  21  L.  R. 
'12  Am.   Dec.   440;    Hare  v.   Gibson,  A.  673;  34  N.  E.  692. 

32  0.  S.  33;  30  Am.  Rep.  568.  23  See  §  871. 

83 


1298  PAGE    ON    CONTRACTS.  > 

has  authorized  his  child  to  buy  the  goods  for  which  suit  ie- 
brought  or  has  expressly  or  impliedly  agreed  to  pay  therefor/ 
If  the  child  has  left  this  parent's  home  with  the  consent  of  such 
jDarent,  necessaries  furnished  such  child  constitute  a  liability 
against  the  parent  if  the  child  is  not  in  fact  provided  with 
them.^  Thus  A's  minor  daughter,  B,  was  by  A's  permission 
living  apart  from  A  and  supporting  herself.  She  fell  sick  and 
X  attended  her  as  a  physician.  B  did  not  know  of  her  illness 
and  the  circumstances  were  such  as  to  make  it  impracticable  to 
notify  him.  It  was  held  that  X  could  recover  from  B.^  If  the 
child  has  left  his  father's  home,  without  the  consent  of  the 
father,  the  question  of  the  latter's  liability  turns  on  whether  the 
father's  wrongful  act  caused  the  child  to  leave,  or  whether  such 
child  left  without  legal  excuse.  If  a  minor  abandons  his 
father's  home  without  his  father's  being  at  fault,  the  father  is 
not  liable  to  third  persons  who  furnish  such  child  with  neces- 
saries.* If  the  child  is  compelled  to  leave  home  by  the  wrong- 
ful act  of  the  parent,  the  latter  is  liable  to  third  persons  who 
furnish  such  child  with  necessaries.^  What  are  necessaries  de- 
pends on  the  financial  ability,  social  standing  and  style  of  living 
assumed  by  the  parents  of  the  child.  In  clear  cases  it  may  be  a 
matter  of  law  that  certain  things  are  or  are  not  necessaries. 
Thus  a  father  was  held  not  liable  for  services  rendered  without 
his  knowledge  in  tutoring  his  son  during  vacation,  the  son  living 
at  home.®  If  dependent  on  surrounding  facts  it  is  for  the  jury 
to  determine,  as  whether  a  commercial  education  furnished  to  a 
child  whose  father  had  abandoned  his  family  without  cause'^ 

iConboy  v.  Howe,  59  Conn.  112;  ^Hunt  v.   Tliompson,  4  111.   179; 

22   Atl.  35;   Gotts  v.  Clark,   78  111.  36  Am.  Dec.  538;    Glynn  v.  Glynn, 

229;  Farmington  v.  Jones,  36  N.  H.  94  Me.  465;   48  Atl.   105;   Angel  v. 

271;    Van   Valkinburgh   v.   Watson,  McLellan,  16  Mass.  28;  8  Am.  Dec. 

13  Johns.   (N.  Y.)  480;  7  Am.  Dec.  118. 

395;  McLaughlin  V.  Mctaughlin,  159  5  Stanton     v.     Willson,     3     Day. 

Pa.   St.   489;    28   Atl.   302.  (Conn.)    37;    3  Am.  Dee.  255. 

2  Cooper  V.  MeNamara,  92  la.  243;  "  Peacock  v.  Linton,  22  P.  I.  328; 
60  N.  W.  522.  53  L.  R.  A.  192;  47  Atl.  887. 

3  Porter   v.   Powell.    79    la.    151;  7  Cory  v.  Cook,  24  R.  L  421;   53 
18  Am.  St.  Rep.  353;  7  L.  R.  A.  176;  Atl.  315. 

44  N.  W.  295. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1299 

was  a  necessary.  A  parent  is  liable  for  reasonable  funeral  ex- 
penses of  his  child,  even  if  such  child  leaves  an  estate.®  In 
some  cases  the  liability  of  a  father  to  third  persons  for  the  sup- 
port of  his  minor  children  has  been  said  not  to  exist  in  any  case 
in  the  absence  of  statutory  provision  therefor.^  In  all  jurisdic- 
tions the  liability  of  the  parent  is  limited  in  the  absence  of  con- 
tract on  his  part,  express  or  implied,  or  some  statutory  provision, 
to  the  support  of  his  minor  children,  and  he  is  not  liable  for 
necessaries  furnished  to  his  adult  children."  Where  slavery 
existed  a  master  was  liable  for  necessaries  furnished  to  a  slave 
whom  suck  master  "had  not  furnished  with  necessaries.  Thus  a 
master  who  drives  his  slave  away  is  liable  to  a  physician  who 
cares  for  such  slave  while  sick,  even  if  the  master  forbids  him 
to  care  for  such  slave. ^^ 

§836.    Support  of  paupers. 

The  duty  of  supporting  paupers  which  rests  upon  public  cor- 
porations and  quasi-corporations  is  a  creature  of  statute.  In 
passing  such  statutes  the  legislature  intended  to  set  forth  fully 
and  completely  the  duty  and  liability  of  such  public  organiza- 
tions. Accordingly  in  the  absence  of  statutory  provision  there- 
for, no  recovery  can  be  had  from  the  public  corporation  which 
is  liable  for  such  support  but  neglects  to  furnish  it,  by  any  per- 
son furnishing  such  support,^  whether  a  natural  person,^  or  an- 

8  Rowe  V.  Raper,  23  Ind.  App.  27 ;  242 ;  88  N.  W.  477 ;  Patrick  v.  Bald- 
77  Am.  St.  Rep.  411;  54  N.  E.  770.  win,    109    Wis.    342;    53    L.    R.    A. 

9  Murphy  v.  Ottenheimer,  84  111.  613;  85  N.  W.  274;  overruling  in 
39;  25  Am.  Rep.  424;  Holt  v.  Bald-  effect  Mappes  v.  Iowa  County,  47 
win,  46  Mo.  265;  2  Am.  Rep.  515;  Wis.  31;  IN.  W.  359. 
Freeman  v.  Robinson,  38  N.  J.  L.  2  Morgan  County  v.  Seaton,  122 
383;  20  Am.  Rep.  399;  Jackson  v.  Ind.  521;  24  N.  E.  213;  O'Keefe  v. 
Mull,  6  Wyom.  55;  42  Pac.  603.  Northampton,    145    Mass.    115;     13 

10  White  V.  Mann,  110  Ind.  74;  N.  E.  382;  Caswell  v.  Hazard,  10 
10  N.  E.  629;  Blachley  v.  Laba,  63  R.  I.  490;  Macoon  v.  Berlin,  49  Vt. 
la.  22;  50  Am.  Rep.  724;  18  N.  W,  13;  Patrick  v.  Baldwin.  109  Wis. 
658.  342;  53  L.  R.  A.  613;  85  N.  W.  274; 

11  Fairehild  v.  Bell.  2  Brev.  (S.  overruling  in  effect  Mappes  v.  Iowa 
C.)    129;  3  Am.  Dec.  702.  County,  47  W^is,  31;  IN.  W.  359. 

iGilligan    v.     Grattan,    63     Neb. 


1300  PAGE    ON    CONTRACTS. 

Other  public  corporation.^  While  many  statutes  give  such  right 
of  recovery,  either  to  a  private  person,*  or  to  a  public  corpora- 
tion,""^  such  right  of  action  is  limited  by  the  terms  of  the  statute 
giving  it,  and  does  not  exist  unless  such  terms  are  complied 
with.^  Thus  where  the  remedy  given  by  statute  is  an  action  for 
money  laid  out  and  expended,  this  means  an  action  in  assumpsit, 
not  in  case,  and  a  pleading  will  be  construed  to  be  in  assumpsit 
if  it  states  facts  sufficient  to  show  such  liability,  even  if  no  ex- 
press promise  is  alleged/  Where  a  town  is  given  a  right  to  re- 
cover for  support  which  it  furnishes,  no  recovery  can  be  had  for 
support  furnished  through  the  voluntary  subscription  of  private 
individuals.*  In  some  few  states,  however,  it  seems  to  be  held 
that  a  statute  providing  that  a  pauper  is  to  be  supported  at  the 
expense  of  a  public  corporation,  imposes  a  liability  on  such  cor- 
poration in  favor  of  persons  furnishing  necessaries  to  a  pauper 
at  least  after  the  public  corporation  has  notice  of  the  needs  of 
such  pauper  and  thereafter  omits  to  furnish  such  necessaries.* 

§837.     Payment  on  request. 

If  A  pays  B's  debt  upon  B's  request,  either  express  or  implied, 
A  may  recover  from  B.^     Thus,  where  the  president  and  gen- 

3  Bristol  V.  New  Britain,  71  Conn.  ton  v.  Limenburgh,  23  Vt.  525; 
201;  41  Atl.  548;  Marlborough  v.  Portage  County  v.  Neshkoro,  109 
Framingham,  13  Met.  (Mass.)  328;  Wis.  520;  85  N.  W.  414. 
Strafford  County  v.  Rockingham  6  Palmer  v.  Hampden,  182  Mass. 
County,  71  N.  H.  37;  51  Atl.  677;  511;  65  N.  E.  817;  Loudon  v.  Mer- 
Millcreek  Township  v.  Miami,  10  rimack  County,  71  N.  H.  573;  53 
Ohio  375.  Atl.    906;    Rutland    v.    Chittenden, 

4  Wile  V.  Southbury,  43  Conn.  53;  74  Vt.  219;  52  Atl.  426;  Danville  v. 
Wing  V.  Chesterfield,  116  Mass.  Hartford,  73  Vt.  300;  50  Atl.  1082; 
353;  Blodgett  v.  Lowell,  33  Vt.  174.  Topham  v.  Waterbury,  73  Vt.  185; 

5  Bristol  V.  Fox,  159  111.  500;  42  50  Atl.  860. 

N.  E  887 ;  Clay  County  v.  Palo  Al-  7  Woodstock    v.   Hancock,    62    Vt. 

to   County,   82   la.   626;    48   N.    W.  348;  19  Atl.  991. 

1053;   Auburn  v.  Lewiston,   85  Me.  s  Orland  v.  Penobscot,  97  Me.  29; 

282;   27  Atl.   159;   Reading  v.  Mai-  53  Atl.  830. 

den.    141    Mass.    580;  7    N.    E.    21;  9  Eckman  v.  Brady  Township,   81 

Taylor      Township      v.      Shenango  Mich.    70;    45   X.   W.    502.     To   the 

Township,     114     Pa.     St.     394;     6  same  effect  see  Perry  County  v.  Du 

Atl.  475 ;  Chittenden  v.  Stockbridge,  Quoin,   99   111.  479. 

63  Vt.  308;   21  Atl.  1102;   Charles-  1  Littleton  Savings  Bank  v.  Land 


IMPLIED    COr^TRACTS    AXD    QUASI-CONTEACTS.  1301 

eral  manager  of  a  corporation  takes  up  a  debt  of  the  corporation, 
in  part  with  his  individual  funds,  and  in  part  with  funds  fur- 
nished bj  a  stockholder,  they  may  join  in  an  action  against  the 
corporation  for  money  thus  furnished."  If  A,  the  agent  of  a 
railroad  company,  delivers  freight  to  B  upon  B's  promise  to  pay 
the  freight  charges  thereon,  and  B  does  not  make  such  payment, 
and  as  a  result  thereof  A  is  obligea  to  pay  such  amount  to  the 
company,  it  being  contrary  to  the  rules  of  the  company  to  de- 
liver the  freight  until  the  charges  were  paid,  A  may  recover 
from  B.^  A  carrier  of  imports  may  pay  the  duties  thereon  and 
claim  a  lien  on  the  property  therefor.*  A  payment  to  a  third 
person  made  on  request  may  be  recovered  even  if  made  under  a 
special  contract  which  proves  unenforceable.  Thus  the  direc- 
tors and  a  majority  of  the  stockholders  in  a  corporation  agreed 
with  A,  a  stockholder,  that  A  should  spend  a  certain  amount  of 
money  in  developing  a  mine  belonging  to  the  corporation  and  re- 
ceive compensation  in  stock.  The  contract  was  set  aside  by  the 
court ;  but  as  the  performance  was  beneficial  to  the  corporation 
it  was  held  that  A  could  recover  from  the  corporation  the  money 
thus  expended.^  If  A  expends  money  on  B's  account  at  X's  re- 
quest, A  has  no  right  to  recover  from  B  unless  X  was  authorized 
by  B  to  make  such  request.*' 

§838.     Payment  of  another's  debt  to  protect  one's  interests. 

If  A  is  obliged  to  pay  B's  debt  in  order  to  protect  A's  prop- 
erty interests,  A's  payment  is  not  voluntary  and  he  may  recover 
from  B.^     If  the  debt  which  B  owes,  and  upon  which  B  is  pri- 

Co.,  76  la.  660;  39  N.  W.  201;  Arm-  3  Grand   Island   Mercantile  Co.  v, 

strong  V.  Keith,  3  J.  J.  Mar.   (Ky.)  McMeans,   60   Neb.    373;    83   N.   W, 

153;   20  Am.  Dec.   131;   Wheeler  v.  172. 

Young,  143  Mass.  143;  9  N.  E.  531;  4  Wabash  R.  R.  v.  Pearce,  192  U. 

Rosemond  v.  Register  Co.,  62  Minn.  S.    179. 

374;    64   N.   W.   925;    Grand  Island  5  Jones  v.   Green,   129  Mich.  203; 

Mercantile  Co.  v.  McMeans,  60  Neb.  95  Am.  St.  Rep.  433;  88  N.  W.  1047. 

373 ;   83  N.  W.   172 ;   Albany  v.  Mc-  6  Little  Bros.  v.  Phosphate  Co..  — 

Namara,  117  N.  Y.  168;  6  L.  R.  A.  Fla.  — ;  32  So.  808;  Allen  v.  Bobo, 

212;  22  N.  E.  931.  81  Miss.  443;  33  So.  288. 

2  Rosemond    v.    Register    Co.,    62  i  Exall  v.  Partridge,  8  T.  R.  308 ; 

Minn.  374 ;   64  N.  W.  925.  Post  v.  Gilbert,  44  Conn.  9 ;  Gleason 


1302  PAGE    ON    CONTRACTS. 

marily  liable,  is  a  lien  upon  A's  property,  and  A  is  obliged  to 
pay  such  lien  to  protect  his  interest  in  the  property,  he  may  re- 
cover from  B.^  Thus,  where  property  subject  to  an  assess- 
ment was  conveyed,  and  the  grantor  had  promised  as  a  part  of 
the  consideration  to  pay  the  assessments  due  thereon,  and  he 
does  not  make  such  payments,  and  by  reason  thereof  the  grantee 
is  obliged  to  pay  such  assessments,  he  may  recover  from  the 
grantor,  on  the  theory  of  an  implied  contract  in  an  action  for 
money  paid,  and  need  not  sue  on  the  express  contract  to  pay  the 
assessment.^  So,  if  a  court  has  by  decree  found  that  A  is  hold- 
ing stock  for  B,  subject  to  a  lien  in  favor  of  A  for  advances 
which  he  has  made  to  B,  on  account  of  such  stock,  A  may  recover 
from  B  for  assessments  made  upon  the  stock  by  the  corporation 
and  paid  by  A  to  the  corporation  to  preserve  his  interest  in  it, 
and  his  right  to  recover  from  B  is  not  defeated  by  his  taking  an 
appeal  from  such  decree.*  So  if  a  lessee  to  protect  his  interest 
is  obliged  to  pay  taxes  on  the  leased  realty  he  may  recover  from 
his  lessor.^  So  if  a  lessee  covenants  in  the  lease  to  pay  taxes  on 
the  leased  realty,  and  does  not  do  so,  the  lessor  may  pay  such 
taxes  and  recover  from  the  lessee  or  his  assignee,  even  after  the 
lessor  has  conveyed  his  interest  by  a  deed  containing  a  covenant 
against  encumbrances.*'  The  party  paying  such  liens  cannot  re- 
cover unless  the  payment  is  necessary  to  protect  his  interests. 
So  a  mortgagee  who  pays  taxes  on  the  realty  mortgaged  to  en- 
able him  to  negotiate  his  mortgage,  and  who  subsequently  trans- 
fers the  mortgage  to  the  mortgagors,  releasing  the  mortgage  debt, 
cannot  recover  from  them  the  amount  thus  expended  as  taxes.' 
The  tax  thus  paid  must  be  on  the  property  in  which  the  person 
paying  it  owns  an  interest  or  he  cannot  recover.  So  where  a 
first  mortgagee  foreclosed  and  made  the  assignee  of  a  second 

V.    Dyke,    22    Pick.     (Mass.)     390.  s  Vermont,  etc.,  Ry.  v.  Ry.,  63  Vt. 

2Gleason      v.      Dyke,      22     Pick.  1;    10  L.  R.  A.   562;    21   Atl.   262; 

(Mass.)     390;    Hunt   v.    Amidon,   4  731. 

Hill   (N.  Y.)   345;  40  Am.  Dec.  283.  6  Wills  v.  Summers,  45  Minn.  90; 

3  Post  V.  Gilbert,  44  Conn.  9.  47  N.  W.  463. 

4  Irvine  v.  Angus,  93  Fed.  629 ;  35  7  Kersenbrock    v.    Muff,    29    Neb. 
C.  C.  A.  501.  530;  45  N.  W.  778. 


IMPLIED    CONTEACTS    AND    QUASI-CONTEACTS.  1303 

mortgagee  a  party  to  the  suit,  but  the  iutercst  of  the  second  mort- 
gagee had  been  sold  for  taxes  and  had  been  bought  in  by  the 
state,  the  first  mortgagee  cannot  after  buying  in  the  realty  and 
paying  to  the  state  the  amount  for  which  such  second  mortgage 
had  been  sold  with  costs,  recover  such  amount  from  such 
assignee.^  In  order  to  enable  A  to  recover  from  B  for  paying  a 
debt  of  B's,  which  was  a  lien  upon  A's  property,  the  lien  must 
be  a  valid  debt  of  B's,  and  must  also  be  a  lien  upon  A's  prop- 
erty. Thus,  if  a  grantee  takes  by  a  warranty  deed,  with  a 
covenant  against  incumbrances,  he  cannot  recover  from  his 
grantor  for  payment  of  a  void  tax  assessed  against  such  prop- 
erty.^ So,  A  held  the  legal  title  to  realty,  and  A,  B  and  C  each 
had  a  third  of  the  beneficial  interest  therein.  C  bought  in  the 
property  at  a  tax  sale,  taking  a  deed  thereto  in  his  wife's  name. 
X,  a  judgment  creditor  of  A,  redeemed  the  land  to  protect  his 
interest.  X  cannot  recover  from  B,  since  one  co-owner  cannot 
acquire  interests  as  against  another  at  a  tax  sale,  and  C's  right 
to  recover  from  B  for  his  share  of  the  taxes  thus  paid  was  re- 
stricted to  the  balance,  if  any,  due  on  the  accounts  of  each  as  to 
the  property  owned  in  common.^"  If  A  induces  B  to  enter  into 
a  contract  for  the  sale  of  land  by  false  representations  as  to  the 
identity  of  A,  B  being  induced  to  believe  that  he  is  dealing  with 
X.  and  B  avoids  such  contract,  A  cannot  recover  the  amount 
which  he  has  paid  to  redeem  such  land  from  a  tax  sale.^^  A  con- 
veyed realty  to  B,  who  took  possession  and  paid  taxes.  Subse- 
quently the  conveyance  w\as  set  aside  on  the  theory  that  it  was 
intended  as  a  will.  It  was  held  that  equity  and  good  conscience 
required  payment  of  such  taxes,  and  that  slight  circumstances 
were  sufficient  from  which  to  infer  a  promise  to  pay,^^  implying 
a  promise  to  pay  recovery  could  be  had. 

8  Canadian,  etc..  Co.  v.  Boas,  136  141;  16  Am.  St.  Rep.  425;  42  N.  W. 
Cal.  419;  69  Pac.  18.  629. 

9  Balfour   v.    Whitman,    89    Mich.  12  Smith    v.    Roundtree.    185    III. 
202;   50  N.  W.  744.  219;  56  N.  E.  1130;  affirming  85  111. 

loLindley  v.  Snell,  80  la.  103;  45      App.      161.      (This     case,     however, 

NT.  W.  726.  falls   short   of   holding  that    in   the 

11  Ellsworth    V.    Randall,    78    la.      absence    of   some   circumstances   im- 


1304  PAGE    ON    CONTRACTS. 

§839.     Payment  by  party  secondarily  liable. 

If  A  has,  at  B's  request,  incurred  a  liability  by  reason  of 
which  A  is  subsequently  bound  to  pay  a  debt  to  C  upon  which 
B  was  primarily  liable,  A  may  recover  from  B  for  such  payment 
although  B  did  not  expressly  request  A  to  make  such  payment. 
Thus,  if  A  has  become  surety  for  B,  at  B's  request,  and  A  is 
obliged  to  pay  the  debt,  A  may  recover  such  payment  from  B.^ 
This  right  of  recovery  does  not,  however,  rest  on  express  con- 
tract of  any  sort  between  the  parties.  One  surety  who  has  paid 
more  than  his  proportionate  share  of  the  debt  may  recover  from 
his  co-sureties.^  If  A  is  bound  by  law  to  pay  a  debt  for  which 
B  is  primarily  liable,  such  payment  is  not  voluntary,  and  A  can 
recover.  Thus,  where  certain  damages  for  opening  streets  must 
by  law  be  paid  out  of  a  county  treasury,  although  the  liability 
therefor  is  against  the  city  in  the  first  instance,  such  payments 
are  not  voluntary,  and  the  county  may  recover  therefor  from  the 
city.^  So  if  a  county  agrees  to  pay  for  certain  fire  plugs  which 
by  order  of  the  fiscal  court  are  to  be  entered  on  the  contract  of 
the  water-works  company  with  the  city,  and  the  city  is  thus 
obliged  to  pay  for  them,  it  may  recover  from  the  county.*  If  B 
has  executed  and  delivered  a  negotiable  instrument  to  A,  in 
whose  hands  it  is  unenforceable,  and  A  sells  such  negotiable  in- 
strument to  X,  a  bona  fide  holder,  who  enforces  the  instrument 
against  B,  B  may  recover  from  A.  Thus  where  a  city  issues 
bonds  to  a  corporation,  in  payment  of  an  ultra  vires  subscription 
by  the  city  to  the  capital  stock  of  such  corporation,  and  the  cor- 
poration delivers  the  bonds  to  a  bona  fide  purchaser  in  whose 

plying   a  j>romise  to  pay,  recovery  Rep.  499;  45  L.  E.  A,  285;  57  Pac. 

could  be  had.)  445. 

iHall  V.  Smith,  5  How.    (U.  S.)  2  Berlin    v.    New    Britain    School 

96;    Curtia  v.   Parks,   55   Cal.    106;  Society,  9  Conn.  175;  Rushworth  v. 

Chamberlain  v.  Lesley,  39  Fla.  452;  Moore,    36    N.    H.    188;    Aldrich   v. 

22    So.     7-36;     Kennedy    v.    Gaddie  Aldrich,    56  Vt.   324;    48   Am.   Rep. 

(Ky.),    32    S.    W.    408;    Gibbs    v.  791. 

Bryant,  1  Pick.    (Mass.)    118;  Mer-  3  Lancaster   County  v.  Lancaster, 

chants'     Hational     Bank    v.     Opera  160  Pa.  St.  411;  28  Atl.  854. 

House  Co.,  23  Mont.  33;  75  Am.  St.  4  Stanford    (City   of)    v.   Lincoln 

County    (Ky.),  61   S.  W.  463. 


IMPLIED    CONTRACTS    AND    QUASI-CONTEACTS.  1305 

iiaiids  they  are  enforceable  against  the  city,  the  city  may  main- 
tain an  action  against  the  corporation  for  the  proceeds  of  such 
bonds.^  A  entered  into  a  contract  with  B  for  the  sale  of  real 
property,  by  the  terms  of  which  contract  A  reserved  as  his  own  a 
building  thereon.  Subsequently,  at  B's  request,  A  made  to  X  a 
warranty  deed  for  such  property  with  full  covenants  of  war- 
ranty, X  having  purchased  B's  rights  in  such  contract.  X 
claimed  the  building  by  force  of  the  deed,  and  B  was  obliged  to 
pay  X  the  value  of  such  improvements  for  the  privilege  of  re- 
moving them.  It  was  held  that  A  could  recover  from  B  the 
amount  thus  paid,  since  B  got  the  benefit  thereof  in  the  addi- 
tional price  received  by  him  on  sale  of  his  interests  in  such 
property.  ** 

XI.     Waiver  of  Tort. 

§840.    Waiver  of  tort. —  Nature  and  theory  of  doctrine. 

At  the  original  English  Common  Law,  an  injured  person  who 
brought  suit  in  contract,  was  not  allowed  to  show  an  injury 
which  really  amounted  to  a  tort  as  a  means  of  proving  the  alle- 
gations of  his  complaint.^  In  the  early  part  of  the  eighteenth 
century  the  English  courts  began  to  hold  that  in  some  cases  it 
was  possible  for  the  injured  party  to  maintain  an  action  in  im- 
plied contract  on  an  injury  which  really  amounted  to  a  tort^ 
This  principle  has  been  extended  and  developed  at  Modern 
Law.^  This  doctrine,  of  course,  carries  us  beyond  the  limits  of 
real  contracts.  The  doctrine  is  really  not  one  of  substantive 
law  at  all,  but  one  of  adjective  law.  It  determines  the  right  of 
an  injured  party  to  elect  between  the  remedies  given  by  the 
actions  in  tort  and  in  contract.  The  exact  limits  of  the  extent  of 
this  doctrine  at  Modern  Law,  are  very  indefinite.  '  Different 

5  Geneseo  v.  Natural  Gas  Co.,  55  =  Lamine  v.  Dorrell.  2  L,  Ray. 
Kan.   358;    40   Pac.   655.  1216;  decided  1705  A.  D. 

6  Edmunds  v.  Depper.  97  Ky.  661 ;  s  Seavey  v.  Dana,  61  N.  H,  339j 
31   S.  W.  468.  Smith  v.  Smith,  43  N.  H.  536. 

1  Phillips    V.    Thompson,    3    Lev. 
191. 


1306  PAGE    ON    CONTRACTS. 

jurisdictions  have  very  different  views  on  the  question  of  what 
cases  fall  within  it.  In  discussing  the  various  classes  of  cases 
brought  under  this  doctrine,  we  will  therefore  begin  with  those 
on  which  there  is  the  least  divergence  of  authority.  Since  the 
doctrine  of  suing  in  implied  contract  upon  a  tort,  is  really  a  case 
of  election  of  remedies,  the  election  of  one  remedy  when  com- 
plete bars  the  other.  Thus  where  several  persons  detach  machin- 
ery, and  carry  it  away,  and  an  action  is  subsequently  brought 
against  two  of  such  persons  in  assumpsit,  and  judgment  is  ob- 
tained, the  injured  party  cannot  subsequently  sue  the  remaining 
wrongdoers  in  tort.*  The  action  against  a  wrongdoer  on  an  im- 
plied contract,  lies  to  recover  the  value  of  property  taken  wrong- 
fully from  the  real  owner  and  received  by  the  wrongdoer.  One 
of  several  joint  wrongdoers  is  liable  in  tort,  and  cannot  be  held 
in  implied  contract  if  he  did  not  receive  the  property  converted, 
or  the  proceeds  thereof.^  So  the  amount  of  recovery  is  limited 
to  the  value  of  the  property  appropriated  by  the  wrongdoer  and 
not  by  the  damage  done  to  the  owner  of  the  property.  If  A  re- 
moved sand  from  B's  land  with  B's  acquiescence,  both  parties, 
however,  laboring  under  a  mistake  of  fact  and  thinking  that  the 
land  came  within  the  limits  of  the  property  sold  by  A  to  B,  B 
may  recover  from  A  in  assumpsit  for  the  value  of  the  sand  thus 
converted.® 

§841.     Taking  money  or  personal  property  converted  into  money. 

If  B  converts  A's  money  to  his  own  use,  A  may  sue  B  therefor 
in  an  action  for  money  had  and  received.^  This  is  true,  even  if 
B's  conversion  amounted  to  larceny."     If  B  has  converted  A's 

4  Terry  v.  Munger,  121  N.  Y.  property;  but  the  value  of  the  sand 
161;  18  Am.  St.  Rep.  803;  8  L.  R.  A.      taken. 

216:  24  N.  E.  272.  i  See  §  789. 

5  Ward  V.  Hood.  124  Ala.  570;  2  Guernsey  v.  Davis.  67  Kan.  378; 
82  Am.  St.  Rep.  205;  27  So.  245;  73  Pac.  101;  Howe  v.  Clancey,  53 
Bates-Farley  Sav.  Bank  v.  Dismukes,  Me.  130.  Contra,  Drury  v.  Douglas, 
107  Ga.  212;   33  S.  E.   175.  35  Vt.  474.     In  this  case  B  delivered 

B  Merriwether  v.  Bell  (Ky.).  58  money  to  A  to  carry  to  X.  A  ap- 
S.  W.  987.  The  measure  of  damages  propriated  it.  It  was  held  that  as- 
will   not  be  the  injury  done  to  the      sumpsit  would  not  lie. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1307 

chattels,  other  than  money,  to  his  own  use,  and  B  has  sold  them 
and  received  the  money  therefor,  A  may  maintain  an  action 
against  him  for  money  had  and  received.^  Thus,  where  X  de- 
livers to  A,  as  his  agent,  to  sell  upon  commission,  certain  tobacco 
which  really  belongs  to  B,  and  A  sells  this  tobacco  at  auction, 
delivers  it  to  the  purchaser,  collects  the  money,  and  pays  it  to  X, 
with  full  knowledge  of  B's  rights  in  such  tobacco,  B  may 
maintain  an  action  against  A  for  money  had  and  received.* 
So,  if  A,  a  treasurer  of  a  corporation,  B,  fraudulently  is- 
sues certificates  of  B's  stock  in  excess  of  his  authority,  and 
such  certificates  are  so  intermingled  with  the  genuine  stock  that 
they  cannot  be  distinguished  from  it,  and  A  appropriates  the 
money  thus  received  for  his  own  use,  B  may  recover  from  A  in 
an  action  for  money  had  and  received.^  So,  if  B  cuts  timber 
from  A's  land  and  sells  it,  B  may  recover  from  A  for  money  had 
and  received,  if  the  question  of  the  title  to  the  realty  is  not  in- 
volved.^ B,  a  creditor  of  Y,  secured  an  attachment  and  seized 
certain  property  as  Y's.  X,  claiming  as  vendee  from  Y,'  main- 
tained an  action  against  B  in  trespass  for  the  value  of  the  prop- 
erty, and  recovered  a  judgment  against  him,  which  B  satisfied. 
A,  a  subsequent  attaching  creditor,  had  the  property  sold  under 
the  attachments,  and  received  the  money  therefor.  B  may  re- 
cover such  amount  from  A."  If  A  sells  B's  property  on  credit, 
it  has  been  held  that  B  may  recover  from  him  for  money  had 

sGriel   v.   Pollak,    105    Ala.   249;  Hughlett,     11     Lea      (Tenn.)      549; 

16    So.    704;    Halleck   v.    Mixer,    16  Hutchinson  v.  Ford,  62  Vt.  97;    18 

Cal.  574;  Cushman  v.  Hayes,  46  111.  Atl.    1044. 

145;  Moses  v.  Arnold,  43  la.   187;  *  White  v.  Boyd,   124  N.  C.  177; 

22  Am.  Rep.  239 ;  Robinson  v.  Bird,  32  S.  E.  495. 

158    Mass.    357;    35    Am.    St.    Rep.  5  Rutland   Ry.   Co.   v.    Haven,    62 

495;   33  K  E.  391;   Nelson  v.  Kil-  Vt.  39;  19  Atl.  769. 

bride,    113    Mich.    637;    71    N.    W.  s  Guarantee,    etc.,    Co.    v.    Invest- 

1089;  Tolan  v.  Hodgeboom,  38  Mich,  ment  Co.,  107  La.  251;  31  So.  736. 

625;  Koch  v.  Branch,  44  Mo.  542;  Nelson  v.  Kilbride,  113  Mich.  637; 

100  Am.  Dec.  324;   White  v.  Boyd,  71    N.   W.    1089. 

124  N.  C.  177;  32  S.  E.  499;  Scot-  7  Griel  v.   Pollak,    105    Ala.    249; 

tish,  etc.,  Co.  v.  Brooks.  109  N.  C.  16  So.  704. 
698;    14    S.    E.    315;    Huffman    v. 


1308  PAGE    ON    CONTRACTS. 

and  received  after  the  term  of  credit  has  expired.^  If  one  who 
has  received  the  property  of  another  and  has  held  it  for  so  long 
a  time  that  a  presumption  may  arise  that  he  has  sold  it,  he  may 
be  liable  in  an  action  for  money  had  and  received ;  but  within 
a  shorter  period  of  time  the  action  will  not  lie.'^ 

§842.     Taking  personal   property   not   converted  into   money. — 
Theory  that  assumpsit  will  not  lie. 

If  A  has  converted  B's  property  to  his  own  use,  but  has  kept 
the  property  in  his  possession,  and  has  not  sold  it,  there  is  a 
divergence  of  authority  upon  the  question  of  whether  he  can  re- 
cover from  A  upon  an  implied  contract.  Some  authorities  hold 
that  B  cannot  maintain  an  action  for  money  had  and  received.^ 
This  view  is  probably  correct  enough  if  we  consider  the  nature 
of  averments  in  an  action  for  money  had  and  received,  and  the 
total  failure  of  proof  that  must  follow  in  such  cases.  When  we 
consider,  however,  that  the  entire  action  is  brought  upon  a  fic- 
tion, there  seems  no  good  reason  for  restricting  the  fiction  arbi- 
trarily in  cases  of  this  sort.  In  some  jurisdictions  this  distinc- 
tion seems  to  be  recognized,  and  while  an  action  for  money  had 
and  received  will  not  lie  where  the  party  converting  the  property 
to  its  own  use  still  retains  it,  an  action  in  account  will  lie.^ 
"  The  owner  of  goods  in  the  possession  of  another  party,  who 
without  legal  excuse,  refuses  to  deliver  them  to  the  owner  on  de- 
mand, may  sue  in  tort  for  a  conversion,  or  he  may  waive  the  tort^ 
and  treat  the  wrongdoer  as  a  purchaser  and  sue  and  recover  upon 
account  for  their  value."^  In  these  cases,  however,  possession 
of  the  property  in  question  passed  with  the  consent  of  the  owner ; 
a  fact  which  in  many  jurisdictions  gives  a  right  to  maintain 
assumpsit. 

In  many  jurisdictions,  however,  it  is  held  that  the  real  owner 

8  Burton   Lumber   Co.   v.    Wilder,  2  Bradfield  v.  Patterson.  106  Ala. 
108  Ala.  669;   18  So.  552.                          397;   17  So.  536;  Pharr  v.  Bachelor, 

9  Moody  V.  Walker.  89  Ala.  619;      3  Ala.  237. 

7.  So.  246.  ^  Bradfield  v.  Patterson,  106  Ala. 

iSnodgrass    v.    Coulson,    90    Ala.      397,  401;  17  So.  536. 
347;  7  So.  736. 


IMPLIED    CONTRACTS    ANJ)    QUASI-CONTRACTS.  1309 

of  the  property  converted  carmot  recover  from  the  wrongdoer  in 
any  form  of  action  in  implied  contract,  if  the  wrongdoer  has  not 
sold  the  property  and  received  the  proceeds  thereof,  and  the 
original  taking  is  unlawful.*  Thus  if  the  wrongdoer  has  the 
property  in  his  possession,  as  where  he  converted  both  to  his 
own  use  and  made  a  fence  out  of  it,^  or  if  he  has  bartered  it  for 
other  personal  property,*'  assumpsit  will  not  lie.  On  this  theory, 
in  an  action  for  money  had  and  received,  the  real  owner  can- 
not recover  if  he  cannot  show  the  amount  received  by  the  wrong- 
doer on  such  sale.^  It  has  been  said  that  to  allow  assumpsit  in 
such  cases  would  abolish  all  distinctions  between  actions  ex  con- 
tractu and  those  ex  delicto.^  But  even  where  this  theory  ob- 
tains it  is  not  necessary  that  payment  should  be  actually  received 
in  money.  If  the  property  converted  has  been  sold  at  a  value 
estimated  in  money,  he  is  liable  in  an  action  for  money  had  and 
received  even  if  he  subsequently  receives  something  other  than 
money  in  discharge  of  the  obligation  due  to  him  by  reason  of 
such  sale.^  A  different  rule  prevails  in  some  states  where  the 
original  taking  is  lawful,  and  with  the  consent  of  the  real  owner, 
and  there  is  a  subsequent  unlawful  conversion.  If  B  delivers 
property  to  A  voluntarily,  and  A  subsequently  refuses  to  return 

*  Miller    v.    King,    67    Ala.    575 ;  Co.  v.  Bassett,  2  Nev.  249 ;  Smith  v. 
Smith   V.  Jernigan,   83   Ala.   256;   3  Smith,  43  N.  H.  536;  Allen  v.  Wood- 
So.  515;   Chamblee  v.  McKenzie.  31  ward,  22  N.  H.  544;    Bethlehem  v. 
Ark.   155;   Barlow  v.  Stalworth.  27  Perseverance   Fire    Co.,    81    Pa.    St. 
Ga.  517;   Kellogg  v.  Turpie,  93  111.  445;    Willett    v.    Willett,    3    Watts 
265;  34  Am.  Rep.  163;  Johnston  v.  (Pa.)    277;    Kidney  v.   Persons,   41 
Salisbury,  61  111.  316;  Moses  v.  Ar-  Vt.  386;  98  Am.  Dec.  595. 
nold,  43  la.  187;  22  Am.  Rep.  239;  5  Folsom    v.    Cornell,    150    Mass. 
Quimby  v.   Lowell,   89  Me.   547;   36  115;   22  N.  E.  705. 
Atl.  902;  Androscoggin  Water  Pow-  e  Kidney  v.  Persons,  41   Vt.  386; 
er  Co.  V.  Metcalf,  65  Me.  40 ;  Allen  98   Am,   Dec.   595. 
V.  Ford,  19  Pick.   (Mass.)   217;  Mc-  7  Glasscock  v.  Hazell,   109   N,   C. 
Cormick  Harvesting  Machine  Co.  v.  145;  13  S.  E.  789. 
Waldo,  128  Mich.  135;  87  N.  W.  55;  «  Kidney  v.  Persons,  41  Vt.  386; 
St.  John  v.  Iron  Co.,  122  Mich.  68;  98  Am.  Dec.  595. 
80  N.  W.  998;  Tolan  v.  Hodgeboom.  »  Fuller  v.  Duren,  36  Ala.  73;   76 
38   Mich.   624;    Tuttle   v.   Campbell,  Am.   Dec.   318;    Miller   v.   Miller,   7 
74  Mich.  652;  16  Am.  St.  Rep.  652;  Pick.    (Mass.)    133;    19    Am.    Dec. 
42  N.  W.  384 ;  Carson  River  Lumber  264, 


1310  PAGE    ON    CONTEACTS. 

it,  or  pay  for  it,  B  may  maintain  assumpsit.^"  Thus,  if  a  bailee 
converts  property  to  his  own  use,  the  bailor  may  waive  tort,  and 
sue  in  assumpsit.^^  If  A's  property  is  sold  with  A's  consent, 
and  the  price  therefor  is  paid  to  B,  B  must  account  therefor  to 
A  in  an  action  for  money  had  and  received.  Thus,  where  cer- 
tain stock  was  sold  and  the  money  was  received  by  B,  it  was  held 
a  question  of  fact  for  the  jury  whose  stock  it  was ;  and  if  the 
stock  belonged  to  A,  B  would  have  to  account  to  A  for  such 
money/"  So,  where  A  forwarded  butter  to  certain  commission 
merchants,  B,  in  the  regular  course  of  business,  and  B  sold  the 
same  and  received  payment  therefor,  A  may  compel  B  to  pay 
over  such  money  to  him  after  deducting  commissions.^^  So,  if 
A,  the  owner  of  one-half  of  a  patent  right,  has  sold  the  entire 
patent  right  to  a  stranger,  and  received  the  money  therefor,  B, 
the  owner  of  the  other  half,  may  maintain  an  action  against  A 
for  one-half  of  such  proceeds.^*  So,  a  tenant  in  common  who 
collects  more  than  his  share  of  the  rents  and  profits  of  the  realty 
owned  in  common,  is  liable  to  the  other  tenant  in  common  in 
assumpsit.^^  So,  if  one  tenant  in  common  mines  and  sells  coal, 
and  there  is  no  dispute  as  to  his  right  to  do  so,  as  to  the  amount 
of  the  coal  mined,  or  as  to  his  right  to  sell  it  at  that  price,  but  the 
only  dispute  is  as  to  the  amount  which  the  other  co-tenant  is  en- 
titled to  receive,  the  latter  may  maintain  an  action  against  the 
former.^^  If  A  quarries  stone  on  B's  land,  and  takes  it  away, 
and  either  sells  it  or  uses  it,  A  is  liable  to  B  in  assumpsit,  not  for 
the  amount  of  the  damage  done  to  B's  property,  but  for  the  value 
of  the  property  thus  converted  by  A.*^     If  a  railroad  company 

10  Grinnell  v.  Anderson,  122  Mich.  is  Tucker    v.    Utley,     168    Mass. 

533;  81  N.  W.  329;  Newman  v.  01-  415;   47  N.  E.  198. 

ney,    118   Mich.   .545;    77   N.  W.   9;  "Currier  v.  Hallowell,  158  Mass. 

Tuttle   V.   Campbell,   74   Mich.   652;  254;   33  N.  E.  497. 

16  Am.  St.  Rep.  652;  42  N.  W.  384;  is  Hudson   v.    Coe,   79   Me.   83;    1 

Ginsburg  v.   Lumber   Co.,    85   Mich.  Am.  St.  Rep.  288;  8  Atl.  249. 

439;  48  N.  W.  952.  le  Winton   Coal   Co.   v.   Coal   Co., 

"Newman    v.    Olney,    118    Mich.  170  Pa.  St.  437;  33  Atl.  110. 

.545;  77  N.  W.  9.  it  Downs   v.    Finnegan,    58   Minn. 

i2Shouldice    v.    McLeod's    Estate,  112:    49  Am.   St.  Rep.  488;    59   N. 

130  Mich.  444;  90  N.  W.  288.  W.   981. 


IMPLIED    CONTEACTS    AND    QUASI-CONTEACTS.  1311 

enters  upon  B's  land  and  permanently  appropriates  it  as  a  part 
of  its  right  of  way,  and  B  acquiesces  therein,  B  may  recover 
against  the  railroad  company  indebitatus  assumpsit/® 

§843.    Theory  that  assumpsit  will  lie. 

Another  line  of  authorities,  greater  numerically,  and  treating 
the  fiction  of  implied  contract  more  rationally,  allow  the  real 
owner  to  recover  from  the  wrongdoer,  even  where  the  wrongdoer 
has  not  sold  the  property.^  Where  this  theory  obtains  it  is,  of 
course,  immaterial  whether  the  property  has  been  bartered  or 
sold  on  credit,  since  the  liability  on  the  common  counts  in 
assumpsit  exists  even  if  the  property  converted  has  not  been  sold 
at  all.  Under  this  theory  assumpsit  will  lie  where  the  wrongful 
act  consists  in  making  use  of  property,  and  not  in  attempting  to 
deprive  the  owner  of  it  permanently.  Thus  A  was  to  work  for 
B  for  a  year,  giving  B  his  entire  time.  Instead  A  used  B's  team 
on  A's  business.  It  was  held  that  B  could  recover  a  reasonable 
compensation  for  such  use  from  A,  on  the  theory  of  an  implied 
promise,  even  if  A  in  fact  did  not  intend  to  pay  therefor.^ 

§844.     Wrongful  occupancy  of  real  property. 

If  the  tort  complained  of  consisted  in  adverse  possession  of 
real  property,  or  any  form  of  possession  thereof  without  the 
consent  of  the  true  owner,  the  Common  Law  did  not  allow  such 
tort  to  be  waived  and  an  action  in  assumpsit  for  use  and  occupa- 
tion to  be  brought.  Assumpsit  could  not  be  made  the  means  of 
trying  the  title  to  land.^     Accordingly,  an  action  in  assumpsit 

18  Chattanooga,  etc.,  Ry.  v.  Town  Terry  v.  Hunger,  121  N.  Y.  161 ;  18 
Co.,  89  Ga.  732;   16  S.  E.  308.  Am.  St.  Rep.  803;   8  L.  R.  A.  216; 

24  N.  E.  272;  Barker  v,  Cory,  15 
Ohio  9;  McCombs  v.  Guild.  9  Lea 
(Tenn.)  81;  Kirknian  v.  Philips,  7 
Heisk.  (Tenn.)  222;  Maloney  v. 
Barr,  27  W.  Va.  381;  Walker  v. 
Duncan,  68  Wis.  624 ;  32  N.  W.  689. 
2  Stebbins  v.  Waterhouse,  58  Conn. 


1  Roberts  v.  Evans,  43  Cal.  380 
Toledo,  etc.,  Ry.  v.  Chew,  67  111 
378;  Morford  v.  White,  53  Ind.  547 
Jones  V.  Gregg,  17  Ind.  84;  Ever 
sole  V.  Moore,  3  Bush.  (Ky.)  49 
Gordon  v.  Bruner,  49  Mo.  570: 
Moore  v.  Richardson,  68  N.  J.  L 
305;  53  Atl.  1032;  Galvin  v.  Mill  370;  20  Atl.  480. 
Co,    14   Mont.    508;    37    Pac.    366;  i  Burdin  v.  Ordway,  88  Me.  375; 


1312 


PAGE    ON    CONTRACTS. 


could  not  be  brought  unless  there  was  either  an  express  or  an 
implied  contract  between  the  owner  and  the  possessor  creating 
the  relation  of  landlord  and  tenant.^  Where  decedent's  widow 
occupies  the  homestead  after  the  period  fixed  bj  statute  for  her 
occupancy  had  expired,  the  heir  cannot  recover  from  her  in  an 
action  for  the  rent  thereof.^  One  who  holds  wrongful  posses- 
sion, adverse  to  that  of  the  real  owner,  cannot  be  held  liable  in  an 
action  for  use  and  occupation.*  Where  the  person  in  wrongful 
adverse  possession  collects  rents  of  the  property,  it  has  been  held 
that  he  is  not  liable  to  the  real  owner  for  money  had  and  re- 
ceived. Thus,  one  in  possession  under  an  invalid  tax  deed  has 
been  held  not  to  be  liable  in  this  form  of  action.^  A  railroad 
company  took  some  of  A's  land  for  a  right  of  way.  Subse- 
quently, A  sold  his  property  to  B.  It  was  held  that  B  could  not 
maintain  an  action  against  the  railroad  company  for  use  and 
occupation.®  Xeither  could  B  in  this  case  sue  as  A's  assignee  in 
trespass,  since  such  a  claim  could  not  be  assigned.  A  vendee  in 
possession  under  a  contract  of  sale  is  not,  on  breach  of  such  con- 


34   Atl.    175;    Boston  v.   Binney,   11 
Pick.    (Mass.)    1;   22  Am.  Dec.  353. 

2  Grady  v.  Ibach,  94  Ala.  152 ;  10 
So.  287;  O'Conner  v.  Corbitt,  3  Cal. 
370;  Atlanta,  etc.,  Ry.  v.  McHan, 
110  Ga.  543;  35  S.  E.  634;  Waller 
V.  Morgan,  18  B.  Mon.  (Ky.)  136; 
Emery  v.  Emery,  87  Me.  281;  32 
Atl.  900;  Janouch  v.  Pence  (Neb.), 
93  N.  W.  217;  Phoenix  Ins.  Co.  v. 
Hoyt  (Neb.),  91  N.  W.  186;  CoII- 
yer  v.  Collyer,  113  N.  Y.  442;  21 
N.  E.  114;  Faulcon  v.  Jobnston, 
102  N.  C.  264;  11  Am.  St.  Rep. 
737;  9  S.  E.  394;  Cincinnati  v. 
Walls,  1  0.  S.  222 ;  Richey  v.  Hinde, 
6  Ohio  371;  Butler  v.  Cowles,  4 
Ohio  205;  19  Am.  Dec.  612;  Blake 
V.  Preston,  67  Vt.  613;  32  Atl.  491; 
Ackerman  v.  Lyman,  20  Wis.  454. 

3  Emery  v.  Emery,  87  Me.  281 ;  32 
Atl.  900. 

4  Atlanta,  etc.,  Ry.  v.  McHan, 
110     Ga.      543;      35     S.     E.     634; 


Williams  v.  Hollis,  19  Ga.  313; 
Richardson  v.  Richardson,  72  Me. 
403 ;  Bigelow  v.  Jones,  10  Pick. 
(Mass.)  161;  Henderson  v.  Detroit, 
61  Mich.  378;  28  N.  W.  133;  Hart- 
man  v.  Weiland,  36  Minn.  223;  30 
N.  W.  815;  Barron  v.  Marsh,  63  N. 
H.  107;  Stockwell  v.  Phelps,  34  N. 
Y.  363;  90  Am.  Dec.  710;  Faulcon 
V.  Johnston,  102  N.  C.  264;  11  Am. 
St.  Rep.  737;  9  S.  E.  394;  Watson 
V.  Brainard,  33  Vt.  88.  "The  dis- 
seizor is  a  trespasser  and  cannot  be 
treated  as  a  tenant.  The  tort  can- 
not be  waived  for  the  purpose  of 
trying  the  title  to  lands  in  an  ac- 
tion of  assumpsit."  Richardson  v. 
Richardson,  72  Me.  403,  408;  quot- 
ed in  Phoenix  Ins.  Co.  v.  Hoyt 
(Neb.),  91  N.  W.  186. 

5  Phoenix  Ins.  Co.  v.  Hoyt  (Neb.), 
91  N.  W.  186. 

6  Allen  V.  R.  R.,  107  Ga.  838;  33 
S.    E.    696, 


IMPLIED    CONTKACTS    AND    QUASI-COK^TKACTS.  1313 

tract,  liable  for  use  and  occupation/  even  if  the  contract  is  sub- 
sequently rescinded/  If  a  person  in  possession,  who  has  made 
a  contract  to  purchase  the  land,  did  not  enter  into  possession 
under  such  contract  of  purchase,  this  principle  does  not  apply. 
Thus  A,  the  owner  and  mortgagor  of  a  piece  of  land,  and  B,  A's 
son,  were  living  together  on  the  mortgaged  premises.  C,  the 
owner  of  the  mortgage,  agreed  with  B  that  C  should  foreclose 
the  mortgage,  buy  the  property  in,  and  convey  it  to  B.  C  per- 
formed the  contract  as  far  as  foreclosure  and  buying  in  were 
concerned.  B  remained  in  possession,  but  did  not  perform  the 
contract  on  his  part  and  it  was  subsequently  rescinded.  It  was 
held  that  B  was  liable  to  C  in  an  action  for  use  and  occupation.* 
So  if  the  person  in  possession  under  a  contract  of  sale  has  agreed 
to  pay  rent  in  case  of  rescission,  this  principle  has  no  applica- 
tion. A  transferred  property  to  B  under  an  agreement  made 
between  their  respective  husbands,  by  which  A  was  to  take  the 
property  back  or  obtain  a  purchaser  therefor  if  B  was  dissatis- 
fied with  the  purchase ;  and  in  such  case  B  was  to  pay  for  the 
use  and  occupation  of  the  land.  B,  after  accepting  the  deed, 
became  dissatisfied,  and  reconveyed  the  property  to  A.  It  was 
held  that  B  could  not  take  advantage  of  the  contract  made  on  her 
behalf  by  her  husband  for  reconveyance,  and  avoid  liability  for 
use  and  occupation.^'*  If  the  vendor  under  a  contract  of  sale 
retains  possession,  the  vendee  cannot  recover  from  him  in  an  ac- 
tion for  use  and  occupation.^^  By  statute  in  some  jurisdictions 
an  action  for  use  and  occupation  may  be  brought  where  the 
premises  are  wrongfully  occupied,  even  though  there  is  no  agree- 
ment, express  or  implied,  for  the  payment  of  rent.^"  Under 
the  code  of  civil  procedure,  the  court  sometimes  does  not  at- 

7  Nance  V.  Alexander,  49  Ind.  516;  9  Lynch  v.  Pearson,   125   Cal.  21; 

Jones  V.  Tipton,  2  Dana   (Ky.)  295;  57  Pac.  676. 

Bishop  V.  Clark,  82  Me.  532;  20  Atl.  loVan    Brunt   v.    Calder,    167    N. 

88;     Little     v.     Pearson,     7     Pick,  Y.  458;  60  N.  E.  755. 

(Mass.)     301;     19    Am.    Dec.    289;  n  Greenup   v.   Vernor,    16   111.  26. 

Hough  V.  Birge,  11  Vt,  190;  34  Am.  12  Parkinson    v.    Shew,    12    S.   D. 

Dec.  682.  171;  SON.  W.  189. 

sBelger  v.  Sanchez,  137  Cal.  614; 
70   Pac.    738. 
83 


1314  PAGE    ON    CONTRACTS. 

*:erapt  to  say  whether  the  actiou  in  which  relief  is  given  would 
have  been  at  Common  Law  an  action  for  rent  or  for  use  and  oc- 
cupation." Where  possession  is  taken  under  a  contract  other 
than  one  for  the  sale  of  such  realty,  an  action  for  use  and  occupa- 
tion will  lie.^*  A  mortgagee,  who  purchases  at  foreclosure  sale, 
and  enters  into  rightful  possession,  and  who  upon  redemption 
by  the  mortgagor  within  a  year  from  the  date  of  such  sale,  is  lia- 
ble for  rents  during  the  period  of  his  occupation,  is  liable  to  the 
mortgagee  for  such  rents  collected  in  an  action  for  money  had 
and  received.^^  Thus  where  a  railroad  construction  company 
took  possession  of  the  working  plant  of  certain  contractors, 
claiming  the  right  so  to  do  under  the  contract  on  the  ground  of 
contractor's  default,  and  asserting  such  right  by  means  of  an 
injunction,  it  was  held  that  after  it  was  adjudged  that  the  con- 
struction company  did  not  possess  such  right,  it  was  liable  to  the 
contractor  it:,r  a  reasonable  compensation  for  the  use  of  such 
plant."  . 

§845.     liability  of  trespasser  in  assumpsit. 

One  who  enters  upon  land,  not  as  an  adverse  claimant  thereof 
but  as  a  mere  trespasser,  and  who  severs  something  of  value 
from  the  realty  and  converts  it  into  personalty,  may  be  held 
liable  in  assumpsit  wherever  he  could  have  been  held  in  assump- 
sit had  the  property  thus  converted  been  personalty  originally.* 
The  title  to  land  is  in  no  way  involved  in  such  form  of  action. 
But  if  the  acts  of  such  trespasser  amount  to  adverse  possession, 
the  question  of  title  is  involved  and  assumpsit  will  not  lie.^ 
One  whose  property  has  been  occupied  by  another,  may  recover 
therefor,  even  after  conveying  such  property  to  a  third  person.^ 

13  Van  Brunt  v.  Calder,  167  N.  Y.  40  C.  C.  A.  72;  Downs  v.  Finnegan, 
458;   60  N.  E.  755.  58  Minn.  112;  49  Am.  St.  Rep,  488; 

14  P.  P.  Emory  Mfg.  Co.  v.  Rood,      59  N.  W.  981. 

182  Mass.  166;  65  N.  E.  58.  2  Downs    v.    Finnegan,    58    Minn. 

15  Siems  v.  Bank,  7  S.  D.  338;  64  112;  49  Am.  St.  Rep.  488;  59  N.  W. 
N.  W.  167.  981. 

ifi  Champlain   Construction   Co.  v.  3  Bowie  v.  Herring,   116  la.   209; 

O'Brien,  117  Fed.  271.  89  X.  W.  976. 

1  Phelps  V.  Church,  99  Fed.  683; 


IMPLIED    CONTKACTS    AND    QUASI-CONTEACTS.  1315 

g846.     Assumpsit  for  occupation  of  realty  under  a  formal  lease. 

An  action  for  use  and  occupation  would  not  lie  at  Common 
Law,  if  the  occupant  was  holding  by  a  formal  lease  under  seal/ 
At  Modern  Law  the  same  principle  applies,  where  the  occupant 
holds  by  a  formal  lease  which  is  enforceable  and  contains  an  ex- 
press covenant  to  pay  rent.  An  occupant  who  enters  under  a 
formal  lease,  may  be  liable  for  use  and  occupation,  if  for  any 
reason  the  lease  itself  proves  unenforceable.  Thus,  where  a 
tenant  was  partially  evicted  by  his  landlord,  and  his  landlord 
had  sued  in  debt  and  failed  to  recover  because  of  such  partial 
eviction,"  it  was  held  that  he  might  sue  the  tenant  on  a  quan- 
tum meruit  account  in  assumpsit  for  the  beneficial  use  which  the 
tenant  had."  If  a  lease  under  seal  has  been  subsequently  modi- 
fied or  varied  in  legal  effect,  in  any  other  w'ay  whatever  than  by 
another  instrument  under  seal,  the  resulting  obligation  is  treated 
in  law  as  a  simple  obligation,  and  not  a  specialty.  Accordingly, 
an  action  in  assumpsit  can  be  brought  upon  such  an  obligation 
in  a  proper  case,  and  the  fact  that  the  original  lease  was  under 
seal  does  not  prevent  this  form  of  action.  Thus,  where  by  stat- 
ute the  election  of  a  city  to  take  for  public  use  part  of  any  land 
under  lease,  discharges  such  lease  as  to  the  part  taken,  but  leaves 
it  valid  as  to  the  residue,  and  upon  such  election  the  city  acquires 
legal  title  in  the  part  taken,  a  tenant  holding  under  a  sealed  lease 
is  liable  after  such  election  in  an  action  for  the  use  and  occupa- 
tion of  the  residue.*  If  A  holds  property  under  a  perpetual 
lease  from  B,  and  A  sells  to  X,  subject  to  the  annual  rent  re- 
served, and  X  recognizes  B's  rights  in  such  property,  the  law 
implies  a  promise  by  X  to  B  to  pay  the  rent ;  and  accordingly, 
assumpsit  will  lie.^     A  statute  allowing  assumpsit  on  sealed 

1  Codman  v.  Jenkins,  14  Mass.  03;      Drill  Co..  67  N.  H.  450;  39  Atl.  330. 

2  Meredith    Association    v.    Twist-  4McCardell    v.    Miller,    22    R.    I. 
Drill    Co.,    66    N.    H.    539;    .30    Atl.      96;  46  Atl.  184. 

1119.  5  Derrick   v.   Liiddy.   64   Vt.   462; 

3  Meredith    Association    v.    Twist-       24  Atl.  1050. 


1316  PAGE    ON    CONTRACTS. 

contracts  makes  it  possible  to  maintain  assumpsit  on  a  written 
lease  under  seal.® 

§847.     Other  forms  of  occupancy  excluding  liability  in  contract. 

One  who  is  in  possession  under  a  contract  by  which  he  is  to 
have  the  use  of  the  premises  in  question  gratuitously,  cannot  be 
held  liable  in  an  action  for  use  and  occupation.^  An  action  of 
assumpsit  for  use  and  occupation  will  not  lie  against  one  who 
does  not  sustain  the  relation  of  tenant,  even  though  such  person 
may  have  lived  upon  such  real  property  in  a  subordinate  relation 
to  the  tenant.  Thus,  where  A  had  made  a  lease  to  B,  and  B's 
granddaughter,  X,  lived  with  B  on  the  premises,  not  paying 
rent  or  board,  it  was  held  that  A  could  not  recover  from  X  in 
an  action  for  use  and  occupation.^  Under  a  statute  providing 
that  the  expenses  of  the  family  shall  be  chargeable  on  the  prop- 
erty of  the  husband  or  wife,  or  either  of  them,  and  permitting 
either  joint  or  several  actions  to  be  brought  against  them,  it  has 
been  held  that  where  a  lease  is  made  to  the  husband  a  joint  ac- 
tion for  use  and  occupation  may  be  brought  against  husband 
and  wife.^ 

§848.     Torts  not  affecting  property. 

The  right  to  waive  tort  and  sue  in  assumpsit  is  limited  in 
some  jurisdictions  to  torts  affecting  property,  whereby  one  is  en- 
riched by  receiving  property  or  its  proceeds  which  in  good  con- 
science belong  to  another.  It  has  there  no  application  to  other 
forms  of  tort.  If  A  has  by  duress  compelled  B  to  work  for  him, 
B  cannot  recover  from  A  on  an  implied  contract.  Thus  a  con- 
vict who  has  been  compelled  to  work  on  Sundays  and  holidays 
for  the  person  hiring  him  has  been  denied  the  right  to  recover 
from  such  person  on  an  implied  contract,  even  though  the  statute 

6  Beecher    v.    DufReld,    97    Mich.  App.  651.     (Even  if  such  contract  is 

423;    56    N.    W.    777;    Conkling    v.  invalid.) 

Tuttle.  52  Mich.  630;  18  N.  W.  391;  2  Austin    v.    Whipple.    178    Mass, 

Dalton  V.  Laudahn.  30  Mich.  349.  155;  59  N.  E.  636. 

1  Chicago  V.  IMillinc  Co..   196  111.  3  Walker  v.  Houghteling,  107  Fed. 

580;  63  N.  E.  1043;  affirming  97  111.  619;  46  C.  C.  A.  512. 


IMPLIED    CONTRACTS    AND    QUASI-CONTRACTS.  1317 

^specifically  provided  that  a  convict  should  not  be  compelled  to 
work  on  Sundays  and  holidays.^  A  represented  to  B  that  he 
had  adopted  her  as  his  daughter,  and  thus  he  induced  her  to  ren- 
der domestic  services  for  him.  It  was  held  that  she  could  not 
recover  for  work  and  labor.^  If  a  man  represents  himself  as 
single  and  thus  induces  a  woman  to  marry  him,  live  with  him, 
and  perform  domestic  services  for  him,  it  has  been  held  that  she 
cannot  recover  in  assumpsit  for  such  services,  and  that  her  rem- 
edy is  in  tort.^  A  consideration  of  these  cases  will  show  that  if 
it  is  ever  in  accordance  with  principles  of  justice  to  waive  tort 
and  sue  in  quasi-contract,  cases  like  these  are  the  very  ones 
where  such  right  should  be  recognized.  Accordingly  in  some 
states  a  juster  view  permits  such  recovery,  as  in  the  case  of  a 
woman  who  renders  domestic  services  to  a  man,  being  induced 
by  his  fraud  to  believe  that  they  were  married.* 

1  SIoss,  etc.,   Co.   V.   Harvey,    116  *  Schmitt   v.    Schneider,    109    Ga. 
Ala.  656;  22  So.  994.  628;  35  S.  E.  145;  Fox  v.  Dawson,  8 

2  Graham   v.    Stanton,    177    Mass.  Mart.  (La.)  94;  Higgins  v.  Breen,  9 
321;  58  N.  E.  1023.  Mo.    497;    Knott   v.   Knott    (N.   J. 

3  Cooper    V.    Cooper,     147    Mass.  Eq.),  51  Atl.  15. 
370;  9  Am.  St.  Rep.  721;   17  N.  E. 

892. 


PART  IV. 

PARTIES. 


CONTKACTS  OF  INFANTS.  1321 


CHAPTER  XXXVIII. 

CONTRACTS  OF  INFANTS. 

§849.    Abnormal  status  as  affecting  contractual  capacity. 

In  the  discussion  of  contracts  up  to  this  point  we  have  assumed 
that  both  parties  to  the  contract  were  of  normal  status.  Many 
of  the  propositions  of  contract  law  have  no  application  in  cases 
in  which  one  party  or  the  other  is  of  abnormal  status.  A  dis- 
cussion of  the  contracts  of  persons  of  abnormal  status  involves 
questions  both  of  contract  and  of  quasi-contract.  The  com- 
moner types  of  abnormal  status  of  natural  persons  will  first  be 
considered,  then  questions  of  partnership,  agency,  and  of  liabil- 
ity as  trustees  and  the  like  which  are  often  confused  with 
agency;  and  then  the  contracts  of  artificial  persons,  that  is,  of 
the  government  and  of  public  and  private  corporations. 

§850.    Theory  underlying  doctrine  of  infancy. 

A  child  lacks  the  judgment  and  discretion  necessary  to  make 
ordinary  contracts.  If  his  contracts  were  binding  on  him  in  all 
cases,  extravagance  in  personal  expenditures  and  recklessness  in 
business  ventures  would  often  burden  him  before  his  majority 
with  debts  which  he  could  never  pay.  The  policy  of  our  law 
deprives  him  in  many  cases  of  the  control  of  his  own  property 
and  transfers  it  to  his  guardian ;  and  as  a  corollary  the  law  is 
unwilling  to  allow  him  to  bind  himself  by  contracts  concerning 
the  management  of  his  estate,  since  these  are  matters  to  which 
his  guardian  should  attend.  On  the  other  hand  the  law  imposes 
certain  obligations  upon  him,  and  these  obligations  are  in  no 
way  weakened  if  the  infant  voluntarily  promises  to  discharge 
them.  The  wise  policy  of  the  law,  therefore,  must  hold  that 
certain  contracts  are  not  binding  upon  the  infant,  at  least  if  he 


1322  PAGE    ON    CONTRACTS. 

wishes  to  escape  liability;  while  others  are  binding,  at  least  to 
the  extent  of  the  pre-existing  liability  of  the  infant.  As  the 
object  of  the  law  is  not  solely  the  protection  of  the  infant, 
but  rather  an  adjustment  of  his  rights  and  duties  in  such  way 
as  will  promote  the  general  well-being,  a  complicated  set  of 
questions  is  left  for  solution  in  cases  where  the  infant  has  re- 
ceived something  of  value  under  the  contract  and  his  right  to 
avoid  his  liability  limits  the  right  of  the  other  party  to  recover 
his  property.  With  these  questions  the  following  sections  are 
concerned. 

§851.     The  termination  of  minority  at  Common  Law. 

The  Common  Law  fixed  the  age  of  majority  at  twenty-one 
for  both  males  and  females.  Persons  under  that  age  were  in- 
fants or  minors.^  This  rule  is,  of  course,  an  arbitrary  one. 
There  is  but  little  difference  in  the  discretion  of  one  on  the  day 
before  and  on  the  day  after  majority.^  "  A  minor  who  has 
nearly  attained  his  majority  may  be  as  able  to  protect  his  inter- 
ests in  a  contract  as  one  who  has  passed  that  period.  But  the 
law  must  necessarily  fix  some  precise  age  at  which  persons  shall 
be  held  siii  juris.  It  cannot  measure  the  individual  capacity  in 
each  case  as  it  arises."^  Unless  some  arbitrary  point  of  time  is 
fixed  by  law,  the  capacity  of  the  infant  would  necessarily  be  a 
question  of  fact  in  each  case;  and  from  the  uncertainty  and 
practical  difficulty  that  would  be  tlius  caused  the  courts  have 
always  shrunk.  The  exact  moment  at  which  the  age  of  twenty- 
one  was  reached  and  minority  ended  was  settled  at  Common 

1  Anon..  1  Salk.  44 ;  1  Black.  Com.  55 ;    95   Am.   Dec.   572.     "  Whenever 

463;    Rowland   v.   McGure.   64   Ark.  he  arrives  at  majority,  a  time  fixed 

412;  42  S.  W.  1068.     "An  infant  or  by  an  arbitrary  rule,   which   in  the 

minor    (whom  we   call   any  that   is  nature   of   things   cannot   aflPect   the 

\inder  the  age  of  21  years    .     .     .)"  personal  capabilities  of  its  subject, 

Coke  Litt..  2  b.  the   law   presumes  that   he   has   ac- 

sMcCarty  v.   Carter,   49   111.   53;  quired  all  the  wisdom  and  prudence 

95  Am.  Dec.  572;    Baker  v.  Lovett,  necessary    for    the    proper    manage- 

6  Mass.  78;  4  Am.  Dec.  88;  Harner  ment  of  its  affairs;    hence   the  law 

V.  Dipple,  31  O.  S.  72;  27  Am.  Rep.  imposes    on   him    full    responsibility 

496.  for     all     his    acts     and     contracts." 

sMeCarty    v.    Carter,    49    111.    53,  Harner  v.  Dipple,  31  0.  S.  72,  74. 


CONTKACTS  OF  INFANTS.  1323 

Law  as  the  first  moment  of  the  day  preceding  the  twenty-first 
anniversary  of  birth.*  "  On  the  day  before  the  twenty-first  an- 
niversary he  is  held  to  be  twenty-one  years  of  age."^  Thus  lim- 
itations against  an  infant  begins  to  run  the  day  before  his 
twenty-first  birthday.*^  This  rule  is  said  to  rest  upon  the  prin- 
ciple that  the  law  does  not  recognize  fractions  of  a  day.  It  does 
not,  however,  follow  from  that  principle  at  all ;  but  it  really  rests 
on  nothing  but  precedent.  It  is  impossible  to  show  why  the 
rule  ignoring  fractions  of  a  day  is  not  complied  with  by  making 
majority  begin  at  the  first  moment  of  the  twenty-first  anniver- 
sary of  birth.  Still  although  some  authorities  quoted  in  its 
favor  are  really  not  all  clear  on  the  point/  though  it  has  been 
ably  and  logically  criticised,  it  is  probably  too  well  fortified  to 
be  shaken  and  is,  though  illogical,  as  convenient  a  rule  as  any. 

§852.     Effect  of  emancipation. 

While  the  emancipation  of  an  infant  from  parental  control 
gives  him  a  property  in  his  own  earnings  from  that  time,^  it 
does  not  relate  back  so  as  to  permit  him  to  recover  for  services 
previously  rendered,"  and  it  does  not  in  any  way  enlarge  the  con- 
tractual capacity  of  the  infant.^  It  often  is,  however,  of  prac- 
tical importance  in  determining  with  whom  the  contract  was 

4  Swinburne,  pt.  2,  §  2,  pi.  7;  ^  in  the  earlier  cases  this  rule  is 
2  Kent  Com.  233;  Met.  Cont.  38;  stated  apparently  as  a  mere  dictum. 
7  Wait  Act.  &  Def.  129;  Fitzhugh  Anon.  1  Salk.  44;  Fitzhugh  v.  Den- 
V.  Bennington.  6  Mod.  259;  Anon.  1  nington,  6  Mod.  259.  The  rule  as 
Salk.  44;  Roe  v.  Hersey,  3  Wils.  given  in  the  later  cases  is  often 
274;  Wells  v.  Wells.  6  Ind.  447;  based  on  Blackstone;  but  that  au- 
Hamlin  v.  Stevenson,  4  Dana  (Ky.)  thor  merely  said,  I  Com.  463,  "  So 
597;  Bardwell  v.  Purrington,  107  that  full  age  in  male  or  female  is 
Mass.  419;  Phelan  v.  Douglass,  11  twenty-one  years,  which  age  is  com- 
How.  Pr.  193 ;  Ross  v.  Morrow,  85  pleted  on  the  day  preceding  the  anni- 
Tex.  172;  16  L.  R.  A.  542;  19  S.  versary  of  a  person's  birth.  .  .  ." 
W.  1090.  iClay  v.   Shirley,   65  N.   H.  644; 

5  Ross    V.    Morrow,    85    Tex.    172,  23  Atl.  521. 

175 ;    16   L.    R.    A.    542 ;    19    S.    W.  '2  Kreider  v.  Fanning.  74  111.  App. 

1090.  237. 

6  Ross  V.  Morrow.  85  Tex.  172;  3  Burns  v.  Smith.  29  Ind.  App. 
16  L.  R.  A.  542;    19  S.  W.   1090.  181;  64  N.  E.  94;  Tandy  v.  Master- 


1324  PAGE    ON    CONTRACTS. 

made;  and  also  in  deciding  many  questions  under  the  law  of 
necessaries. 

§853.    Statutes  affecting  capacity  of  minors. 

The  legislature,  under  most  American  constitutions,  has  full 
power  to  modify  the  Common  Law  rules  of  the  capacity  of  in- 
fants as  far  as  concerns  transactions  after  the  passage  of  the 
statute.  Where  special  legislation  is  forbidden,  special  statutes 
affecting  capacity  are,  of  course,  unconstitutional.^  Without  a 
clause  in  the  constitution  forbidding  special  legislation,  an  in- 
fant's disabilities  may  be  removed  by  special  statute.^  The 
statutes  affecting  the  Common  Law  rules  as  to  the  incapacity  of 
minors  are  of  several  kinds,  three  of  which  will  be  noticed  here. 
First,  in  many  states  the  age  at  which  majority  is  reached  has 
been  changed,  the  most  common  modification  being  the  reduction 
of  the  age  of  majority  in  females  to  eighteen.^  In  North  Da- 
kota a  contract  of  an  infant  over  eighteen  is  subject  to  his  right 
to  disaffirm  within  one  year.  If  not  so  disaffirmed  is  as  valid  as 
if  he  were  an  adult.*  Second,  certain  statutes  provide  that  by  a 
proceeding  in  a  designated  court  the  disabilities  of  a  minor  may 
be  removed.^  The  general  effect  of  these  statutes  is  the  same, 
though  there  is  some  variance  in  the  details.     The  record  must 

son's  Admr.,  1  Bibb.  330;  Mason  v.  2  Collins  v.   Park.   93   Ky.   6;    18 

Wright.  13  Met.  (Mass.)  306;  Tyler  S.  W.  1013. 

V.    Gallop.    68    Mich.    185;    13    Am.  3  Rowland    v.    McGuire,    64    Ark. 

St.  Rep.  336;  35  N.  W.  902;   Gene-  412;    42   S.   W.   1068;    Stevenson   v. 

reux  V.  Sibley,  18  R.  I.  43;  25  Atl.  Westfall.  18  111.  209;  Cogel  v.  Ralph, 

345;   Person  v.  Chase,  37  Vt.  647;  24   Minn.   194;    Sparhawk  v.   Buell, 

88    Am.    Dec.    630.     The    effect    of  9  Vt.  41. 

emancipation  is  "to  enable  him  to  *  Luce  v.   Jestrab,   —  N.  D.  — ; 

make  contracts  for  his  own  services  97  N.  W.  848. 

and  to  apply  his  wages  to  the  sup-  s  Wilkinson    v.    Buster,    124    Ala. 

port  of  his  family,  otherwise  it  does  574;  26  So.  940;  Cox  v.  Johnson.  80 

not  enlarge  his   power  to  contract,  Ala.  22;   Hindman  v.  O'Connor.  54 

so  that  he  is  bound  by  his  contracts  Ark.  627;  13  L.  R.  A.  490:  16  S.  W. 

except  for  actual  necessities."  Burns  1052;  Cooper  v.  Rhodes.  30  La.  Ann. 

v.    Smith,   29    Ind.   App.    181,    184;  533;    Brown   v.    Wheelock,    75   Tei 

64  N.  E.  94.  385;  12  S.  W.  Ill,  841. 

1  State  ex  rel.  Lamson  v.  Baker, 
25  Fla.  598;  6  So.  445. 


CONTRACTS  OF  INFANTS.  1325 

show  that  the  minor  resides  in  the  county  where  the  application 
is  made  or  the  decree  removing  the  disabilities  is  void.*'  After 
the  decree  is  made,  it  is  valid  in  the  county  where  made,  and  in 
other  counties  where  a  certified  copy  of  the  decree  is  filed/ 
Since  the  statute  authorizing  the  removal  of  the  disabilities  of  a 
minor  applies  to  those  who  are  capable  of  managing  their  own 
business,  an  order  of  court  removing  the  disabilities  of  a  minor 
of  fourteen  is  void.^  Since  an  infant  over  eighteen  whose  dis- 
abilities have  thus  been  removed  may  bind  himself  by  his  under- 
takings, he  may  take  the  bar  examination.^  While  these  stat- 
utes need  not  provide  for  notice  of  the  application,^"  yet  such 
formalities  as  they  require  must  be  complied  with.^^  Third, 
other  statutes  remove  the  disability  of  the  infant  as  to  certain 
kinds  of  contracts.  Thus  in  Georgia  an  infant  who  engages  in 
business  with  the  consent  of  his  guardian  may  bind  himself  by 
contract  for  his  business  debts,^"  even  if  such  contract  is  made 
with  such  guardian  after  he  is  discharged  from  his  trust.^^  In 
Texas  the  marriage  settlements  of  minors  are  binding,  but  this 
does  not  operate  to  make  other  contracts  binding.^*  In  Iowa  an 
infant  who  by  reason  of  his  engaging  in  business  causes  the 
other  party  to  believe  that  he  is  an  adult  is  liable  on  his  con- 
tracts. This  statute,  however,  does  not  apply  to  an  infant  who 
purchases  realty  while  working  as  a  farm-hand,  such  acts  not 
constituting  an  "  engaging  in  business."^^ 

§854.    Infant  married  women. 

The  disabilities  of  married  women  are  elsewhere  discussed.^ 

6  Hindman  v.  O'Connor,   64   Ark.  627;  13  L.  R.  A.  490;  16  S.  W.  1052. 
627;  13  L.  R.  A.  490;  16  S.  W.  1052.  n  Cox  v.  Johnson.  80  Ala.  22. 

7  Wilkinson    v.    Buster,    124    Ala.  12  MeKamy  v.  Cooper,  81  Ga.  679; 
574;  26  So.  940.  8  S.  E.   312.     So  where  his  parents 

8  Doles  V.  Hilton.  48  Ark.  305;  3  consent.     Jimmerson    v.    Lawrence, 
S.   W.    193;    to   the    same   eflfeet   is  112  Ga.  340;  37  S.  E.  371. 
Pochelu's  Emancipation.  41  La.  Ann.  i3  Ullmer   v.   Fitzgerald,    106   Ga. 
331;  6  So.  541.  815;    32   S.   E.   869. 

9  State   ex  rel.  Lamson  v.   Baker,  i*  Burr  v.  Wilson.  18  Tex.  367. 
25    Fla.    598;    6    So.    445.  is  Beickler    v.    Guenther,    121    la. 

10  Hindman  v.  O'Connor,  54  Ark.      419:  96  N.  W.  895. 

iSee   Ch.    XLL 


1326  PAGE    ON    CONTRACTS. 

The  statutes  which  modify  the  Common  Law  rules  of  coverture 
in  some  states  specifically  apply  to  infants  and  remove  together 
the  disabilities  of  infancy  and  coverture.^  Thus  in  Nebraska 
the  statute  removes  the  disabilities  of  a  married  woman  over 
sixteen  years  of  age/  while  in  Alabama  the  limit  is  eighteen 
years,  and  the  statute  applies  to  married  women  of  that  age  even 
if  married  before  they  were  eighteen/  In  states  in  which  the 
statute  removing  the  disabilities  of  a  married  woman  does  not 
specifically  apply  to  infants,  it  is  held  that  notwithstanding  the 
statute,  the  disability  of  infancy  remains.^  "  Where  the  party 
is  an  infant  as  well  as  feme  covert,  the  disability  arising  from 
infancy  remains,  although  she  execute  and  acknowledge  a  deed 
in  the  form  prescribed  by  statute."^  A  proviso  in  a  deed  to  a 
married  woman  that  "  nothing  herein  shall  prevent  her  selling 
said  land  ...  by  her  husband  uniting  with  her  "  does  not 
remove  the  disability  of  infancy.^ 

§855.     Original  rule  concerning  the  eifect  of  an  infant's  contract. 

The  Common  Law  rule  as  to  the  effect  and  validity  of  an 
infant's  contracts  was  that  if  the  court  could,  as  a  matter  of 

2  Knight  V.  Colman,  117  Ala.  266;  mings  v.  Everett,  82  Me.  260;  19 
22  So.  974;  Daley  v.  Minnesota,  etc.,  Atl.  456;  Webb  v.  Hall,  35  Me.  336 
Co.,  43  Minn.  517;  45  N.  W.  1100;  Walsh  v.  Young,  110  Mass.  396 
Ward  V.  Laverty,  19  Neb.  429;  27  Craig  v.  Van  Bebber,  100  Mo.  584 
N.  W.  393;  Chubb  v.  Johnson,  11  18  Am.  St.  Rep.  569;  13  S.  W.  906 
Tex.  469.  Sanford  v.  McLean,  3  Paige   (N.  Y.) 

3  Ward  V.  Laverty,  19  Neb.  429;  117;  23  Am.  Dec.  773;  Bool  v.  Mix, 
27  N.  W.  393.  17  Wend.   (N.  Y.)   119;  31  Am.  Dec. 

4  Knight  V.  Colman,  117  Ala.  266;  285;  Epps.  v.  Flowers,  101  N.  C. 
22  So.  974.  158;  7  S.  E.  680;  Hughes  v.  Watson, 

5  Confederation,  etc..  Association  10  Ohio  127;  McMorris  v.  Webb,  17 
V.  Kinnear,  23  Ont.  App.  497;  Sar-  S.  C.  558;  43  Am.  Rep.  629; 
rod  V.  Myers,  21  Ark.  592;  76  Am.  Bradshaw  v.  Van  Valkenburg,  97 
Dec.  409;  Watson  v.  Billings,  38  Tenn.  316;  37  S.  W.  88;  Walton  v. 
Ark.  278;  42  Am.  Rep.  1;  Magee  v.  Gaines,  94  Tenn.  420;  29  S.  W.  458. 
Welsh.  18  Cal.  155;  Law  v.  Long,  6  Syllabus  of  Bool  v.  Mix,  17 
41  Ind.  586;  Losey  v.  Bond,  94  Ind.  Wend.  (N.  Y.)  119;  31  Am.  Dec. 
67;  Hoyt  v.  Swar,  53  111.  134;  Phil-  285;  quoted  in  Hughes  v.  Watson, 
lips  V.  Green,  3  A.  K.  Marsh.   (Ky.)  10  Ohio  127,  134. 

7;     13    Am.    Dec.    124;     Prewit    v.  t  Sewell   v.    Sewell,    92    Ky.    500; 

Graves,   5   J.   J.   Marsh.   114;    Cum-      36  Am.  St.  Rep.  606;   18  S.  W.  162. 


CONTEACTS  OF  INFANTS.  1327 

law,  determine  that  the  contract  was  prejudicial  to  the  infant, 
it  was  void ;  if  beneficial,  as  for  necessaries,  it  was  valid ;  and 
if  it  was  doubtful  whether  it  was  beneficial  or  prejudicial  it  was 
voidable/     Thus  a  contract  clearly  beneficial  to  the  infant  was 
held  binding.^     An  apparent  modification  of  this  rule,  though 
not  always  recognized  as  such  by  the  courts,  restricts  void  con- 
tracts to  such  as  are  clearly,  certainly  or  necessarily  to  the  prej- 
udice  of  the   infant.^     In   Robinson   v.    Weeks,*   a   somewhat 
different   classification   from   that  given   in   the   text  was   set 
forth  at  length  and  the  contracts  of  infants  were  divided  into 
three    classes:    binding,    if   for   necessaries    at   fair    and    just 
rates;  void,   if  manifestly  and  necessarily  prejudicial,   as   of 
suretyship,  gift,  naked  release,  appointment  of  agents,  confession 
of  judgment  or  the  like ;  and  voidable,  at  the  election  of  the 
minor,  either  during  his  minority  or  within  a  reasonable  time 
after  he  becomes  of  age ;  including  all  the  agreements  of  a  minor 
which  may  be  beneficial  and  are  not  for  necessaries  until  fully 
executed  on  both  sides,  and  all  executed  contracts  of  this  sort 
where  the  other  party  can  be  placed  substantially  in  statu  quo. 
An  examination  of  the  authorities  cited  will  show  that  this  rule 
was  based  on  a  line  of  dicta ;  and  that  the  real  decisions  in 
almost  all  of  the  cases  did  not  require  the  statement  of  the  rule 
in  the  form  given.     The  questions  decided  are  generally  pre- 
sented where  the  infant  has  taken  steps  sufficient  to  avoid  tlie 
contract,  and  it  has  thereby  become  unimportant  whether  the 
contract  was  originally   void   or   merely   voidable.     Wherever 


1  Harvey  v.  Ashley,  3  Atk.  607 
Zouch  V.  Parsons,  3  Burr.  1794 
Keane  v.  Boycott,  2  H.  Black.  512 
Bay  lis  v.  Dinely,  3  Maiile  &  S.  477 
Tucker  v.  Moreland,  10  Pet.  58 
Waugh    V.    Emerson,    79    Ala.    295 


Dec.  251.  Of  these  cases  Keane  v. 
Boycott,  2  H.  Bla.  511.  while  not 
the  earliest  is  perhaps  the  one  most 
often  quoted. 

2  Waugh  V.  Emerson,  79  Ala.  295 ; 
Nickerson      v.      Easton,      12      Pick. 


Green  v.   Wilding,    59   la.    679;    44  (Mass.)    110;  Stone  v.  Dennison,  13 

Am.  Rep.  696;   13  N.  W.  761;   Sue-  Pick.    (Mass.)    1;   23  Am.  Dec.  654; 

cession  of  Wilder,  22  La.  Ann.  219;  Breed  v.  Judd,  1  Gray   (Mass.)   455. 

2  Am.   Rep.   721;    Lawson   v.   Love-  3  Hastings  v.   Dollarhide,   24   Cal. 

joy,   8  Me.  405;   23  Am.   Dec!   526;  195;   Bradford  v.  French,  110  Mass. 

Williams    v.    Hutchinson,    3    N.    Y.  365;    Oliver    v.    Houdlet,    13    Mass. 

312;   53  Am.  Dec.  301;   Wheaton  v.  237;  7  Am.  Dee.  134. 

East,  5  Yerg.    (Tenn.)    41;   26  Am.  ^oQ  Me.  102. 


1328  PAGE    ON    CONTRACTS. 

questions  of  the  possibility  of  ratification  by  the  infant  or  the 
riffht  of  the  adult  to  avoid  have  been  raised  the  conclusion 
reached  is  consistent  only  with  the  view  that  the  contract  called 
"  void  "  is  really  voidable. 

§856.    Present  standing  of  original  rule. 

Before  discussing  the  modern  rule,  it  must  be  noticed  that 
the  old  rule  just  given  is  not  obsolete  everywhere.  It  still  per- 
sists in  obiters.^  The  English  courts  still  apply  the  test  regu- 
larly in  contracts  for  work  and  labor.^  Thus,  a  contract  by 
which  an  infant,  in  consideration  of  a  special  rate  of  fare  agrees 
not  to  hold  the  railroad  for  its  negligence  is  so  manifestly  prej- 
udicial as  to  be  not  binding  f  and  an  apprenticeship  deed  con- 
taining a  provision  that  the  master  was  not  to  pay  wages  to  the 
apprentice  or  to  instruct  him  or  teach  him  while  his  business  was 
interrupted  by  "  turn-outs  "  including  lock-outs,  was  so  much 
TO  the  detriment  of  the  infant  as  to  be  unenforceable.*  On  the 
other  hand,  an  agreement  by  an  infant  employee  to  accept  a 
certain  sum  from  a  mutual  insurance  society  in  lieu  of  damages,^ 
and  a  promise  by  an  infant  that  in  consideration  of  employment 
he  will  not  compete  in  business  with  the  employer  within  a  dis- 
tance of  five  miles,  and  for  a  period  of  two  years  after  the  ter- 
mination of  the  employment,  are  both  for  the  benefit  of  the 
infant  and  enforceable.^  The  English  courts  have  intimated 
that  this  rule  is  not  limited  to  labor  contracts.'^     Some  American 

1  Askey  v.  Williams,  74  Tex.  294;  it  was  for  his  advantage  it  was  not  a 
5  L.  R.  A.   176;    11   S.  W.   1101.  voidable    contract    but    one    binding 

2  Reg.  V.  Lord,  12  Q.  B.  757;  on  him,  which  he  had  no  right  to 
Fellows  V.  Wood,  50  L.  T.  (N.  S.)  repudiate."  Clements  v.  Ry.  Co. 
513;  Meakin  v.  Morris,  12  Q.  B.  D.  (1894),  2  Q.  B.  482,  489. 

352;  Evans  v.  Ware    (1892),  3  Ch.  3  Flower  v.  Ry.  Co.    (1894),  2  Q. 

502;    Corn   v.   Matthews    (1893),    1  B.    65. 

Q.  B.  310;  Flower  V.  Ry.  Co.   (1894),  4  Corn  v.  Matthews    (1893),  1  Q. 

2    Q.    B.    65;    Clements   v.    Ry.    Co.  B.   310. 

( 1894) ,  2  Q.  B.  482.     The  test  of  the  s  Clements  v.  Ry.  Co.  (1894) ,  2  Q. 

validity  of  such  a  contract  is  said  to  B.  482. 

be  "whether   on  the  true  construe-  e  Evans    v.    Ware    (1892),    3    Ch. 

tion  of  the  contract  as  a  whole  it  502. 

was  for  his  advantage.     ...     If  ^  "  j  ^yiH  not  attempt  to  say  how 


CONTKACTS  OF  INFANTS.  1320 

states  still  hold  to  the  original  rule,  in  its  literal  application.^ 
Thus  a  deed  from  an  infant  without  consideration  was  held  void 
as  being  prejudicial ;  and  so  a  covenant  of  seizin  in  a  deed  by  the 
infant's  grantee  to  another  was  broken  as  soon  as  made.^  So  a 
gratuitous  release  by  an  infant  to  a  witness  to  restore  his  com- 
petency was  held  void,  and  of  no  eifect  on  such  competency.^** 

§857.    Modern  rule  concerning  the  effect  of  an  infant's  contracts. 

The  modern  rule,  in  force  in  a  great  majority  of  the  different 
jurisdictions,  also  divides  the  contracts  of  infants  into  void, 
voidable  and  valid  contracts ;  but  the  lines  of  distinction  between 
the  different  classes  of  contracts  are  very  different  from  those 
laid  down  by  the  Common  La^v  rule.  Void  contracts  consist  in 
many  states  of  formal  powers  of  attorney ;  in  fewer  still,  of  gen- 
eral appointments  of  agents;  and  in  a  very  few  of  gratuitous 
gifts.  Valid  contracts  consist. of  certain  executed  contracts  of 
status  and  all  promises  by  an  infant  to  perform  some  legal 
obligation  already  imposed  upon  him ;  and  all  other  contracts  are 
voidable.  These  different  classes  of  contracts  will  be  discussed 
in  detail  in  the  following  sections.  The  modern  English  Statute 
makes  an  infant's  contracts,  except  for  necessaries,  void  and  in- 
capable of  ratification.  Thus,  acceptances  given  by  an  infant 
debtor  who  is  sued  with  others  after  majority  are  void.^ 

far    the    rule    extends    but    that    it  necessaries  —  they  are  valid ;    if  of 

does   apply   to   some   contracts   that  an   uncertain   character  as  to  bene- 

are   not   contracts   of  labor   is   clear  fit    or   prejudice,   they   are   voidable 

from    many    decided    cases."     Clem-  only,     .     .     ." 

ents  V.  Ry.  Co.   (1894) ,  2  Q.  B.  482,  9  Robinson    v.    Coulter.    00    Tenn. 

492.  705;  25  Am.  St.  Rep.  708;  IS  S.  W. 

8  Robinson    v.    Coulter.    90   Tenn.  250. 

705;  25  Am.  St.  Rep.  708;  18  S.  W.  lo  Langford    v.    Frey,    8    Humph. 

250.     \^niere  the  rule  is  reiterated  as  (Tenn.)   443.     See  also  on  the  same 

follows:     "The   rule   governing  the  point   Swaflford  v.   Ferguson,   3   Lea 

contracts  of  minors  long  established,  202;    31    Am.   Rep.   639;    Scobey  v. 

is,  that  they  are  either  void,  voidable  Waters.  10  Lea  551. 

or  valid,  according  as  they  shall  ap-  i  Smith  v.  King    (1892),  2  Q,  B, 

pear  prejudicial,  uncertain,  or  bene-  D.  543. 
ticial.     If    to    his    benefit  —  as    for 
84 


1330  PAGE    ON    CONTEACTS. 

^858.    Void  contracts. —  Powers  of  attorney. 

A  supplement  to  the  original  Common  Law  rule  already  given 
was  the  rule  originally  laid  down  in  conveyancing  that  granta 
made  by  an  infant  which  did  not  take  effect  by  delivery  by  his 
hand  were  void.^  This  rule  survives  in  modified  form  and  in 
many,  perhaps  the  majority  of  jurisdictions,  a  power  of  attor- 
ney for  the  conveyance  of  real  estate  executed  by  an  infant  is 
said  to  be  absolutely  void.^  The  true  meaning  of  this  rule  is  of 
course  that  no  rights  of  any  sort  pass  under  a  deed  delivered  aa 
an  execution  of  such  power.  Many  of  these  decisions  would 
have  resulted  the  same  way  if  the  power  had  been  merely  void- 
able. In  others,  it  is  purely  obiter,  not  being  called  for  in  the 
least  by  the  facts  of  the  case.^  In  the  rest,  however,  the  point 
is  clearly  and  necessarily  involved  in  the  decision.  The  more 
rational  view  of  an  infant's  power  of  attorney  is  that  it  is  void- 
able and  not  void.  Under  our  theory  of  the  transfer  of  estates 
in  realty  there  can  be  no  logical  distinction  between  delivery  by 
the  hand  of  the  infant  and  by  the  hand  of  his  agent.  Accord- 
ingly some  courts  have  held  that  a  power  of  attorney  given  by  an 
infant  was  merely  voidable,  and  might  be  ratified  by  him  on 
arriving  at  majority.*  The  validity  of  a  power  coupled  with  an 
interest,  as  one  inserted  in  a  mortgage,  is  also  an  unsettled  ques- 
tion.^    Powers  of  attorney  other  than  those  for  the  convey- 

1  Perkins  on  Conveyancing,  §   12;  v.  Cravens,  4  Litt.    (Ky.)    18;  Law- 

Zoucli  V.  Parsons,  3  Burr.  1794;  AI-  rence  v.  McArter,  10  Ohio  37;  Knox 

len   V.   Allen,   2   Dru.   &  War.   307;  v.  Flack,  22  Pa.  St.  337. 
Doe  V.  Roberts,    16  M.   &  W.   778;  s  Cole   v.    Pennoyer,    14   111.    158 

Phillips  V.   Green,    3   A.   K.   Marsh.  Fairbanks  v.  Snow,  145  Mass.  153 

(Ky.)    7;    13  Am.  Dec.   124;  Breck-  1  Am.  St.  Rep.  446;   13  N.  E.  596 

enridge's  Heirs  v.   Ormsby,   1   J.   J.  Mustard    v.    Wohlford's    Heirs,     15 

Marsh.     (Ky.)     236;     19    Am.    Dec.  Grattan    (Va.)    329;    76    Am.    Dec. 

71;  Dana  v.  Coombs,  6  Me.  89;   19  209. 

Am.  Dec.    194;   Conroe  v.   Birdsall,  *  Conrsolle    v.    Weyerhauser,     69 

1  Johns.  Cas.    (N.  Y.)    127;   1  Am.  Minn.  328;  72  N.  W.  697;  Ferguson 

Dec.    105.  V.  Ry.  Co.,  73  Tex.  344;    11   S.  W. 

2Zouch  V.  Parsons,  3  Burr.  1794;  347. 
Flexner  v.  Dickerson,   72  Ala.  318;  sin   Askey  v.   Williams,   74   Tex. 

Philpot   V.   Bingham,    55   Ala.   435;  294;  5  L.  R.  A.  176;  11  S.  W.  1101, 

Waplos  V.  Hastings,  3  Harr.    (Del.)  such  a  power  was  held  voidable.     In 

403;    Hiestand   v.    Kuns,    8    Blackf.  Rocks  v.  Cornell,  21  R.  I.  532;   45 

Ind.    345;    46   Am.   Dec.    481;    Pyle  Atl.  552,  it  was  said  to  be  void. 


CONTRACTS    OF    INFANTS. 


1331 


ance  of  real  estate  have  been  said  to  be  void.^  Thus  an  infant 
cannot  appoint  an  attorney  to  make  affidavit  for  him  in  replevin/ 
The  more  rational  view  is  to  look  upon  the  power  and  the  acts 
thereunder  as  being  merely  voidable.® 

§859.     Void  contracts. —  Appointments  of  agents. 

The  rule  given  in  the  preceding  section  that  powers  of  attor- 
ney are  held  void  in  many  jurisdictions  has  been  applied  In 
some  jurisdictions  to  all  appointments  of  agents.^  Such  an  ap- 
pointment is  said  to  be  "  absolutely  void."^  While  in  some  of 
these  cases,  this  rule  is  obiter,  in  others  it  is  specifically  decided. 
Thus  it  has  been  held  that  the  infant  could  not  ratify  the  con- 
tract made  by  the  agent,  on  reaching  majority;^  and  also,  that 
no  title  passed  by  a  sale  made  by  the  agent  for  the  infant,*  or  by 
an  assignment  of  a  note.^  It  was  also  said  that  an  infant  can- 
not adopt  the  act  of  an  agent.^  The  clear  weight  of  modern 
authority,  however,  seems  to  be  that  an  appointment  of  an  agent 
is  voidable  only,  and  not  void.^     Thus  an  appointment  of  an 


6  Fetrow  v.  Wiseman,  40  Ind.  148; 
Hustand  v.  Kuns,  8  Blackf.  (Ind.) 
345;  46  Am.  Dec.  481;  Mustard  v. 
Wohl ford's  Heirs,  15  Grattan  (Va.) 
329;  76  Am.  Dec.  209. 

7  Turner  v.  Bondalier,  31  Mo.  App. 
582. 

8  Karcher  v.  Green,  8  Houst. 
(Del.)  163;  32  Atl.  225.  In  this 
case  a  judgment  on  power  of  attor- 
ney signed  by  a  minor  was  set  aside. 

iCole  V.  Pennoyer,  14  111.  158; 
Tr.ueblood  v.  Triieblood,  8  Ind.  195; 
65  Am.  Dec.  756;  Seraple  V.  Morri- 
son, 7  T.  B.  Mon.  (Ky.)  298;  Armi- 
tage  V,  Widoe,  36  Mich.  124;  Bool 
V.  Mix,  17  Wend.  (N.  Y.)  119;  31 
Am.  Dee.  285;  Fonda  v.  Van  Home, 
15  Wend.  (N.  Y.)  631;  30  Am.  Dee. 
77;  Burns  v.  Smith,  29  Ind.  App. 
181;  94  Am.  St.  Rep.  268;  64  N.  E. 
94 ;  Poston  v.  Williams,  99  Mo.  App. 
513;   73  S.  W.   1099. 

2  Burns   v.   Smith,    29    Ind.   App. 


181;  94  Am.  St.  Rep.  268;  64  N.  E. 
94. 

3  Doe  V.  Roberts,  16  Mee.  &  W. 
777;  Trueblood  v.  Trueblood,  8  Ind. 
195;  65  Am.  Dec.  756. 

4  Fonda  v.  Van  Home,  15  Wend. 
(N.  Y.)   631;  30  Am.  Dec.  77. 

5  Semple  v.  Morrison,  7  T.  B.  Mon. 
(Ky.)    298. 

6  Armitage  v.  Widoe,  36  Mich. 
124.  Contra,  Ward  v.  Steamboat 
Little  Red,  8  Mo.  358. 

7  Hastings  v.  Dollarhide,  24  Cal. 
195;  Hardy  v.  Waters,  38  Me.  450; 
Whitney  v.  Dutch,  14  Mass.  457;  7 
Am.  Dec.  229;  Welch  v.  Welch,  103 
Mass.  562;  Simpson  v.  Ins.  Co.,  184 
Mass.  348;  68  N.  E.  673;  Stiff  v. 
Keith,  143  Mass.  224;  9  N.  E.  577; 
Patterson  v.  Lippincott,  47  N.  J. 
L.  457;  54  Am.  Rep.  178;  1  Atl.  506; 
Cummings  v.  Powell,  8  Tex.  80; 
Voglesang  v.  Null.  67  Tex.  465 ;  3  S. 
W.   451;    Ferguson   v.    Ry.   Co.,    73 


1332  PAGE    ON    CONTKACTS. 

agent,  by  an  infant,  to  execute  a  j)romissory  note,^  or  to  indorse 
one,''  even  if  non-negotiable,^**  or  to  rescind  a  contract,^^  is  mere- 
ly voidable.  Tlie  agent  cannot  be  sued  on  an  implied  breach  of 
warranty  of  authority  ;^^  nor  can  the  adversary  party  avoid  a 
contract  made  through  an  agent  with  an  undisclosed  principal 
who  proves  to  be  a  minor/^  Hence  also  an  infant  can  bind  him- 
self for  necessaries  by  an  agent/* 

§860.     Other  contracts  held  void. 

An  infant's  contract  to  arbitrate  has  been  said  to  be  absolutely 
void.^  AMiile  not  strictly  contracts,  gratuitous  transfers  of  prop- 
erty are  in  some  jurisdictions  held  absolutely  void  and  incapable 
of  ratification.^ 

§861.    Valid  contracts. —  Marriage. 

The  validity  of  certain  contracts  of  minors  depends  in  part 
on  the  legal  effect  of  certain  statutes, —  though  this  effect  is  not 
always  expressed  in  the  exact  wording  of  the  statutes, —  and  in 
part  upon  Common  Law  rules.  At  Common  Law  a  male  could 
contract  a  valid  and  binding  marriage  at  the  age  of  fourteen ;  a 
female  at  the  age  of  twelve.^  While  this  age  is  changed  by 
statute  in  many  states,  persons  under  the  age  of  infancy  are  by 
statute  in  almost  all  jurisdictions  allowed  to  contract  valid  mar- 
riages.^   From  the  Common  Law  rule  just  given  and  from  the 

Tex.   344;    11   S.   W.  347;   Askey  v.  i*  Fruehey    v.    Eagleson,    15    Ind. 

Williams,  74  Tex.  294;   5  L.  R.  A.  App.  88;   43  N.  E.   146;   see   §   865 

176;  11  S.  W.  1101.  et  seq. 

sWhitneyv.  Dutch,  14  Mass.  457;  i  Millsaps    v.    Estes,    134    K    C. 

7  Am.  Dee.  229.  486;  46  S.  E.  988. 

9  Hardy  v.  Waters,  38  Me.  450.  2  Robinson    v.    Coulter.    90    Tenn. 

10  Hastings  v.  Dollarhide,  24  Cal.  705;  25  Am.  St.  Rep.  708;  18  S.  W. 
195.  250. 

11  Towle  V.  Dresser,  73  Me.  252.  i  1  Black  Com.  436 :  Fisher  v.  Ber- 

12  Patterson  v.  Lippincott,  47   N.  nard.  65  Vt.  663;  27  Atl.  316. 

J.  L.  457;  54  Am.  Eep.  178;   1  Atl.  2  Such  a  statute  prevents  a  person 

506.  above  the  Common  Law  age  and  un- 

13  Stiff  V.  Keith,  143  Mass.  224;  der  the  statutory  age  from  binding 
9  N.  E.  577;   Cummings  v.  Powell,  himself  by  a  valid  marriage,  even  if 

8  Tex.  80.  it  does  not  specifically  abolish  the 


CONTKACTS    OF    INFANTS. 


1333 


various  local  statutes,  it  follows  that  an  executed  contract  of 
marriage  entered  into  by  one  below  the  age  of  full  majority  but 
above  the  age  so  fixed  by  law  is  absolutely  valid.^  While  such 
statutes  generally  require  the  consent  of  a  parent  or  guardian 
if  the  party  to  be  married  is  under  the  full  age  of  majority,  a 
marriage  witiiout  such  consent  is  perfectly  valid,*  even  if  it  is  a 
misdemeanor  to  enter  into  such  a  marriage.^  By  statute,  a  mar- 
riage under  the  ordinary  age  of  consent  may  in  certain  cases 
be  valid  if  all  the  requirements  of  the  statute  are  complied  with, 
and  otherwise,  void.^  An  infant's  executory  contract  of  mar- 
riage, however,  as  it  does  not  cause  any  change  in  status  is  not 
binding  upon  him  but  like  his  contracts  in  general,  is  void- 
able.'^ While  Develin  v.  Riggsbee,^  is  often  cited  as  contrary  to 
the  principle  laid  down,  it  merely  holds  that  a  minor  female 
may  give  a  valid  release  from  a  promise  to  marry. 


Common  Law  rile.  Eliot  v.  Eliot, 
77  Wis.  634;  10  L.  R.  A.  568;  46  N. 
W.  806. 

3  Hunter  v.  Milam  (Cal.),  41 
Pac.  332;  Parton  v.  Hei'vey,  1  Gray 
(Mass.)  119;  Governor  v.  Rector,  10 
Humph.  (Tenn.)  57;  Pool  v.  Pratt, 
1  Chip.   (Vt.)   252. 

4LaCoste  v.  Guidroz,  47  La.  Ann. 
295;  16  So.  836;  Commonwealth  v. 
Graham,  157  Mass.  73;  34  Am.  St. 
Rep.  255;  16  L.  R.  A.  578;  31  N.  E. 
706;  Holland  v.  Beard.  59  Miss.  161 ; 
42  Am.  Rep.  360;  Wilkinson  v.  Del- 
linger,  126  N.  C.  462;  35  S.  E. 
819;  apparently  to  this  effect  is 
Western,  etc.,  Co.  v.  Proctor,  6  Tex. 
Civ.  App.  300;  25  S.  W.  811;  where 
damages  were  allowed  for  fail- 
ure to  deliver  a  telegram  forbidding 
the  clerk  to  issue  a  license  to  the 
plaintiff's  daughter.  Apparently 
contra  Eliot  v.  Eliot.  81  Wis.  295; 
15  L.  R.  A.  259;  51  N.  W.  81; 
where  the  boy  who  was  under  eigh- 
teen, the  age  of  consent,  represented 


that  he  was  nineteen  and  it  was 
held,  first,  that  no  estoppel  could 
arise;  and,  second,  that  if  there 
could  be  an  estoppel,  it  could  only 
have  arisen  from  his  misrepresenta- 
tion that  his  parents  had  given  their 
consent  as  required  by  statute. 

5  Hunter  v.  Milam  (Cal.),  41  Pac. 
332. 

6  People  v.  Schoonmaker,  119 
Mich.  242 ;  77  N.  W.  934.  The  stat- 
ute involved  in  this  case  allowed  a, 
marriage  under  the  age  of  consent, 
where  the  girl  was  seduced,  the  par- 
ents consented,  and  the  parties  lived 
together  after  the  age  of  consent. 

7  McConkey  v.  Barnes,  42  111.  App. 
511;  Frost  v.  Vought,  37  Mich.  65; 
Hunt  V.  Peake.  5  Cow.  (N.  Y.)  475; 
15  Dec.  475;  Rush  v.  Wick,  31  O. 
S.  521 ;  27  Am.  Rep.  523 ;  Warwick 
v.  Cooper,  5  Sneed.  (Tenn.)  659; 
Wells  V.  Hardy,  21  Tex.  Civ.  App. 
454;  51  S.  W.  503;  Pool  v.  Pratt. 
1    Chip.    (Vt.)    252. 

8  4  Ind.  464. 


1834  PAGE    ON    CONTRACTS. 

§862.    Valid  contracts. —  Enlistment. 

The  statutes  of  the  United  States  allow  minors  over  sixteen 
to  enlist  in  the  army  if  the  parent  or  guardian  consents  to  such 
enlistment.  This  clearly  recognizes  the  capacity  of  the  minor  to 
bind  himself  by  a  contract  of  enlistment.^  The  practical  ques- 
tion arising  most  often  under  these  statutes  is  whether  in  cases 
of  enlistment  without  such  ^vritten  consent  the  infant  can  him- 
self avoid  the  contract.  The  better  line  of  authorities  holds  that 
he  cannot,  and  that  the  privilege  of  avoiding  the  contract  be- 
longs to  the  parent  or  guardian ;  accordingly  if  he  deserts,  this 
does  not  avoid  the  contract  apd  he  may  be  punished  therefor.^ 
Other  authorities  hold  that  the  minor  may  avoid  such  contract 
without  being  punished  for  desertion,^  and  that  he  may  avoid  it 
either  before  or  after  he  arrives  at  majority.*  In  any  event, 
one  appointed  guardian  after  the  enlistment  of  a  minor  cannot 
give  the  written  consent  required  by  statute,^  while  the  delay  of 
a  father  who  does  not  by  habeas  corpus  procure  the  discharge  of 
his  son  who  was  enlisted  in  the  navy  under  the  age  of  eighteen, 
before  that  age,  does  not  validate  the  enlistment,®  Whether 
the  same  rules  on  this  point  apply  to  the  volunteer  service  as  to 
the  regular  army  is  in  dispute.^  It  has  been  held,  under  differ- 
ent statutes,  that  in  the  navy,  a  minor  over  eighteen,  enlisting 

iMorrissey  v.    Perry,    137    U.    S.  wealth   v.    Gamble,    11    Serg.    &   R. 

157;  In  re  Dowd,  90  Fed.  718;  Sol-  (Pa.)    93;    United    States   v.    Blak- 

omon   V.   Davenport,    87    Fed.    318;  eney,  3  Gratt.   (Va.)   405. 

Lanahan    v.    Birge,    30    Conn.    438;  3  United    States    v.    Hanchett,    18 

Ex  parte  Anderson,   16  la.  595;   In  Fed.  26;  In  re  Davison,  21  Fed.  618; 

re  Graham,   8   Jones    (N.   C.)    416;  In    re    Baker,    23    Fed.    30;    In    r< 

Commonwealth  v.  Gamble,  11  Serg.  Chapman,  37  Fed.  327;   2  L.  R.  A. 

&   R.    (Pa.)    93;    In  re   Tarble,   25  332;  In  re  Von  Dieselskie,  5  Mack. 

Wis.  390;  3  Am.  Rep.  85.  (D.  C.)  485;  Commonwealth  v.  Fox, 

2Morrissey  v.   Perry,    137    U.    S.  7  Pa.  St.  336. 

157;  In  re  Dowd,  90  Fed.  718;  Sol-  ^  In  re  Chapman,  37  Fed.  327;   2 

omon  V.  Davenport,  87  Fed.  318;  In  L.  R.  A.  332. 

re   Kaufman,    41    Fed.    876;    In   re  ^  In  re  Perrone,  89  Fed.  150. 

Cosenow,   37   Fed.   668:   In  re  Zim-  ^  In  re  Falconer,  91  Fed.  649. 

merman,  30  Fed.  176;  Ex  parte  An-  7  That  they  do,  In  re  Burns,   87 

derson,  16  la.  595;  In  re  Graham,  8  Fed.      796.        Contra,     Lanahan     v. 

Jones    L.    (N.    C.)    416;    Common-  Birge,  30  Conn.  438. 


CONTKACTS    OF    INFAISTTS.  1335 

without  consent  of  parent  or  guardian  cannot  be  discharged  on 
habeas  corpus  on  suit  of  the  parent.* 

§863.    Valid  contracts. —  Apprenticeship. 

Under  the  old  theory  of  an  infant's  contracts,  a  reasonable 
contract  for  teaching  him  a  trade  was  for  his  benefit;^  under 
the  modern  theory  it  is  held  to  be  a  necessary.^  For  one  or  the 
other  of  these  reasons,  many  authorities  have  held  that  a  contract 
of  apprenticeship  executed  by  an  infant  is  binding  upon  him 
at  Common  Law.^  In  these  cases,  however,  there  were  either 
statutes  making  such  a  contract  valid,  or  the  infant  had  not 
taken  proper  steps  to  avoid  the  contract. 

Other  authorities  have  held  that  at  Common  Law  in  the  ab- 
sence of  statute  or  local  custom  an  infant's  contract  of  appren- 
ticeship is  voidable  and  not  valid.*  Under  some  statutes  an  in- 
fant is  empowered  to  bind  himself  by  a  contract  of  apprentice- 
ship.^ In  England  an  apprenticeship  deed  executed  by  an  in- 
fant apprentice  is  not  enforceable  against  him  if  the  covenants 
are  detrimental  to  him  f  but  otherwise  it  is  enforceable.^  Under 
some  of  these  statutes,  a  master  may  recover  from  an  infant  ap- 

8/»  re  Norton,   98   Fed.   606;    In  dey  v.  Ship  Windlass  Co.,  20  R.  I. 

re  Doyle,  18  Fed.  369;  United  States  147;   78  Am.  St.  Rep.  844;   37  Atl. 

V.  Bainbridge,  1  Mason   (U.  S.)   71;  706;  Frazier  v.  Rowan,  2  Brev.   (S. 

Commonwealth  v.  Downes,  24  Pick.  C.)    47.     So  by  local  custom,  Horn 

(Mass.)    227.      {Contra,  In   re   Me-  v.  Chandler,   1  Mod.  271. 

Nulty,  2  Low.    (U.  S.)    270;   In  re  4  Clark  v.  Goddard,   39  Ala.   164; 

McLave,  8  Blatch.    (U.  S.)    67,  dis-  84  Am.  Dee.  777;  Harney  v.  Owen, 

approved  in  In  re  Norton,  98   Fed.  4  Blackf.    (Ind.)    337;   30  Am.  Dec. 

606.)  662. 

1  Rex  V.  Wigston,  3  B.  &  C.  484.  s  Whitmore  v.  Whitcomb.  43  Me. 

2  Walter  v.  Everard  (1891),  2  Q.  458;  Harper  v.  Gilbert,  5  Cush. 
B.  369;  Pardey  v.  American  Ship  (Mass.)  417;  Fisher  v.  Lunger,  33 
Windlass  Co.,  20  R.  I.  147;  78  Am.  N.  J.  L.  100;  State  v.  ReufT,  29  W. 
St.  Rep.  844;  37  Atl.  706.  Va.  751;  6  Am.  St.  Rep.  676;   2  S. 

3  Rex  V.  Arundel,  5  M.  &  S.  257;  E.  801. 

Rex  V.  Wigston,  3  B.  &   C.  484;   5  6  Corn  v.  Matthews    (1893),   1   Q. 

Dowl.    &    R.    339;    Cooper    v.    Sim-  B.  310. 

mons,  7  Ex.   707;   7  H.  &  N.  707;  7  Green  v.  Thompson  (1899),  2  Q. 

Bratzman     v.     Bunnell,     5     Whart.  B.  1. 
(Pa.)    128;   34  Am.  Dec.  537;   Par- 


1336 


PAGE    0]Sr    CONTBACTS. 


preutice  for  damages  for  breach  of  his  covenants,^  or  for  de- 
ferred premiums.''  Under  other  statutes  no  such  action  can  be 
maintained  against  an  infant  who  pleads  infancy/"  If  the  in- 
fant does  not  sign  the  articles  of  apprenticeship  it  is  void  as  to 
him." 

§864.     Valid  contracts. —  Performance  of  legal  duty. 

If  a  liability  is  imposed  upon  an  infant  by  Common  Law, 
equity  or  statute,  a  fair  and  reasonable  contract  entered  into 
for  the  purpose  of  discharging  the  liability  is  valid.^  Thus, 
if  an  infant  holds  the  legal  title  to  property  in  trust  and  agrees 
to  and  does  execute  the  trust  he  cannot  thereafter  avoid  such 
executed  agreement.^  So  where  a  mortgage  debt  is  discharged, 
an  infant  mortgagee  is  bound  by  his  release  f  and  an  infant  to 
whom  the  legal  title  is  conveyed  in  order  to  defraud  his  father's 
creditors  is  bound  by  his  conveyance  at  his  father's  direction,* 
especially  where  he  conveys  for  the  benefit  of  the  defrauded 
creditors.^     So  an  infant  who  by  agreement  with  the  executor 


8  Woodruff  V.  Logan,  6  Ark.  276 ; 
42  Am.  Dec.  695. 

9  Walter  v.  Everard  (1891),  2  Q. 
B.  .369.  This  ease  distinguishes  Gyl- 
bert  V.  Fletcher,  Crc,  Car.  179,  on 
the  ground  that  in  the  latter  ease 
ample  remedies  for  enforcing  good 
behavior  existed  in  the  master's 
right  of  punishment,  or  if  appealing 
to  a  justice  of  the  peace;  reasons 
which  "  do  not  apply  to  a  covenant 
by  an  infant  to  pay  a  premium." 

loGylbert  v.  Fletcher,  Cro.  Car. 
179;  Lylly's  Case,  7  Mod.  15; 
Moses  V.  Stevens,  2  Pick.  (Mass.) 
332.  Ordinary  contracts  for  work 
and  labor  present  different  questions 
from  contracts  of  apprenticeship 
■which  involve  instruction,  and  are 
separately  discussed. 

11  Anderson  v.  Young,  54  S.  Car. 
388 ;  44  L.  R.  A.  277 ;  32  S.  E.  448. 

1  Elliott  v.  Horn,  10  Ala.  348:  44 
Am.  Dec.  488 ;  Xordholt  v.  Xordholt, 


87  Cal.  .552;  22  Am.  St.  Rep.  268; 
26  Pac.  599;  Stowers  v.  Hollis,  83 
Ky.  544;  Starr  v.  Wright,  20  O.  S. 
97;  Williams  v.  Ivory,  173  Pa.  St. 
536;  34  Atl.  291;  Kearby  v.  Hop- 
kins. 14  Tex.  Civ.  App.  166;  36  S. 
W.  506. 

2  Elliott  v.  Horn,  10  Ala.  .348;  44 
Am.  Dec.  488 ;  Xordholt  v.  Xordholt, 
87  Cal.  552;  22  Am.  St.  Rep.  268; 
26  Pac.  599 ;  Prouty  v.  Edgar,  6  la. 
353  (where  the  minor  conveyed  the 
legal  title )  ;  Bridges  v.  Bidwell,  20 
Xeb.  185;  29  X.  W.  302  (where  the 
minor  mortgaged  the  legal  title)  ; 
Trader  v.  Jarvis.  23  W.  Va.  100 
(where  the  minor  assigned  his  in- 
terest in  an  indemnity  bond  on  being 
protected  against  loss ) . 

3  ^ouch  v.  Parsons.  3  Burr.  1794. 

4  Elliott  v.  Horn,  10  Ala.  .348;  44 
Am.  Dec.  488. 

5  Starr  v.  Wright,  20  0.  S.  97. 


CONTBACTS    OF    INFANTS. 


1337 


buys  land  in  his  own  name  at  the  executor's  sale  and  at  once 
conveys  it  to  the  executor,  cannot  afterward  avoid  such  convey- 
ance.*' Since  an  infant  as  well  as  an  adult  is  subject  to  Criminal 
Law,  it  follows  that  bonds  and  other  undertakings  entered  into 
pursuant  to  such  laws  are  valid.  Of  this  class  are  recognizances,' 
bonds  to  pay  fines,®  and  assignments  to  avoid  arrest."  Thus  a 
minor  who  had  fraudulently  obtained .  goods  by  representing 
himself  to  be  of  full  age,  and  who  was  lawfully  arrested  therefor 
on  a  civil  suit,  which  arrest  he  avoided  by  making  an  assignment 
under  the  statute,  cannot  avoid  such  assignment.^*'  Further  an 
infant  is  subject  to  the  statutes  concerning  bastardy  as  well  as 
an  adult;  and  therefore  his  undertakings  under  such  statutes 
such  as  bonds  to  the  public,  to  support  the  child,^^  or  agreements 
with  the  mother,  by  way  of  compromise,  for  its  support.^^  Other 
examples  of  valid  contracts  are  dissolving  bonds  or  re-delivery 
bonds,  given  by  an  infant  to  obtain  possession  of  his  property 
previously  attached,  or  the  proceeds  thereof.^''  So  agreements 
for  the  discharge  of  valid  liens  are  binding.^*  So  a  male  infant 
who  marries  is  bound  at  Common  Law  for  his  wife's  ante-nuptial 
debts.^^ 


6  Sheldon's  Lessee  v.  Newton,  3  O. 
S.  494. 

7  State  V.  Weatherwax,  12  Kan. 
463;  McCall  v.  Parker,  13  Met. 
(Mass.)   372;  46  Am.  Dee.  735. 

8  Dial  V.  Wood,  9  Baxt.  (Tenn.) 
296. 

9  People  V.  Mullin,  25  Wend.  (N. 
Y.)  698;  Williams  v.  Ivory,  173  Pa. 
St.  536;   34  Atl.  291. 

10  Williams  v.  Ivory,  173  Pa.  St. 
536;  34  Atl.  291,  in  which  ease  the 
court  said,  citing  and  quoting  Peo- 
ple V.  Mullin.  25  Wend.  (N.  Y.)  698, 
"  an  infant  as  well  as  an  adult  was 
entitled  to  the  benefit  of  the  act 
which  is  general  in  its  terms,  viz., 
*  every  person  may  at  any  time  pe- 
tition,' etc.  Besides  the  relief  from 
imprisonment  being  so  highly  bene- 
ficial to  the  petitioner  his  act  in 
making  an  assignment  must  in  law 


be  regarded  as  valid  notwithstanding 
his  nonage." 

11  Bordentown  v.  Wallace,  50  N. 
J.  L.  13;  11  Atl.  267;  People  v. 
Moores,  4  Denio  (N.  Y.)  518;  47 
Am.  Dec.  272. 

12  Gavin  v.  Burton,  8  Ind.  69; 
Stowers  v.  Hollis,  83  Ky.  544. 

13  Sanger  v.  Hibbard,  2  Ind.  Ter. 
547 ;  53  S.  W.  300. 

14  Where  there  was  a  mortgage 
on  land  given  to  a  minor  by  her 
father,  and  subsequently  the  father 
agreed  with  the  mortgagee  for  an 
extension  of  time,  the  minor  not  ob- 
jecting and  the  mortgage  was  then 
assigned,  it  was  held  that  the  as- 
signee had  a  valid  lien.  Kearby  v. 
Hopkins.  14  Tex.  Civ.  App.  166;  36 
S.  W.  506. 

15  Butler  v.  Breck,  7  Met.  (Mass.) 
164;    39    Am.    Dec.    768;    Roach    v. 


1338  PAGE    ON    CONTRACTS. 

§865.     Valid  contracts. —  Necessaries. —  Nature  of  liability. 

In  some  cases  the  courts  have  said  that  an  infant's  contract 
for  necessaries  is  absolutely  valid  and  binding;^  and  in  others, 
they  have  gone  to  the  opposite  extreme  and  held  that  an  infant 
could  not  be  held  on  his  contract  for  necessaries  at  all,  but  only 
on  his  legal  liability  to  pay  for  them.^  Both  of  these  forms  of 
expression  are  largely  obiter  and  the  true  rule  which  is  sup- 
ported by  the  great  "weight  of  authority  is  that  an  infant's  con- 
tract for  necessaries  received  by  him  may  be  the  foundation 
of  an  action  but  that  it  differs  from  a  valid  contract  of  the  ordi- 
nary type  in  that  only  the  reasonable  value  of  the  necessaries 
furnished  and  not  the  price  contracted  for,  may  be  recovered.^ 
Thus,  an  agreement  by  a  minor  employee  that  his  employer  shall 
pay  all  his  wages  to  dealers  who  supplied  the  family  with  which 
such  minor  boarded,  is  enforceable  only  to  the  extent  of  a  rea- 
sonable support  for  such  minor ;  and  he  can  recover  the  excess 
of  his  wages  above  such  support.*  Thus,  while  a  minor  may  re- 
pudiate a  contract  with  his  attorneys  to  pay  half  the  sum  re- 
Quick,  9  Wend.  (N.  Y.)  238;  Cole  v.  541;  Epperson  v.  Nugent,  57  Miss. 
Seeley,  25  Vt.  220;  60  Am.  Dec.  258.      45;    34    Am.    Rep.    434;    Locke    v. 

1  Fridge  v.  State,  3  Gill  &  J.  Smith,  41  N.  H.  346;  Pardey  v. 
(Md.)    103;   20  Am.  Dec.  463,  Windlass  Co.,  20  R.  I.  147;  78  Am. 

2/n  re  Soltykoff  (1891)  1  Q.  B.  St.  Rep.  844;  37  Atl.  706;  Genereux 
413;  Bliss  v.  Periyman,  1  Scam.  v.  Sibley,  18  R.  I.  43;  25  Atl.  345; 
(2  111.)  484;  Ayers  v.  Burns,  87  Rainwater  v.  Durham,*  2  Nott.  «fc 
Ind.  245;  44  Am.  Rep.  759;  Beeler  McC.  (S.  C.)  524;  10  Am.  Dec. 
V.  Young,  1  Bibb.  (Ky.)  519.  637;    Askey   v.    Williams,    74    Tex. 

3  Walter  v.  Everard  (1891),  2  Q.  294;  5  L.  R.  A.  176;  11  S.  W.  1101; 
B.  369;  Barnes  v.  Barnes,  50  Conn.  Smith  v.  Crohn  (Tex.  Civ.  App.), 
572;  Burton  v.  Willin,  6  Houst.  37  S.  W.  469.  "An  infant  may 
(Del.)  522;  22  Am.  St.  Rep.  363;  make  an  express  written  contract 
Hunt  V.  Thompson,  4  111.  179;  36  for  necessaries  upon  which  he  may 
Am.  Dec.  538;  Price  v.  Sanders,  60  be  sued,  but  ...  by  showing 
Ind.  310;  Kilgore  v.  Rich,  83  Me.  the  price  agreed  to  be  paid  was  un- 
305;  23  Am.  St.  Rep.  780;  12  L.  R.  reasonable,  he  can  reduce  the  recov- 
A.  859;  22  Atl.  176;  Trainer  v.  ery  to  a  just  compensation  for  the 
Trumbull.  141  Mass.  527 ;  6  N.  E.  necessaries  received  by  him."  Askey 
761;  Earle  v.  Reed,  10  Met.  (Mass.)  v.  Williams,  74  Tex.  294.  297;  5  L. 
387;  Stone  v.  Dennison,  13  Pick.  R.  A.  176;  11  S.  W.  1101. 
(Mass.)   1;  23  Am.  Dec.  654;  Welch  *  Genereux  v.  Sibley,  18  R.  I.  43; 

V.  Olmstead,  90  Mich.  492;  51  N.  W.      25  Atl.  345. 


CONTRACTS  OF  INFANTS.  1339 

covered,  he  cannot  refuse  a  reasonable  compensation.^  The  right 
of  a  minor  to  refuse  to  pay  an  unreasonable  contract  price  is 
especially  true  where  an  unfair  advantage  was  taken  of  him  by 
false  repreieiitations  as  to  the  value  of  the  goods.^  The  liability 
of  the  minor,  furthermore  "  does  not  seem  to  arise  out  of  a 
contract  in  the  legal  sense  of  that  term,  but  out  of  a  transaction 
of  a  quasi-contractual  nature ;  for  it  may  be  imposed  upon  an 
infant  too  young  to  understand  the  nature  of  a  contract  at  all  ;"^ 
and  accordingly  an  infant  may  be  held  for  necessaries  in  the  ab- 
sence of  any  express  contract.®  As  a  corollary,  it  follows  that  an 
executory  contract  for  necessaries  —  that  is  for  necessaries  not 
yet  received  by  the  infant  —  has  none  of  the  peculiarities  of  an 
executed  contract  for  necessaries,  but  is  voidable  like  the  ordi- 
nary contract  of  an  infant.^  The  liability  of  an  infant  for 
necessaries  is  one  created  by  the  law  for  the  good  of  the  infant ; 
since  if  he  could  not  bind  himself  in  any  way  for  necessaries,  a 
minor  though  owning  property  would  be  left  to  the  charities  of 
those  who  would,  in  reliance  solely  on  his  honor,  provide  him 
with  the  means  of  living.^" 

5  Hanlon    v.    Wheeler    (Tex.    Civ.  of  a  lunatic."     Trainer  v.  Trurabull, 
App.),  45  S.  W.  821   (provided  their  141  Mass.  527,  530;  6  N.  E.  761. 
services  are  necessaries,  or  are  bene-  9  Gregory  v.  Lee,   64   Conn.  407; 
ficial).  25  L.  R.  A.  618;  30  Atl.  53.     In  this 

See  §  867.  case  an  infant  while  attending  col- 

6  Welch  V.  Olmstead,  90  Mich.  lege  hired  a  room  for  ten  months. 
492;  51  N.  W.  541.  He  occupied  it  for  four  months  and 

7  Gregory  v,  Lee,  64  Conn.  407;  then  left,  after  paying  rent  in  full 
25  L.  R.  A.  618;  30  Atl.  53;  Trainer  to  the  time  of  leaving.  It  was  held 
V.  Trumbull,  141  Mass.  527;  6  N.  E.  that  he  was  not  liable  for  the  rent 
761;  Epperson  v.  Nugent,  57  Miss,  beyond  the  time  that  he  occupied  the 
45 ;  34  Am.  Rep.  434 ;  Gay  v.  Bal-  room.  So  of  a  lease  of  a  house  by  a 
lou,  4  Wend.  (N.  Y.)  403;  21  Am.  married  infant;  Peck  v.  Cain,  27 
Dee.  158;  Hyman  v.  Cain,  3  Jones  Tex.  Civ.  App.  38;  63  S.  W.  177. 
(N.  C.)   111.  In  Pool  v.  Pratt,  1  Chip.   (Vt.)   252, 

8 "  The  question  whether  or  not  254,  the  court  said,  "  if  he  contract 
the  infant  made  an  express  promise  to  purchase  articles  ever  so  neces- 
to  pay  is  not  important.  He  is  sary,  he  is  not  holden  by  his  con- 
held  on  a  promise  implied  by  law,  tract  to  receive  and  pay  for  the  arti- 
and   not,    strictly  speaking,   on   his  cles." 

actual  promise.     The  law  implies  a  lo  Trainer  v.  Trumbull,  141  Mass. 

promise  to  pay,  from  the  necessities  527:  6  N.  E.  761;  Squier  v.  Hydlifl, 

of  his  situation;  just  as  in  the  case  9  Mich.  274.     "The  liability  of  an 


1340  PAGE    ON    CONTRACTS. 

§866.     What  are  necessaries. 

Whether  the  goods  furnished  to  the  infant  may  be  necessaries, 
and  whether  there  is  any  evidence-  tending  to  show  that  the 
goods  were  necessaries,  is  a  question  for  the  court  to  decide,  and 
is  usually  treated  as  a  question  of  law ;  whether  under  the  cir- 
cumstances of  each  particular  case,  the  goods  furnished  were 
necessaries  is  a  question  of  fact,  and  in  jury  cases  is  to  be  de- 
cided by  the  jury  under  x)roper  instructions  from  the  court.^ 
Therefore  precedents  cannot  be  followed  rigidly,  but  full  regard 
must  be  paid  to  the  attending  circumstances  of  the  case  under 
discussion,  and  of  the  case  relied  upon  as  a  precedent.  The  gen- 
eral rule  as  to  what  may  be  necessaries  is  that  they  are  "  those 
things  that  are  conducive  and  fairly  proper  for  his  comfortable 
support  and  education  according  to  his  fortune  and  rank.  So 
that  what  would  be  considered  necessary  in  one  case  would  not 
be  so  regarded  in  another.  The  rule  is  entirely  relative  in  its 
operation."^  While  not  a  definite  and  exact  rule,  it  cannot 
safely  be  stated  more  exactly,  and  has  been  repeated  often.^  It 
follows  that  the  infant's  station  in  life  must  be  regarded  in  de- 
termining what  are  necessaries.* 

infant   for   necessaries    is   based    on  40  Am.  Dec.  542;   Grace  v.  Hale,  2 

the   necessity   of   his   situation.     As  Humph.    (Tenn.)    27;    36   Am.  Dee. 

he  must  live,  the  law  allows  to  any-  296. 

one  supplying  his  wants  a  reasonable  -  Rivers  v.  Gregg,  5  Rich.  Eq.   ( S. 

compensation.     The  law  implies  the  C.)   274,  278. 

promise  to  pay  from  the  necessity  of  3  Hanas    v.    Slaney     8    Term.    R. 

his  situation."     Epperson  v.  Nugent,  578 ;    Braj-shaw   v.    Eaton,    7    Scott 

57  Miss.  45,  47;  34  Am.  Rep.  434.  183;  5  Ring.   (N.  C.)   231;  Peters  v. 

1  Peters  v.   Fleming,   6  M.   &   W.  Fleming,  6  Mees.  &  W.  43;   Smith- 

43 ;  Ryder  v.  Wombell,  L.  R.  4  Ex.  peters  v.  Griffin's  Admr.,  10  B.  Mon. 

32;  McKanna  v.  Merry,  61  HI.  177;  (Ky.)   259;  Tupper  v.  Caldwell    12 

Garr  V.  Haskett,  86  Ind.  373;  Davis  Met.     (Mass.)     559;    46    Am.    Dec. 

V.  Caldwell,  12  Cush.    (Mass.)    512;  704;   Epperson  v.  Nugent,   57  Miss. 

Tupper  V.  Caldwell,  12  Met.  (Mass.)  45;  34  Am.  Rep.  434. 
559;    46    Am.    Dee.    704;    Decell   v.  *  Hanas  v.   Slaney,   8   T.   R.   578; 

Lewenthal,   57    Miss.    331;    34   Am.  Strong    v.    Foote,    42     Conn.    203; 

Eep.  449;    Englebert  v.  Troxell,  40  Davis  v.  Caldwell,  12  Cush.   (Mass.) 

Neb.  195;  42  Am.  St.  Rep.  665;  26  512;    Rivers  v.   Gregg,  5   Rich.   Eq, 

L.  R.  A.  177 ;  58  N.  W.  852 ;  Jordan  ( S.    C. )     274 ;    Middlebury    College 

V.   Coffield,   70  N.   C.   110;   Johnson  v.  Chandler,  16  Vt.  683;  42  Am.  Dec. 

V.  Lines,  6  Watts  &  S.    (Pa.)    80;  537. 


CONTRACTS    OF    INFANTS. 


1341 


§867.    Examples  of  necessaries. 

Lord  Coke  said,  in  a  rule  much  quoted  since,  "  an  infant  may 
bind  himself  to  pay  for  his  necessary  meat,  drink,  apparel,  neces- 
sary pliysick,  and  such  other  necessaries,  and  likewise  for  his 
good  teaching  or  instruction  whereby  he  may  profit  himself 
afterwards."^  Much  of  the  subsequent  law  of  necessaries  is 
merely  an  amf)lification  of  this  short  rule.  Thus  food,"  lodging,^ 
suitable  clothing,*  medical  attendance,^  and.  nursing  in  time  of 
sickness,*^  and  services  rendered  by  a  dentist,'^  may  all  be  neces- 
saries. A  trade  education,®  and  a  common  school  education,^ 
have  been  held  to  be  necessaries;  but  not  a  collegiate,^*'  or  a 
professional  education.^^  The  propriety  of  denying  that  a  col- 
legiate or  a  professional  education  may  be  a  necessary  for  one 
not  possessed  of  wealth,  considerable  social  standing,  or  marked 
ability,  is  very  doubtful  in  this  country.  It  places  preparation 
for  teaching  or  for  other  learned  professions  on  a  less  favored 
footing  than  preparation  for  a  trade  or  for  business  life.    In  this 


1  Co.  Litt.  172a. 

2  Barnes  v.  Barnes,  50  Conn.  572; 
Price  V.  Sanders,  60  Ind.  310;  Kil- 
gore  V.  Rich,  83  Me.  305;  23  Am. 
St.  Rep.  780;  12  L.  R.  A.  859;  22 
Atl.  176;  Trainer  v.  Trumbull,  141 
Mass.  527;  6  N.  E.  761;  Stone  v. 
Dennison,  13  Pick.  (Mass.)  1;  23 
Am.  Dec.  654;  Saunders  v.  Ott,  1 
McCord.  (S.  C.)  572;  Rivers  v. 
Gregg,  5  Rich.  Eq.  (S.  C.)  274; 
Bradley  v.  Pratt,  23  Vt.  378. 

3  Gregory  v.  Lee,  64  Conn.  407 ; 
25  L.  R.  A.  618;  30  Atl.  53;  Price 
V.  Sanders,  60  Ind.  310;  Kilgore  v. 
Rich,  83  Me.  305;  23  Am.  St.  Rep. 
780;  12  L.  R.  A.  859;  22  Atl.  176; 
Trainer  v.  Trumbull,  141  Mass.  527; 
6  N,  E.  761;  Rivers  v.  Gregg,  5 
Rich.  Eq.   (S.  C.)   274. 

4  Price  V.  Sanders,  60  Ind.  310; 
Stone  V.  Denison.  13  Pick.  (Mass.) 
1 ;  23  Am.  Dec.  654 ;  Lynch  v.  John- 
son, 109  Mich.  640;   67  N.  W,  908; 


Saunders  v,  Ott,  1  McCord.  (S. 
C.)  572;  Rivers  v.  Gregg,  5  Rich. 
Eq.   (S.  C.)  274. 

5  Price  V.  Sanders,  60  Ind.  310; 
Saunders  v.  Ott,  1  McCord.  (S. 
C.)  572. 

6  Werner's  Appeal,  91  Pa.  St.  222. 

7  Strong  V,  Foote,  42  Conn.  203. 

8  Walter  v.  Everard  (1891),  2  Q. 
B.  369;  Pardey  v.  American  Ship- 
Windlass  Co.,  20  R.  L  147;  78  Am. 
St.  Rep.  844;  37  Atl.  706. 

9  Peters  v.  Fleming.  6  Mees.  &  W. 
42;  Saunders  v.  Ott,  1  McCord.  (S. 
C.)  572;  Rivers  v.  Gregg,  5  Rich. 
Eq.  (S.  C.)  274.  See  the  obiter 
to  this  effect  in  Middlebury  College 
V.  Chandler,  16  Vt.  683;  42  Am. 
Dec.  537. 

10  Middlebury  College  v.  Chandler, 
16  Vt.  683;  42  Am.  Dec.  537. 

11  Turner  v.  Gaither.  83  N.  C. 
357;  35  Am.  Rep.  574;  Bouchell  v. 
Clary,  3  Brev.  (S.  C.)  194. 


1342  PAGE    ON    CONTEACTS. 

country,  at  least,  all  honest  occupations  should  be  equally  honor- 
able and  equally  favored  by  the  law.  Attorney's  services  ren- 
dered in  defending  an  infant  in  a  criminal  action,^^  or  in  a 
bastardy  suit,  where  imprisonment  may  result,"  or  in  any  pro- 
ceeding involving  personal  liberty,^*  or  in  bringing  suit  for  a 
female  infant  for  an  indecent  assault,^^  are  necessaries.  So,  in 
an  extreme  case,  are  legal  services  in  prosecuting  a  suit  for 
breach  of  promise,  where  seduction  was  an  aggravation  of 
damages/®  But  attorney's  fees  in  defending  a  foreclosure  suit," 
or  in  searching  records  and  advising  the  infant  of  his  rights,^* 
or  in  recovering  land,^^  are  not  necessaries,  the  law  preferring 
to  compel  parties  to  contract  with  the  infant's  guardian  in  mat- 
ters pertaining  to  his  property.  Contrary  to  the  views  just 
expressed,  and  in  accordance  with  a  principle  hereafter  dis- 
cussed,'"  it  has  been  held  that  any  beneficial  legal  services  which 
result  in  advantage  to  the  infant's  estate,  are  necessaries.^^ 
Kecognizances,^"  and  other  contracts  to  procure  release  from  law- 
ful imprisonment^^  are  treated  as  necessaries.  Since  the  law 
discourages  an  infant  from  incurring  business  debts,  purchases 

izAskey  V.  Williams,  74  Tex.  294;  a  contract  by  an  infant  to  pay  her 

5  L.  R.  A.  176;  11  S.  W.  1101.  attorney  half  the  amount  recovered 

13  Barker  v.  Hibbard,  54  N.  H.  for  her  in  a  breach  of  promise  suit 
539;  20  Am.  Rep.  IGO.  was  not  enforceable  beyond  a  reason- 

14  McCrillis  v.  Bartlett,   8   N,   H.  able  fee. 

569.  1^  Englebert  v.  Troxwell,  40  Neb. 

15  Crafts  V.  Carr.  24  R.  I.  397;  195;  42  Am.  St.  Rep.  665;  26  L.  R. 
96  Am.  St.  Rep.  721;  60  L.  R.  A.  A.  177;  58  N.  W.  852,  including  ser- 
128;  53  Atl.  275.     (The  action  hav-  vices  as  guardian  ad  litem. 

ing  resulted  successfully.)  isCobbey   v.    Buchanan,    48    Neb. 

16  Munson  v.  Washband,  31  Conn.      391 ;  67  N.  W.  176. 

303;  83  Am.  Dec.  151.     In  this  case  i9  Phelps  v.  Worcester,  11  N.  H. 

the  minor  was  pregnant  and  desti-  51. 

tute.        Her      attorney       instituted  20  See   §   891. 

breach  of  promise  proceedings,  which  21  Epperson  v.   Nugent,    57   Miss. 

were  compromised  by  her  marriage  45;    34    Am.    Rep.    434;    Searcy    v. 

with    the   defendant.     The   attorney  Himter,   81   Tex.   644;    26   Am.   St. 

then  brought   suit  against  her   and  Rep.  837;  17  S.  W.  372. 

her  husband  for  reasonable  attorney  22  State  v.  Weatherwax,  12  Kan. 

fees.         It  was   held   that  he   could  463. 

recover.     In  Petrie  v.  Williams,  68  23  Buckinghamshire    v.    Drurv.    2 

Hun    (N.  Y.)    589,  it  was  held  that  Eden.  60;  Clark  v.  Leslie,  5  Esp.  28. 


CONTEACTS    OF    INFANTS. 


1343 


for  purposes  of  business  such  as  a  barber  shop  and  furnishings/* 
a  horse,"^  or  food  for  horses,^*^  or  a  wagon  to  be  used  in  farm- 
ing,"^ or  supplies  for  a  plantation,"^  are  not  necessaries.  Articles 
purchased  for  business  are,  however,  necessaries  as  far  as  actual- 
ly applied  to  the  support  of  the  minor.-''  So,  as  his  property  is 
best  managed  by  his  guardian,  an  infant's  contracts  for  the 
preservation  of  his  property,  as  for  repairs,^"  even  if  required 
to  preserve  a  dwelling  house,^^  though  occupied  by  the  infant,^^ 
are  not  necessaries ;  nor  are  materials  for  the  construction  of  a 
house,^^  nor  fire  insurance.^*  But  while  material  used  in  erect- 
ing improvements  upon  an  infant's  realty  is  not  looked  upon  at 
Common  Law  as  a  necessary,  equity  will  subrogate  the  party  who 
makes  the  improvements  to  the  increased  value  of  the  premises 
due  to  such  improvement,^^  or  to  the  increase  in  the  rental  value 


24j?yan  v.  Smith,  165  Mass.  303; 
43  N.  E.  109. 

25  House  V.  Alexander,  105  Ind. 
109;  55  Am.  Rep.  189;  4  N.  E.  891; 
Wood  V.  Losey,  50  Mich.  475;  15  N. 
W.  557;  Eainwater  v.  Durham,  2 
Nott.  &  McCord.  (S.  C.)  524;  10 
Am.  Dec.  637;  Grace  v.  Hale,  2 
Humph.  (Tenn.)  27;  36  Am.  Dec. 
296.  Contra,  Mohney  v.  Evans,  51 
Pa.  St.  80. 

26  Merriam  v.  Cunningham,  11 
Cush.  (Mass.)  40;  Mason  v.  Wright, 
13  Met.    (Mass.)    306. 

27  Paul  V.  Smith,  41  Mo.  App.  275. 
28Decell    V.    Lewenthal,    57    Miss. 

331 ;  34  Am.  Rep.  449. 

29  Turberville  v.  Whitehouse,  1 
Car.  &  P.  94;   12  Price  693. 

soTupper  v.  Caldwell,  12  Met. 
(Mass.)  559;  46  Am.  Dee.  704; 
Horstmeyer  v.  Connors,  56  Mo.  App. 
115;  Allen  v.  Lardner,  78  Hun  (N. 
Y.)  603;  Phillips  v.  Lloyd,  18  R.  I. 
99;  25  All.  909. 

siWallis  V.  Bardwell,  126  Mass. 
366;  Tupper  v.  Caldwell,  12  Met. 
(Mass.)  559;  46  Am.  Dec.  704. 


32  Horstmeyer  v.  Connors,  56  Mo. 
App.  115. 

33  Price  V.  Jennings,  62  Ind.  Ill; 
Price  V.  Sanders,  60  Ind.  310;  War- 
nock  V.  Loar  (Ky.),  11  S.  W.  43, 
88;  Freeman  v.  Bridger,  4  Jones  L. 
(N.  C.)  1;  67  Am.  Dec.  258;  Shu- 
mate V.  Harbin,  35  S.  C.  521;  15 
S.  E.  270.  If  the  improvement  is 
not  authorized  by  infants  who  have 
a  homestead  interest  only,  it  cannot 
be  charged  against  their  interest. 
Morris  v.  Mitchell  (Ky.),  39  S. 
W.  250.  Some  cases  seem  to  hold 
the  infant  liable  for  reasonable  re- 
pairs made  by  his  orders.  Chap- 
man v.  Hughes,  61  Miss.  339. 

34  New  Hampshire,  etc.,  Co.  v. 
Noyes,  32  N.  H.  345.  But  the  in- 
surer cannot  avoid  the  contract. 
Monaghan  v.  Ins.  Co.,  53  Mich.  238; 
18  N.  W.  797. 

35  In  McGreal  v.  Taylor,  167  U.  S. 
688,  money  was  loaned  to  pay  off 
prior  liens  and  to  erect  a  building. 
The  court  held  that  the  property 
should  be  sold  and  the  proceeds  ap- 
plied   ( 1 )    to   reimburse   the  lender 


1344 


PAGE    ON    CONTRACTS. 


due  thereto/^  Articles  which  are  used  as  a  means  of  diversion, 
such  as  a  horse  and  buggy  bought  by  a  clerk  and  not  shown  to 
be  used  in  his  business,"^  or  a  bicycle/^  as  where  bought  by  a 
female  servant/^  or  by  a  girl  of  seventeen/"  have  been  held  in 
each  case  not  to  be  necessaries.  But  where  the  use  of  bi- 
cycles was  common  among  persons  of  the  infant's  station  in 
life  in  the  surrounding  neighborhood,  it  was  held  not  error  to 
find  affirmatively  that  it  was  a  necessary.'*^  Life  insurance  is 
not  a  necessary.*"  Articles  which  are  mere  ornaments  or  luxur- 
ies, as  betting  books,*^  expensive  dinners,**  expensive  jewelry,*^ 
an  expensive  chronometer,*®  or  "  liquor,  pistols,  powder,  saddles. 


for  the  amounts  advanced  for  liens; 

(2)  to  pay  to  the  infant  the  value 
of  the  realty  less  the  amount  of  the 
liens  and  the  value  of  the  building; 

(3)  to  pay  to  the  lender  the  residue 
which  would  represent  the  present 
value  of  the  building.  This  modi- 
fied, Utermehle  v.  McGreal,  1  App. 
D.  C  359^  in  which  the  entire  loan 
was  ordered  repaid  first,  out  of  the 
proceeds  of  the  sale.  For  a  some- 
what similar  result,  though  with 
less  clear  reasoning,  see  Rundle  v. 
Spencer,  67  Mich.  189;  34  N.  W. 
548.  In  Langdon  v.  Clayson,  75 
Mich.  204;  42  N.  W.  805,  a  similar 
result  was  obtained,  where  the  minor 
had  bought  land,  subject  to  liens, 
and  afterwards  had  borrowed  money 
on  a  mortgage  and  thereby  dis- 
charged the  liens,  by  treating  the 
sale  of  the  land  by  the  minor  after 
majority  as  a  ratification  of  the  en- 
tire transaction,  including  the  mort- 
gage. 

3c  In  Shumate  v.  Harbin,  35  S. 
C.  521;  15  S.  E.  270,  the  party 
furnishing  materials  was,  however, 
subrogated  to  the  increased  rents 
due  to  the  improvement  to  be  ap- 
plied on  his  debt.  The  contract, 
further,  was  made  by  the  infant's 
guardian  by  nature. 


37  Rice  V.  Boyer,  108  Ind.  472;  58 
Am.  Rep.  53;  7  West.  68;  9  N.  E. 
420.  So  as  to  a  buggy,  Howard  v. 
Simpkins,  70  Ga.  322. 

38Gillis  V.  Goodwin,  180  Mass. 
140;  91  Am.  St.  Rep.  265;  61  N.  E. 
813. 

39Pyne  V.  Wood,  145  Mass.  558; 
14  N.  E.  775. . 

40  Rice  V.  Butler,  160  N.  Y.  578; 
73  Am.  St.  Rep.  703;  47  L.  R.  A. 
303 ;  55  N.  E.  275.  In  this  case  the 
court  of  appeals  assumed,  without 
expressly  deciding,  that  the  bicycle 
was  not  a  necessary. 

41  Clyde  Cycle  Co.  v.  Hargreaves 
(Q.  B.),  78  Law  T.  N.  S.  296.     In 

this  case  a  minor  earning  21  shill- 
ings a  week  bought  a  racing  bicycle 
for  £12  lOs.^  with  which  he  won 
some  racing  prizes  and  which  he 
used  on  the  road  somewhat.  A  road 
wheel  would  have  cost  a  little  more. 

42  Simpson  v.  Ins.  Co.,  184  Mass. 
348;  68  N.  E.  673. 

43  Jenner  v.  Walker,  19  L.  T.  398. 

44  Brooker  v.  Scott,  11  Mees.  &  W. 
67. 

45  Ryder  v.  Wombell,  L.  R.  4  Ex. 
32. 

46  Berolles  v.  Ramsey,  Holt  N.  P. 
77. 


CONTKACTS  OF  INFANTS.  13i5 

bridles,  whii^s,  fiddles,  fiddlestrings,  etc.,  amouiitiug  to 
$111.53^^^,"^^  are  not  necessaries.  In  general,  whatever  would 
be  necessaries  if  for  the  infant  himself,  are  necessaries  if  sup- 
plied to  his  wife  and  children  if  he  is  married,***  or  even  to  his 
illegitimate  children  if  he  is  not.*'' 

§868.     Effect  of  special  circumstances. 

The  examples  given  in  the  preceding  section  illustrate  prima 
facie  rules  only.  Special  circumstances  may  bring  within  the 
class  of  necessaries,  articles  which  ordinarily  do  not  belong  to  it. 
Thus  the  direction  of  a  physician  to  take  horse-back  exercise 
may  make  a  horse  a  necessary.^  Sickness  may  make  expensive 
fruits  necessary.^  Expensive  jewelry  may  be  necessary  as  an 
engagement  present  f  and  expensive  goods  furnished  at  a  wed- 
ding may  be  necessaries,  though  they  would  not  ordinarily  be 
so  classed.* 

§869.     Effect  of  excessive  supply  of  articles. 

To  allow  a  recovery  against  an  infant,  the  articles  furnished 
must  not  only  be  such  as  may  be  necessaries,  but  they  must  also 
be  in  fact  necessary  for  the  infant  under  the  actual  circum- 
stances. Accordingly  goods  which  would  be  necessaries  if  fur- 
nished in  reasonable  quantity,  may  be  furnished  in  such  excess 
as  not  to  be  necessaries,  at  least  as  to  the  excess  over  a  reason- 
able amount  f  while  if  the  infant  is  in  fact  furnished  with  the 
articles  sold,  the  vendor  cannot  recover  for  the  additional  sup- 
ply ks  for  necessaries."    The  better  view  of  the  infant's  liability 

47  Saunders    v.    Ott     (S.    C),     1  *3  Jenner  v.  Walker,   19  L.  T.  308. 

McCord  572.  *  Garr   v.    Haskett,    86   Ind.    373; 

48Cantine    v.    Phillips'    Admr.,    5  Sams  v.  Stockton,  14  B.  Mon.  (Ky.) 

Harr.    (Del.)   428;  Price  v.  Sanders,  232;  Jordan  v.  Coffield,  70  N.  C.  110. 

60  Ind.   310;    Chapman   v.   Hughes,  i  Johnson  v.  Lines,  6  Watts    &  S. 

61  Miss.  339.  (Pa.)    80;  40  Am.  Dec.  542. 

40  Stowers  v.  Hollis,  83  Ky.  544,  2  Bainbridge    v.    Pickering.    2    W. 

iHart  V.  Prater,  1  Jur.  623.  Bla.  1325;  Cook  v.  Deaton,  3  Car.  & 

2  Wharton  v.  Mackenzie,   5   Q.   B.  P.  114;  Barnes  v.  Toye,  L.  R.    13  Q. 

606.  B.  D.  410;   McKanna  v.  Merry,  61 

85 


1346 


PAGE    ON    CONTKACTS. 


in  the  latter  case  is  that  it  depends  upon  the  fact  that  he  is  not 
supplied  with  the  articles  furnished;  and  not  upon  the  good 
faith  or  the  careful  inquiry  into  the  facts  made  by  the  party  sup- 
plying the  goods.^  While  it  is  sometimes  said  that  one  furnish- 
ing goods  to  an  infant  should  inquire  into  his  circumstances,* 
this  is  merely  good  business  advice  and  not  a  rule  of  law.  If  the 
goods  are  in  fact  necessaries  the  party  can  recover  without  show- 
ing any  previous  inquiry  f  while  if  they  are  not  necessaries,  no 
amount  of  careful  inquiry  will  aid  the  vendor  in  recovering, 
for  necessaries.  If  the  infant  is  supplied  with  sufficient  money 
for  necessaries,  but  instead  purchases  on  credit,  the  vendor  can- 
not recover  as  for  necessaries.^ 


111.  177;  Angel  v.  McLellan,  16 
Mass.  28;  8  Am.  Dec.  118;  Swift  v. 
Bennett,  10  Cush.  (Mass.)  436j 
Davis  V.  Caldwell,  12  Cush.  (Mass.) 
512;  Hoyt  v.  Casey,  114  Mass.  397; 
19  Am.  Rep.  371;  Decell  v.  Lewen- 
thal,  57  Miss.  331;  34  Am.  Rep. 
449;  Kline  v.  L'Amoureux,  2  Paige 
(N.  Y.)  419;  22  Am.  Dec.  652; 
Guthrie  v.  Murphy,  4  Watts  (Pa.) 
80;  28  Am.  Dec.  681;  Elrod  v.  My- 
ers, 2  Head.  (Tenn.)  33;  Nichol  v. 
Steger,  2  Tenn.  Ch.  328,  affirmed,  6 
Lea  393.  "  If  a  tradesman  trusts 
an  infant  he  does  it  at  his  peril  and 
he  cannot  recover  if  it  turns  out  that 
the  party  has  been  properly  supplied 
by  his  friends,"  per  Tenterden,  C.  J., 
in  Story  v.  Perry,  4  C.  &  P.  526, 
527;  19  E.  C.  L.  508. 

3  Story  V.  Perry,  4  Car.  &  P.  526 ; 
Barnes  v.  Toye,  L.  R.  13  Q.  B.  D. 
410;  McKanna  v.  Merry.  61  111.  180; 
Hoyt  V.  Casey,  114  Mass.  397;  19 
Am.  Rep.  371;  Perrin  v.  Wilson,  10 
Mo.  451. 

4  "The  plaintiff  ought  to  have 
made  inquiry."  Cook  v.  Deaton.  3  C. 
&  P.  114;  14  E.  C.  L.  232. 


sDalton  v.  Gibb,  7  Scott  117;  5 
Bing.  N.  C.  198.  It  has  been  said, 
"  whether  inquiry  were  made  or  not, 
the  question  for  the  jury  would  still 
be  the  same,"  Brayshaw  v.  Eaton, 
7  Scott  183,  186;  5  Bing.  N.  C.  231. 
In  a  ease  of  a  husband's  liability  for 
goods  furnished  to  his  wife,  the 
court,  in  discussing  the  necessity  of 
inquiry,  said :  "  The  report  states 
that  the  plaintiffs  had  no  knowledge 
of  the  circumstances  of  the  husband 
or  the  necessities  of  the  wife.  That 
is  immaterial.  The  burden  of  proof 
is  upon  them  to  show  facts  which 
create  the  defendant's  liability.  If 
they  sold  goods  upon  his  credit  with- 
out his  express  authority,  they  took 
the  risk  of  being  able  to  prove  an 
authority  by  implication  of  law." 
Eames  v.  Sweetser,  101  Mass.  78, 
80. 

6  Nicholson  v.  Wilborn,  13  Ga. 
467;  Nicholson  v.  Spencer.  11  Ga. 
607;  Brent  v.  Williams,  79  Miss, 
355;  30  So.  713;  Rivers  v.  Gregg,  5 
Rich.  Eq.  (S.  C.)  274.  ,  Contra,  in 
England,  Burghart  v.  Hall,  4  Mees. 
&  W.  727. 


CONTKACTS  OF  INFANTS.  1347 

§870.    Effect  of  existence  of  parent  or  guardian. 

The  existence  of  a  parent  or  guardian  complicates  the  liability 
of  the  infant  for  necessaries.  If  credit  is  extended  to  the  parent, 
the  infant  cannot  afterwards  be  held  liable.^  If  the  parent  or 
guardian  actually  supplies  the  infant  with  necessaries,  addi- 
tional goods  are  not  necessaries."  Where  the  infant  lives  with 
his  parents,  there  is  a  'prima  facie  presumption  that  he  is  sup 
plied  with  necessaries.^  "It  seems  to  be  generally  held  that  a 
minor  living  with  his  parents,  who  is  actually  in  want  by  reason 
of  their  inability  to  supply  his  needs,  may  be  held  liable  for 
necessaries  furnished.*  However,  it  has  been  held  that  where 
the  father  was  poor  and  unable  to  procure  medical  attendance, 
the  infant  was  not  liable  therefor  ;^  but  in  the  same  state,  where 
the  infant's  father  was  in  a  soldiers'  home,  his  mother  in  a  re- 
formatory and  he  himself  in  an  almshouse,  the  infant  is  liable  to 
one  who  furnishes  him  with  support  and  education.^  So  an 
infant  may  be  personally  liable  for  attorney's  fees  in  a  damage 
suit  for  an  indecent  assault,  as  it  is  not  the  parent's  duty  in  law 
to  pay  for  such  attorney's  services.'' 

§871.     Money  as  a  necessary. 

Money  expended  for  necessaries  for  an  infant,'^  or  advanced  to 

1  Thorp  V.  Connelly,  48  Mo.  App.  an  infant  under  the  care  and  con- 
59.  trol   of   a   parent  or  guardian,   able 

2  See  §  869.  and    willing    to    furnish    him    with 

3  Perrin  v.  Wilson,  10  Mo.  451 ;  necessaries  cannot  bind  himself 
State  V.  Cook,  12  Ired.  L.  (N.  C.)  therefor  without  the  consent  of  such 
67;  Freeman  v.  Bridger,  4  Jones  L.  parent  or  guardian. 

(N.  Car.);    67  Am.  Dec.  258;   Con-  s  Hoyt  v.  Casey.    114   Mass.   397; 

nolly   V.   Assignees   of   Hull,    3    Mc-  19   Am.   R.    371.     This   case   cannot 

Cord.    (S.  C.)    6;    15  Am.  Dec.  612.  be  reconciled  with  the  general  prim 

Contra,  that  such  presumption  does  ciples  of  this  doctrine, 
not  exist.  Parsons  v.  Keys,  43  Tex.  e  Trainer  v.  Trumbull,   141   Mass. 

557.  527;  6  N.  e.  761. 

4  See  preceding  note.  Goodman  v.  7  Crafts  v.  Carr,  24  R.  I.  397;  96 
Alexander,  165  N.  Y.  289;  55  L.  R.  Am.  St.  Rep.  721;  60  L.  R.  A.  128; 
A.  781;  59  N.  E.  145.     In  Kline  v.  53  Atl.  275. 

L'Amoreux,   2   Paige    (N.   Y.)    419;  i  Randall   v.   Sweet,    1   Denio    (IST. 

22  Am.  Dec.  652,  it  was  said  that      Y.)   460. 


1348  PAGE    ON    CONTRACTS. 

pay  off  a  pre-existing  debt  for  necessaries,"  is  itself  a  necessary. 
So  is  money  advanced  for  a  discharge  from  jail.^  Money,  itself, 
contrary  to  ordinary  experience  is  not  regarded  by  the  Common 
Law  as  a  necessary,  even  if  tlie  infant  actually  expends  it  for 
necessaries.^  The  reason  generally  given  for  this  absurd,  but 
well-settled  rule  is  that  the  liability  of  the  infant  is  fixed  at  the 
moment  of  the  loan ;  and  since  the  fund  is  not  a  necessary  or 
expended  for  necessaries  at  that  moment,  his  subsequent  invest- 
ment of  it  in  necessaries  does  not  increase  his  liability.  In 
equity,  however,  a  more  rational  rule  is  adopted,  and  the  party 
lending  the  money  is  subrogated  as  to  so  much  thereof  as  is  ex- 
pended by  the  infant  for  necessaries,  to  the  rights  of  the  party 
furnishing  the  same.^  A  loan  of  money  to  discharge  prior  valid 
liens  on  realty  owned  by  the  minor  is  not  a  necessary  at  law ;  that 
is,  no  personal  judgment  can  be  rendered  against  the  minor  for 
such  indebtedness  f  but  in  equity  the  lender  is  subrogated  to  the 
rights  of  the  holder  of  the  prior  valid  liens,  which  have  been 
paid  off  by  the  money  advanced.''  This  right  does  not  exist 
where  it  is  not  shown  that  the  lien  thus  discharged  was  valid 
as   to   the  infant.^     Money  loaned   to   an   infant  and  not  ex- 

2  Hedgeley  v.  Holt,  4  Car.  &  P.  the  request  of  the  guardian,  not  of 
104   (obiter  as  in  this  case  the  arti-      the  infant.) 

cles  were  not  necessaries);   Swift  v.  '^  MacGreal   v.   Taylor,    167   U.   S. 

Bennett,     10    Cush.     (Mass.)     436;  688;    Charles   v.   Hastedt,   51    N.   J. 

Kilgore  v.  Rich.  83  Me.  305;  23  Am.  Eq.  171;  26  Atl.  564;  Folts  v.  Fer- 

St.   Rep.  780;    12  L.  R.  A.   859;   22  guson,  77  Tex.  301;   13  S.  W.  1037. 

Atl.  176.  "  These   debts  having  been   paid  by 

3  In  ease  of  a  civil  claim,  at  least  Mrs.  U.,  the  appellees  are  entitled 
if  the  claim  is  for  necessaries,  Clark  in  equity  to  be  subrogated  to  the 
V.  Leslie,  5  Esp.  28.  rights  of  the  persons  who  held  them, 

*  Earle  v.  Peale.  1   Salk.  386;   10  and  who  were  about  to  foreclose  the 

Mod.  67;  Darly  v.  Boucher,  1   Salk.  liens  therefor  when   the  application 

279;  Price  v.  Sanders.  60  Ind.  310;  was  made  to  Mrs.  U.  for  the  loan  of 

Bent  v.  Manning.  10  Vt.  225.  $8,000  to  be  used  in  meeting  those 

5  Marlow   v.   Pitfield.    1    P.   Wms.  debts  and  improving  the  lot  in  ques- 

558;  ^Yatson  v.  Cross.  2  Dur.   (Ky.)  tion."     MacGreal  v.  Taylor,   167  U. 

147 ;    Hickman   v.   Hall's   Admrs.    5  S.    688.    701 ;    reversing   in   part   on 

Litt.   (Ky.)   338.  another    point,    Utermehle    v.    Mac- 

6Magee   v.    Welsh.    18    Cal.    155;  Greal,  1  App.  D.  C.  359. 

Bicknell  v.  Bicknell.  Ill  Mass.  265.  s  Thormaehlen      v.     Kaeppel,     «6 

(In  this  case  the  loan  was  made  at  Wis.  378;  56  N.  W.  1089. 


COJJJTEACTS    OF    INFANTS. 


1349 


ponded  by  him  for  necessaries  is,  of  course,  not  a  necessary.® 

§872.     Voidable  contracts. 

The  remaining  contracts  of  an  infant  are  neither  valid  nor 
void  but  are  voidable.^  This  implies  that  they  may  be  dis- 
affirmed or  ratified  by  the  infant ;  the  methods  and  legal  conse- 


9  Root  V.  Stevenson's  Admr.,  24 
Ind,  115;  Kennedy  v.  Doyle,  10  All. 
(Mass.)  161;  Turner  v.  Gaither,  83 
N.  C.  357;  35  Am.  Eep.  574. 

iMcGreal  v.  Taylor,  167  U.  S. 
688;  Shropshire  v.  Burns,  46  Ala. 
108;  Savage  v.  Lichlyter,  59  Ark. 
1;  26  S.  W.  12;  Barlow  v.  Robinson, 
174  111.  317;  51  N.  E.  1045;  Cole  v. 
Pennoyer,  14  111.  158;  Alvey  v. 
Reed,  115  Ind.  148;  7  Am.  St.  Rep. 
418;  17  N.  E.  265;  Phipps  v. 
Phipps,  39  Kan.  495;  18  Pac.  707; 
Breckinridge  v.  Ormsby,  1  J.  J. 
Mar.  (Ky.)  236;  19  Am.  Dec.  71; 
McDonald  v.  Sargent,  171  Mass. 
492;  51  N.  E.  17;  Dube  v.  Beaudry, 
150  Mass.  448;  15  Am.  St.  Rep. 
228;  6  L.  R.  A.  146;  23  N.  E.  222; 
Owen  V.  Long,  112  Mass.  403;  Reed 
V.  Batchelder,  1  Met.  (Mass.)  559; 
Whitney  v.  Dutch,  14  Mass.  457;  7 
Am.  Dec.  229 ;  Bloomingdale  v.  Chit- 
tenden, 74  Mich.  698;  42  N.  W. 
166;  Tyler  v.  Gallop,  68  Mich.  185; 
13  Am.  St.  Rep.  336;  35  N.  W.  902; 
Johnson  v.  Insurance  Co.,  56  Minn. 
365;  43  Am.  St.  Rep.  473;  26  L.  R. 
A.  187;  59  N.  W.  992;  57  N.  W. 
934;  Englebert  v.  Troxell.  40  Neb. 
195;  42  Am.  St.  Rep.  665;  26  L.  R. 
A.  177;  58  N.  W.  852;  Danville  v. 
Mfg.  Co.,  62  N.  H.  133;  Patterson 
V.  Lippincott,  47  N.  J.  L.  457;  54 
Am.  Rep.  178;  1  Atl.  506;  Willard 
V.  Stone,  7  Cow.  (N.  Y.)  22;  17 
Am.  Dec.  496;   Campbell  v.  Stokes, 


2  Wend.  (N.  Y.)  137;  19  Am.  Dec. 
561;  Fonda  v.  Van  Home,  15  Wend. 
(N.  Y.)  631;  30  Am.  Dec.  77;  Ear- 
ner v.  Dipple,  31  O.  S.  72;  27  Am. 
Rep.  496;  Rush  v.  Wick,  31  O.  S. 
521;  27  Am.  Rep.  523;  Dolph  v. 
Hand,  156  Pa.  St.  91;  36  Am.  St. 
Rep.  25;  27  Atl.  114;  Curtin  v.  Pat- 
ton,  11  Serg.  &  R.  (Pa.)  305;  Scott 
V.  Buchanan,  11  Humph.  (Tenn. ) 
468;  Bonner  v.  Bryant,  79  Tex.  540; 
23  Am.  St.  Rep.  361;  15  S.  W.  49; 
Cummings  v.  Powell,  8  Tex.  80; 
Patchin  v.  Cromach,  13  Vt.  330; 
Mustard  v.  Wohlford,  15  Gratt. 
(Va.)  329;  76  Am.  Dec.  209. 
"  i\Iany  text-writers  state  the  propo- 
sition that  the  contract  of  an  in- 
fant is  void,  but  upon  a  careful  ex- 
amination of  the  cases  cited  by  them 
we  are  of  the  opinion  that  they  do 
not  support  such  a  doctrine. 
To  hold  the  executory  contract  of  a 
minor  void  would  unsettle  the  law  in 
many  of  its  branches.  It  would  ne- 
cessitate the  holding  that  the  prom- 
ise of  a  minor  cannot  furnish  a  con- 
sideration for  the  promise  of  an 
adult,  and  the  latter's  promise 
would  be  void,  both  for  want  of  con- 
sideration and  for  lack  of  mutual- 
ity, whereas  the  contrary  is  the  set- 
tled law  based  upon  the  proposition 
that  the  infant's  contract  is  only 
voidable."  Brown  v.  Bank,  88  Tex. 
265,  274;  33  L.  R.  A.  359;  31  S.  W. 
285. 


1350 


PAGE    ON    CONTRACTS. 


quences  of  whicli  will  be  discussed  subsequently.^  By  the  great 
weight  of  authority  not  only  executory  contracts,^  but  also  con- 
tracts fully  performed  by  one  or  both  of  the  parties  thereto,* 
are  voidable.  So  an  infant's  assignment  of  an  insurance  policy 
is  voidable  only,  and  not  void.^  It  will  be  seen  from  the  spe- 
cial classes  of  contracts  hereafter  discussed  that  these  contracts 
are  voidable  even  if  advantageous  to  the  infant,®  as  where  he  sold 
the  goods,  purchased  by  him,  without  loss,''  or  profited  by  the 
services  of  an  attorney  in  defending  a  foreclosure  suit;^  or  if 
the  avoidance  of  such  contracts  is  disastrous  to  the  adversary 
party ;  as  where  he  relied  on  the  infant's  contract  and  by  delay 
lost  his  claim  against  the  estate  of  the  infant's  father.^  The  dis- 
senting view  which  holds  certain  fair,  reasonable  and  executed 
contracts  of  a  minor  to  be  valid  is  hereafter  discussed."     On 


2  See  §  881  et  seq. 

3  Savage  v.  Lichlyter,  59  Ark.  1 ; 
26  S.  W.  12',  Gregory  v.  Lee,  64 
Conn.  407;  25  L.  R.  A.  618;  30  Atl. 
53;  Barlow  v.  Robinson,  174  III. 
317;  51  N.  E.  1045;  Des  Moines  Ins. 
Co.  V.  Mclntire,  99  la.  50;  68  N. 
W.  565;  Danville  v.  Mfg.  Co.,  62 
N.  H.  133;  Harner  v.  Dipple,  31  O. 
S.  72;  27  Am.  Rep.  496;  Rush  v. 
Wick,  31  0.  S.  521;  27  Am.  Rep. 
523. 

4  Walker  v.  Pope,  101  Ga.  665 ;  29 
S.  E.  8;  Hoffert  v.  Miller,  86  Ky. 
572;  6  S.  W.  447;  Morse  v.  Ely, 
154  Mass.  458;  26  Am.  St.  Rep. 
263 ;  28  N.  E.  577 ;  Dube  v.  Beaudry, 
150  Mass.  448;  15  Am.  St.  Rep. 
228;  6  L.  R.  A.  146;  23  N.  E.  222; 
Barney  v.  Rutledge,  104  Mich.  289; 
62  N.  W.  369 ;  Bloomingdale  v.  Chit- 
tenden, 74  Mich.  698;  42  N.  W.  166; 
Nichols,  etc.,  Co.  v.  Snyder,  78 
Minn.  502;  81  N.  W.  516;  Engle- 
bert  V.  Troxell,  40  Neb.  195 ;  42  Am. 
St.  Rep.  665;  26  L.  R.  A.  177;  58 
N.  W.  852;  Dolph  v.  Hand,  156  Pa. 
St.  91;  36  Am.  St.  Rep.  25;  27  Atl. 
114;     Grace    v.     Hale,     2     Humph. 


(Tenn.)  27;  36  Am.  Dec.  296; 
Askey  v.  Williams,  74  Tex.  294;  5 
L.  R.  A.  176;  11  S.  W.  1101;  Dar- 
raugh  V.  Blackford,  84  Va.  509;  5 
S.  E.  542.  "  It  is  wholly  immaterial 
whether  the  contract  of  an  infant  is 
executed  or  executory.  He  has  the 
right  to  avoid  it."  Leaeox  v.  Grif- 
fith, 76  la.  89,  94 ;  40  N.  W.  109. 

5  Union,  etc.,  Ins.  Co.  v.  Hilliard, 
63  0.  S.  478;  81  Am.  St.  Rep.  644; 
53  L.  R.  A.  462;  59  N.  E.  230. 

cMagee  v.  Welsh,  18  Cal.  155; 
Price  V.  Jennings,  62  Ind.  Ill; 
Warnock  v.  Loar  (Ky.),  11  S.  W. 
438;  Morse  v.  Ely,  154  Mass.  458; 
26  Am.  St.  Rep.  263 ;  28  N.  E.  577 ; 
Tupper  V.  Caldwell,  12  Met.  (Mass.) 
559;  46  Am.  Dec.  704;  Phelps  v. 
Worcester,  11  N.  H.  51. 

7  Morse  v.  Ely,  154  Mass.  458 ;  26 
Am.  St.  Rep.  263 ;  28  N.  E.  577. 

sEnglebert  v.  Troxell,  40  Neb. 
195;  42  Am.  St.  Rep.  665;  26  L.  R. 
A.  177;  58  N.  W.  852. 

9  Dube  V.  Beaudry,  150  Mass. 
448;  15  Am.  St.  Rep.  228;  6  L.  R. 
A.  146 ;  23  N.  E.  222. 

10  See  §  891. 


CONTBACTS  OF  INFANTS.  1351 

sound  legal  principle  and  by  the  better  reasoning,  an  infant's 
contract  whether  executed  or  executory  is  to  be  treated  as  bind- 
ing until  it  is  disaffirmed  by  him  or  some  one  authorized  by  law 
to  act  for  him/^  This  is  on  the  theory  that  disaffirmance  is  a 
privilege  which  may  be  exercised  by  the  infant  at  his  discretion, 
but  that  subject  to  this  right,  a  voidable  contract  of  an  infant 
stands  on  the  same  footing  as  any  valid  contract.  The  courts 
have  said,  however,  in  many  cases,  that  an  executory  contract  of 
an  infant  is  not  valid  until  it  is  ratified.^^  An  examination  of 
these  cases  will,  however,  show  that  in  every  case  this  proposition 
is  a  mere  dictum,  as  the  contract  in  each  case  has  been  avoided 
by  the  infant  in  a  proper  manner.  It  may  be  doubted  if  even 
these  courts  really  mean  all  that  they  say.  If  the  infant's  execu- 
tory contract  were  of  no  validity  until  he  affirmed,  there  would 
be  no  consideration  for  the  promise  of  the  adversary  party,  and 
he  would  be  able  to  defeat  any  action  against  him  by  the  infant 
—  a  conclusion  to  which  no  court  has  come.  What  is  probably 
meant  by  this  form  of  statement  is  that:  An  executory  con- 
tract, unless  ratified,  is  subject  to  the  defense  of  infancy  until 
the  right  of  disaffirmance  is  barred  by  lapse  of  time.^^  This 
right  exists  therefore  either  for  a  reasonable  time  or  for  the 
period  prescribed  by  the  statute  of  limitations.  In  the  latter 
case,  the  right  to  plead  infancy  will  not  be  extinguished  until 
the  right  to  sue  on  the  contract  is  extinguished.  In  the  former 
case,  it  might  be  possible  that  the  right  to  disaffirm  would  cease 
before  the  right  of  action  on  the  contract  would  be  lost.  The  doc- 
trine of  a  reasonable  time  is  generally  applied  only  to  executed 
conveyances.     If  two  infants  contract  with  each  other,  either 

iiViditz    V.    O'Hagan     (1899),  2  12  Morton  v.  Steward,  5  111.  App 

Ch.   569;   68  L.  J.   Ch,   N.   S.   553;  533;  Tyler  v.  Gallop,  68  Mich.  185 

American,    etc.,    Co.   v.    Dykes,    111  13  Am.  St.  Rep.  336;  35  N.  W.  902 

Ala.   178;    56  Am.  St.  Rep.   38;    18  Minock  v.  Shortridge,  21  Mich.  304 

So.   292;    Amey  v.   Cockey.    73   Md.  State  v.  Plaisted.  43  N.  H.  413;  Ed 

297;    20    Atl.    1071;    Englebert    v.  gerly  v.    Shaw,    25   N.   H.   514;    57 

Troxell,   40   Neb.    195;    42   Am.   St.  Am.  Dee.  349:   Beardsley  v.  Hotch- 

Rep.  665;   26  L.  R.  A.   177;    58  N.  kiss.  96  N.  Y.  201. 

W.  852;  Logan  v.  Gardner,  136  Pa.  is  See  §  885. 
St.   588;    20  Am.   St.   Rep.   939;   20 
Atl.  625. 


1352 


PAGE    ON    CONTKACTS. 


has  the  same  right  to  disaffirm  that  he  has  in  contracting  with 
an  adult/* 

§873.     Examples  of  voidable  contracts. —  Transfers  of  property. 

An  infant's  executory  contract  to  convey  realty/  or  to  pur- 
chase it;^  a  lease  by  him/  or  to  him;*  and  his  deed  passing 
realty/  are  all  voidable.  His  right  to  avoid  is  not  affected  by  the 
fact  that  adult  grantors  joined  with  him  as  being  co-owners/ 
or  by  the  fact  that  the  property  sold  has  passed  into  the  hands  of 


iiDrude  v.  Curtis,  183  Mass.  317; 
62  L.  R.  A.  755;  67  N.  E.  317. 

1  Barlow  v.  Robinson,  174  111. 
317;  51  N.  E.  1045;  Yeager  v. 
Knight,  60  Miss.  730;  Shurtleff  v. 
Millard,  12  R.  I.  272;  34  Am.  Rep. 
640;  Mustard  v.  Wohlford,  15 
Gratt.   (Va.)   329;  76  Am.  Dec.  209. 

2Lynde  v.  Budd,  2  Paige  (N.  Y.) 
191;  21  Am.  Dec.  84. 

sSlator  V.  Trimble,  14  Ir.  C.  L. 
342;  Slator  v.  Brady,  14  Ir.  C.  L.  61. 

4  Flexner  v.  Dickerson,  72  Ala. 
318;  Gregory  v.  Lee,  64  Conn.  407; 
25  L,  R.  A.  618;  30  Atl.  53;  Baxter 
V.  Bush,  29  Vt.  465;  70  Am.  Dec. 
429. 

5  McDonald  v.  Salmon  Club,  33 
N.  B.  472;  Tucker  v.  Moreland,  10 
Pet.  (U.  S.)  59;  Manning  v.  John- 
son, 26  Ala.  446;  62  Am.  Dec.  732; 
Hastings  v.  Dollarhide,  24  Cal.  195; 
Walker  v.  Pope,  101  Ga.  665;  29  S. 
E.  8;  Tunison  v.  Chamblin,  88  111. 
378;  Keil  v.  Healy,  84  111.  104;  25 
Am.  Rep.  434;  Gillenwaters  v. 
Campbell,  142  Ind.  529;  41  N.  E. 
1041;  Green  v.  Wilding,  59  la.  679; 
44  Am.  Rep.  696;  13  N.  W.  761; 
Hoffert  V.  Miller,  86  Ky.  572 ;  6  S. 
W.  447;  Vallandingham  v.  Johnson, 
85  Ky.  288;  3  S.  W.  173;  Davis  v. 
Dudley.  70  Me.  236;  35  Am.  Rep. 
318;  Kendall  v.  Lawrence,  22  Pick. 


(Mass.)  540;  Ridgeway  v.  Herbert, 
150  Mo.  606;  73  Am.  St.  Rep.  464; 
51  S.  W.  1040;  Craig  v.  Van  Beb- 
ber,  100  Mo.  584;  18  Am.  St.  Rep. 
569;  13  S.  W.  906;  Englebert  v. 
Troxell,  40  Neb.  195;  42  Am.  St. 
Rep.  665;  26  L.  R.  A.  177;  58  N. 
W.  852 ;  Roberts  v.  Wiggin,  1  N.  H. 
73;  8  Am.  Dec.  38;  Green  v.  Green, 
69  N.  Y.  553;  25  Am.  Rep.  233; 
Eagle  Fire  Co.  v.  Lent,  6  Paige  (N. 
Y.)  635;  affirming,  1  Edw.  Ch.  (N. 
Y.)  301;  Cresinger  v.  Welch,  15 
Ohio  156;  45  Am.  Dec.  565;  Drake's 
Lessee  v.  Ramsey,  5  Ohio  251 ;  Dolph 
v.  Hand,  156  Pa.  St.  91 ;  36  Am.  St. 
Rep.  25;  27  Atl.  114;  Ihley  v.  Pad- 
gett, 27  S.  C.  300;  3  S.  E.  468; 
Wheaton  v.  Easton,  5  Yerg.  (Tenn.) 
41;  26  Am.  Dec.  251;  Scott  v.  Bu- 
chanan, 11  Humph.  (Tenn.)  468; 
Bullock  V.  Sprowl,  93  Tex.  188;  77 
Am.  St.  Rep.  849;  47  L.  R.  A.  326; 
54  S.  W.  661;  Askey  v.  Williams,  74 
Tex.  294;  5  L.  R.  A.  176;  11  S.  W. 
1101;  Bigelow  v.  Kinney,  3  Vt. 
353;  21  Am.  Dec.  589;  Darraugh  v. 
Blackford,  84  Va.  509 ;  5  S.  E.  542 ; 
Gillespie  v.  Bailey,  12  W.  Va.  70; 
29  Am.  Rep.  445. 

6  Dunn  V.  Wheeler,  86  Me.  238 ; 
29  Atl.  985;  Clapp  v.  Byrnes,  155 
N.  Y.  535;  50  N.  E.  277. 


CONTKACTS  OF  INFANTS.  1353 

a  horm  fide  purchaser  for  value/  Thus,  an  infant  remainder- 
man assented  to  a  sale  of  the  realty  and  payment  of  the  pro- 
ceeds to  the  life-tenant.  It  was  held  that  he  could  repudiate  this 
agreement  at  the  death  of  the  life-tenant,  even  if  the  title  had 
passed  to  an  innocent  purchaser.^ 

Where,  however,  the  rights  of  the  infant  and  of  the  co-owners 
are  inseparable,  as  where  they  were  the  heirs  to  certain  realty 
which  was  subject  to  a  conditional  oil  lease,  and  the  adult  owner 
on  behalf  of  all  sought  to  forfeit  the  lease  for  a  breach  of  con- 
dition, it  was  held  that  the  minor  heirs  could  repudiate  the  acts 
of  an  adult  co-heir  in  forfeiting  such  oil-lease  if  it  is  in  fraud  of 
their  rights  or  by  mistake  but  not  if  for  their  advantage.^  So 
an  infant's  mortgage  of  his  realty  is  voidable,^*^  even  if  for 
necessaries.^^  If  an  infant  agrees  to  buy  certain  realty  from 
A,  and  thereafter  while  still  a  minor  surrenders  his  interest  in 
such  realty  for  a  team  of  horses,  this  is  a  sale  of  his  equity  and 
not  a  rescission  of  his  original  contract  to  buy  the  realty ;  and 
on  coming  of  age  he  may  repudiate  the  contract  by  which  he 
surrendered  such  interest  in  realty.^"  His  executory  contracts 
to  sell  personalty,^^  executed  sales  by  him^*  even  if  the  property 

7  Walker  v.  Pope,  101  Ga.  665;  29  8  Am.  Dec.  38;  McGan  v.  Marshall, 
S.  E.  8;  Vallandingham  v.  Johnson,      7  Humph.   (Tenn.)   121. 

85  Ky.  288;  3  S.  W.  173;  Searcy  v.  n  McGan  v.  Marshall,   7  Humph. 

Hunter,    81    Tex.   644;    26    Am.    St.  (Tenn.)    121 ;  Askey  v.  Williams,  74 

Rep.  837;    17  S.  W\  372.  Tex.  294;  5  L.  R.  A.  176;  11  S.  W. 

8  Walker  v.  Pope,  101  Ga.  665;  29  1101. 

S.  E.  8.  i2Beickler    v.    Guenther,    121    la. 

9  Wilson  V.  Goldstein,  152  Pa.  St.      419;   96  N.  W.   895. 

524;     25    Atl.     493.         (Hence    the  i3  Petrie  v.  Williams,  68  Hun   (N. 

minors   could   not   on   reaching  ma-  Y.)   589. 

jority  sue  on  the  lease.)      In  Spring-  i*  White  v.  Branch,  51   Ind.  210; 

er  V.  Gas  Co.,  145  Pa.  St.  430;   22  Williams    v.    Brown,    34    Me.    594; 

Atl.  986,  it  was  held  that  if  a  guar-  Kingman  v.  Perkins,  105  Mass.  Ill; 

dian    could    forfeit    an    oil-lease    on  Holmes     v.     Rice,     45     Mich.     142; 

behalf   of  his   wards,   he   could   not  Downing  v.  Stone.  47  Mo.  App.  144; 

bind  adult  co-owners.  Rainwater    v.    Durham,    2    Nott.    & 

10  Hubbard  v.  Cummings,  1  Me.  McCord.  (S.  C.)  524;  10  Am.  Doc. 
11;  Monumental,  etc..  Association  637;  Grace  v.  Hale,  2  Humph. 
V.  Herman,  33  Md.  128;  Mansfield  (Tenn.)  27;  36  Am.  Dec.  296; 
V.  Gordon,  144  Mass.  168;  10  N.  E.  Price  v.  Furman,  27  Vt.  268;  65 
773;  Roberts  v.  Wiggin,  1  N.  H.  73;  Am.  Dec.  194. 


1354 


PAGE    ON    CONTRACTS. 


has  passed  into  the  hands  of  a  bona  fide  purchaser/^  executed 
purchases  hy  him  other  than  necessaries/*^  and  chattel  mortgages 
made  by  him,"  are  alike  voidable.  The  proposition  that  an  in- 
fant's purchases  are  voidable  has  been  qualified  by  one  of  our 
ablest  text-book  writers.  "  If  an  infant  goes  upon  the  streets 
of  a  city,  shopping,  he  cannot  afterward  retrace  his  steps  and  get 
back  the  money  he  paid,  even  though  he  tenders  the  goods  in  re- 
turn ;  for  to  permit  it  would  render  shopkeeping  impossible."^* 
But  no  authorities  are  given  for  this  proposition  and  none  ap- 
pear on  investigation.  If  the  goods  are  necessaries  and  the  price 
is  reasonable,  the  contract  is  binding;  and,  in  other  cases,  shop- 
keej)ing  is  perfectly  possible  without  the  patronage  of  minors. 

§874.     Contracts  for  work  and  labor. 

By  the  weight  of  authority  a  minor  may  avoid  a  contract  of 
service  entered  into  by  him  after  performing  it  in  whole  or  in 
part  and  recover  the  reasonable  value  of  his  services.^    Thus  a 


15  Downing  v.  Stone,  47  Mo.  App. 
144.  There  is  "  no  such  thing  as 
an  innocent  purchaser  of  a  minor's 
property."  Englebert  v.  Troxell, 
40  Neb.  195,  212;  42  Am.  St.  Rep. 
665;  26  L.  R.  A.  177;  58  N.  W.  852. 

16  Riley  V.  Mallory,  3.3  Conn.  201 ; 
House  V.  Alexander.  105  Ind.  109; 
55  Am.  Rep.  189;  4  N.  E.  891;  Rice 
V.  Boyer,  108  Ind.  472;  58  Am.  Rep. 
53;  9  N.  E.  420;  Butler  v.  Stark 
(Ky.),  79  S.  W.  204;  Robinson  v. 
Weeks,  56  Me.  102;  McCarthy  v. 
Henderson,  138  Mass.  310;  Barney 
V.  Rutledge,  104  Mich.  289;  62  N. 
W.  S69;  Nichols,  etc.,  Co.  v.  Snyder, 
78  Minn.  502;  81  N.  W.  516;  \\h\t- 
comb  V.  Joslyn,  51  Vt.  79;  31  Am. 
Rep.  678. 

1"  Barney  v.  Rutledge,  104  Mich, 
289 ;  62  N.  W.  369 ;  Miller  v.  Smith. 
26  Minn.  248;  37  Am.  Rep.  407;  2 
N.  \Y.  942;  Cogley  v.  Cushman.  16 
:\Iinn.  397;  Chapin  v.  Shafer,  49  N. 
Y.  407. 


18  Bishop  on  Contracts,  Enlarged 
Edition,  §  921- 

1  Ray  V.  Haines,  52  111.  485 ;  Van 
Pelt  V.  Corwine,  6  Ind.  363;  Dallas 
V.  Hollingsworth,  3  Ind.  537; 
Haugh,  etc.,  Works  v.  Duncan.  2 
Ind.  App.  264;  28  N.  E.  334;  De- 
rocher  v.  Mills.  58  Me.  217;  4  Am. 
Rep.  286;  Judkins  v.  Walker,  17 
Me.  38;  35  Am.  Dec.  229;  Morse  v, 
Ely,  154  Mass.  458;  26  Am.  St.  Rep. 
263 ;  28  N.  E.  577 ;  Dube  v.  Beaudry, 
150  Mass.  448;  15  Am.  St.  Rep. 
228;  6  L.  R.  A.  146;  23  N.  E.  222; 
Gaffney  v.  Hayden,  110  Mass.  137; 
14  Am.  Rep.  580;  Spicer  v.  Earl, 
41  Mich.  191;  32  Am.  Rep.  152; 
1  N.  W.  923;  Danville  v.  Mfg.  Co., 
62  N,  H.  133;  Hagerty  v.  Lock  Co., 
62  N.  H.  576 ;  Voorhees  v.  Wait,  15 
N.  J.  L.  343 ;  Thompson  v.  Marshall, 
50  Mo.  App.  145;  Dearden  v. 
Adams,  19  R.  I.  217:  36  Atl.  3;  Taft 
V.  Pike,  14  Vt.  405;  39  Am.  Dec 
228. 


CONTRACTS  OF  INFANTS.  1355 

minor  may  avoid  a  contract  to  forfeit  two  weeks  wages  unless 
two  weeks  notice  of  leaving  is  given  ;^  or  a  contract  requiring 
him  to  work  for  six  months  or  to  give  two  weeks'  notice  if  he 
quit,  to  enable  him  to  recover  anything,^  and  if  he  contracts 
to  accept  goods  for  his  wages  he  may  avoid  this  contract  and  de- 
mand money.*  The  contrary  view  has  been  expressed  that  if  an 
infant  receives  what  he  agreed  to  take  for  his  services  he  cannot 
recover  more.^  Of  course  in  any  event  the  amount  already  paid 
to  the  infant  should  be  credited  as  a  part  payment.®  In  Massa- 
chusetts a  different  view  is  entertained.  Thus  where  A,  a 
minor  employee  agreed  with  his  employer  that  articles  not 
necessaries  purchased  by  him  should  be  deducted  from  A's  wages, 
A  afterwards  disposed  of  such  articles  advantageously.  On 
reaching  majority  A  could  repudiate  the  agreement  and  recover 
full  wages.'  So  where  a  minor  worked  under  a  contract  that  his 
wages  were  to  be  applied  to  paying  off  a  debt  due  to  his  em- 
ployer from  his  father's  estate,  it  was  held  that  on  his  failure 
to  receive  anything  from  his  father's  estate  he  could  repudiate 
the  contract  and  recover  full  wages.®  While  some  courts  have 
practically  nullified  the  right  of  a  minor  to  avoid  such  a  contract 
by  holding  that  the  employer  can  also  set  off  against  the  value 
of  thei  infant's  services,  all  damages  caused  by  his  repudiating 
his  contract,^  the  better  reasoning  is  that  such  damages  cannot 
be  so  set  off,  as  the  infant  has  the  right  to  avoid  his  contract 

2  Danville  v.  Mfg.  Co.,   62  N.   H.  himself   by    a    contract    of    employ- 
133.  ment  and   his   employer  will   be  re- 

3  Deroeher    v.    Continental    Mills,  leased  to  the  extent  of  the  money 
58  Me.  217;  4  Am.  Rep.  286.  and   goods   furnished   the   infant   in 

4Abell  V.  Warren,  4  Vt.  149.  part  payment.     Waugh  v.  Emerson, 

sWilhelm    v.    Hardman,    13    Md.  79  Ala.  295. 

140.     So     by    statute,     Murphy    v.  7  Morse  v.  Ely,  154  Mass.  458;  26 

Johnson,  45  la.  57.  Am.  St.  Rep.  263;  28  N.  E.  577. 

6  Waugh  V.  Emerson.  79  Ala.  295;  «  Dube  v.  Beaudry.  150  Mass.  448; 

Spicer   v.    Earl,    41    Mich.    191;    32  15   Am.   St.   Rep.   228;    6   L.   R.    A. 

Am.  Rep.  152;  1  N.  W.  923;  Hager-  146;   23  N.  E.  222. 

ty  V.   Lock  Co.,   62   N.  H.   576.     A  » Judkins  v.  Walker,   17  Me.   38; 

minor   of  nineteen   whose   father   is  35  Am.  Dec.  229;  Hoxie  v.  Lincoln, 

dead,  whose' mother  is  married  again  25  Vt.  206;  Thomas  v.  Dike,  11  "Vt. 

and  who  has  no  guardian  may  bind  273;  34  Am.  Dec.  690. 


1356  PAGE   ON   co2;tkacts. 

without  being  liable  to  any  penalty.^"  The  entire  value  of  his 
services  for  the  entire  time  worked  is  recoverable ;  and  this  state- 
ment of  course  implies  that  any  misconduct  or  negligence  of  the 
infant  by  which  his  services  are  less  valuable  than  they  other- 
Avise  would  be  must  be  allowed  for.^^  A  generally  recognized 
exception  to  the  rule  that  a  minor's  contract  of  service  is  void- 
able, is  that  a  contract  to  work  for  necessaries,  if  fair  and  rea- 
sonable, cannot  be  avoided  as  far  as  it  has  been  executed  ;^-  and 
this  principle  has  been  applied  to  a  contract  for  necessaries  and 
raoney,^^  or  necessaries  and  other  property  f*  but  if  his  services 
are  reasonably  worth  more  than  his  board  he  may  recover  a 
reasonable  value  for  his  services  less  board  furnished.^^ 

§875.     Contracts  of  suretyship. 

Some  of  the  cases  which  followed  the  early  rule  as  to  the 
validity  of  an  infant's  contracts,^  took  a  contract  of  suretyship  as 
the  clearest  example  of  a  contract  prejudicial  to  an  infant,  and 
declared  it  void ;  and  this  rule  has  been  repeated  in  later  cases 
in  dicta."  In  most  of  these  cases  the  result  would  have  been 
the  same  if  the  contract  had  been  held  to  be  merely  voidable ;  as 
where  a  mortgage  was  given  by  an  infant  married  woman  to 
secure  a  partnership,^  or  an  individual  debt."^  So  a  court  after 
saying  that  a  contract  of  suretyship  of  a  minor  was  "  absolute- 
ly void  "  recognized  it  as  capable  of  ratification.^     The  weight 

10  Derocher  v.  Mills,  58  Me.  217 ;  i  See  §  855. 

4   Am.   Rep.   286;    Danville  v.   ]\Ifg.  2  Hastings  v.   Dollarhide.   24   Cal. 

Co.,  62  jSr.  H.  133;  Shurtleff  v.  Mil-  195;  Chandler  v.  McKinney,  6  Mich, 

lard,  12  R.  I.  272;  34  Am.  Rep.  640.  217;    74  Am.   Dee.   686;    Cronise  v. 

11  Vehue  v.  Pinkham,  60  ]Me.  142.  'ciark,  4  Md.  Ch.  403 ;    Wheaton  v. 
i2Squier  v.  Hydliff,  9  :Mich.  274;  East,  5  Yerg.    (Tenn.)    41;   26  Am. 

Stone  V.  Dennison,  13  Pick.  (Mass.)  Dec.  251.  So  vmder  the  early  Con- 
1 ;  23  Am.  Dee.  654 ;  Mountain  v.  necticut  statute.  Maples  v.  Wight- 
Fisher,  22  Wis.  93.  man.  4  Conn.  376:  10  Am.  Dee.  149. 

13  Spicer   v.   Earl,   41   Mich.    191 ;  3  Cronise  v.  Clark.  4  Md.  Ch.  403. 

32  Am.  Rep.  152;  1  N.  W.  923.  4  Chandler  v.   McKinney,   6  Mich. 

i4Wilhelm   v.   Hardman.    13    Md.  217;   74  Am.  Dec.  686.    , 

140.  '5  Curtin  v.  Patton,  11   Serg.  &  R. 

15  Locke  V.  Smith.  41  N.  H.  346.  (Pa.)  305. 


CONTKACTS  OF  INFANTS.  1357 

of  modern  authority  is  that  an  infant's  contract  of  suretyship  is 
not  void,  but  voidable.**  Thus,  becoming  surety  in  a  civil  action 
for  the  appearance  of  the  defendant,"  or  for  stay  of  execution,* 
or  on  a  note,**  are  all  voidable. 

§876.     Compromise  and  arbitration. 

An  infant's  contract  in  compromise  of  a  claim  due  to  him, 
whether  contract,^  or  tort,^  is  voidable.  On  his  avoiding  such 
contract  whatever  he  has  received  under  the  compromise  is  to  be 
credited  upon  his  claim.^  So  a  contract  by  an  infant  to  allow 
a  note  given  by  her  to  a  deceased  testator  to  be  deducted  from 
a  legacy  given  to  her  by  the  will  of  such  testator  is  voidable.* 
It  has  even  been  held  that  the  return  of  the  property  received 
under  the  compromise  is  a  condition  precedent  to  avoiding  it.^ 
Moreover,  although  an  infant  is  liable  for  his  torts,  his  contract 
in  compromise  of  a  claim  against  him  for  his  tort  is  voidable, 
and  upon  his  avoiding  it  he  may  recover  whatever  he  has  parted 
with  thereunder,  leaving  the  other  party  to  his  original  right  of 
action. **  A  release  given  by  an  infant  to  her  guardian  on  taking 
his  note  by  way  of  settlement  of  her  claim  against  him  has  been 

eFetrow  v.  Wiseman,  40  Ind.  148;  N.  E.  920  (settlement  made  by  next 

Wills    V.    Evans     (Ky.)»  38    S.    VV.  friend     without     leave     of     court); 

1090;     Owens    v.    Long,    112    Mass.  Baker  v.  Lovell,  6  Mass.  78;  4  Am. 

403;  Johnson  v.  Storie,  32  Neb.  610;  Dec.  88;  Bonner  v.  Bryant,  79  Tex. 

49  N.  W.  371;  Harner  v.  Dipple,  31  540;  23  Am.  St.  Rep.  361;  15  S.  W. 

O.  S.  72;  27  Am.  Rep.  496;  Reed  v.  491. 

Lane,  61  Vt.  481;  17  Atl.  796.  3  See  cases  cited  in  two  preceding 

7  Reed   v.    Lane,    61    Vt.    481;    17  notes. 

Atl,  796.  4  7h  re  Cummings'  Estate,  120  la. 

8  Harner  v.  Dipple,   31   0.   S.   72;       421;  94  N.  W.  1117. 

27  Am.  Rep.  496.  5  Lane  v.  Coal  Co.,  101  Tenn.  581; 

9  Fetrow  v.  Wiseman,  40  Ind.  148 ;       48  S.  W.  1094. 
Owens    V.    Long,     112    Mass.    403;  See  §   888. 

Johnson  v.  Storie,  32  Neb.  610;   49  c  Ware  v.  Cartledge.  24  Ala.  622; 

N.  W.  371.  60  Am.  Dec.  489;  Shaw  v.  Coffin,  58 

1  Commonwealth  ea?  reZ.   Strayer  v.  Me.  254;  4  Am.  Rep.  290.     In  oppo- 

Hantz,  2  Pen.  &  W.   (Pa.)   333.  sition  to  this  view,  Ray  v.  Tubbs,  50 

2Mattei  v.  Vautro   (Q.  B.),  78  L.  Vt.  688;  28  Am.  Rep.  519,  holds  that 

T.  Rep.  682;   St.  Louis,  etc..  Ry.  v.  an  infant's  note  given  in  a  fair  com- 

Higgins,    44    Ark.    293;    Pittsburg,  promise  of  a  tort  commuted  by  him 

etc.,  Ry.  V.  Haley,  170  111.  610;   48  is  valid. 


1358  PAGE    ox    CONTKACTS. 

said  to  be  void,  and  hence  not  to  release  the  sureties  on  his 
bond/  Since  even  an  executed  contract  of  compromise  is  void- 
able, a  contract  to  arbitrate  is  also  voidable;^  and  some  authori- 
ties have  even  said  that  it  is  void.** 

§877.     Instruments  negotiable  in  form. 

While  not  always  clearly  expressed,  the  early  view  of  an  in- 
fant's negotiable  contracts  seems  to  have  been  that  if  valid  at 
all,  they  must  be  strictly  negotiable  and  subject  to  no  defense  in 
the  hands  of  a  bona  fide  holder  for  value  before  maturity.  Since 
under  this  theory,  it  was  impossible  for  such  contracts  to  be  void- 
able, as  they  must  be  either  absolutely  void  or  strictly  valid,  the 
courts  held  them  void,^  at  least  if  in  the  hands  of  an  indorsee.^ 
In  these  cases,  however,  the  only  question  involved  was  whether 
the  infant  could  not  avoid  his  contract.^  The  modern  view  of 
such  contracts  is  that  while  negotiable  in  form  they  are  not 
negotiable  in  law.  Minority  may  always  be  set  up  as  a  defense, 
even  as  against  a  bona  fide  holder.  Accordingly,  such  contracts 
are  voidable,  unless  for  necessaries.*  Thus,  an  infant's  promise 
to  pay  loan  from  a  bank  is  not  void ;  hence  the  promise  of  his 

7  Fridge  v.  State^  3  Gill  &  J.  533.  ( In  this  case  the  considera- 
(Md.)    103;    20   Am.   Dec.   463.     In      tion  was  necessaries  furnished.) 

this  case  the  decision  was  placed  on  3  Except    Burgess    v.    Merrill.    4 

the  ground  that  the  release  as  dis-  Taunt.  468,  where  it  was  held  that 

tinguished  from  a  mere  receipt  was  the  holder  of  a  bill  accepted  by  an 

prejudicial  to  the  infant.     The  same  adult   and   a   minor   should   sue   the 

result    would    have    followed    from  adult  alone, 

holding  it  voidable.  *  La  Grange,  etc.,  Institute  v.  An- 

8  Jones  V.  Payne,  41  Ga.  23  ;  Baker  derson,  63  Ind.  367  ;  30  Am.  Rep. 
V.  Lovett^  6  Mass.  78;  4  Am.  Dec.  224;  Keokuk,  etc.,  Bank  v.  Hall,  106 
88;  Barnaby  v.  Barnaby,  1  Pick.  la.  540;  76  N.  W.  832;  Best  v.  Giv- 
(Mass.)    221;   Jones  v.  Bank,   8  N.  ens,  3  B.  Mon.    (Ky.)    72;   Stern  v. 

Y.  228.  Freeman,  4  Met.    (Ky.)    309;   Whit- 

sMillsaps  V.  Estes,  134  N.  C.  486;  ney  v.  Dutch,  14  Mass.  457;   7  Am. 

46   S.   E.  988;   Britton  v.  Williams,  Dec.  229;  Baker  v.  Stone,  136  Mass. 

6  Munf.   (Va.)  453.  405;  Minock  v.  Shortridge,  21  Mich. 

1  Burgess  v.  Merrill,  4  Taunt,  304;  Edgerly  v.  Shaw.  25  N.  H.  514; 
468;  Swasey  v.  Van derhey den's  57  Am.  Dec.  349;  Houston  v.  Coop- 
Admr.,  10  Johns.  (N.  Y.)  33;  Mc-  er,  3  X.  J.  L.  866  (where  a  note  of 
Minn      v.       Richmonds,       6       Yerg.  an  infant  was  said  to  be  "  invalid  ")  ; 

(Tenn.)   9.  Brown  v.  Bank,  88  Tex.  265;   33  L. 

2  Morton  v.   Steward    5   111.   App.      R.  A.  359;   31  S.  W.  285;  Askey  v. 


CONTKACTS  OF  INFANTS. 


1359 


surety  is  collateral  only,  not  original.^  An  infant's  liability  to  a 
surety  on  his  note  is  also  voidable  unless  for  necessaries;"  but 
if  for  a  reasonable  value  for  necessaries  he  must  reimburse  the 
surety/  While  it  is  ordinarily  no  defense  to  a  surety  that  the 
principal  is  a  minor,*  a  surety  on  a  minor's  note  is  not  liable 
where  the  minor  disaffirms  and  returns  the  consideration.^  An 
infant's  contract  of  indorsement  is  voidable  only.  It  is  not  void, 
since  the  maker  cannot  refuse  to  pay  the  indorsee;^*'  and  it  is 
not  valid,  since  the  infant  can  avoid  his  liability  to  the  in- 
dorsee,^^  and  before  payment  by  the  maker  he  can  avoid  the 
indorsement  and  recovery  from  the  maker.^^  Whether  he  can 
avoid  his  indorsement  and  recover  of  the  maker  after  payment 
by  the  maker  to  the  indorsee  is  a  point  upon  which  is  found  no 
direct  authority  and  conflicting  dicta. ^^     Of  course  if  an  in- 


Williams,  74  Tex.  294;  5  L.  R.  A. 
176;  11  S.  W.  1101;  Patchin  v. 
Cromach,  13  Vt.  330.  As  to  con- 
tracts  for  necessaries,  see  §  865. 

5  Brown  v.  Bank,  88  Tex.  265 ;  33 
L.  R.  A.  359;  31  S.  W.  285. 

6  Leacox  v.  Griffith,  76  la.  89 ;  40 
N.  W.  109.  In  this  case  the  execu- 
tor became  surety  for  an  infant  heir 
on  a  note  and  was  secured  by  a 
chattel  mortgage.  The  infant  sold 
the  property  before  the  mortgage 
was  recorded  and  the  surety  had  to 
pay  the  note.  To  reimburse  him 
the  infant  released  to  him  his  claims 
against  the  estate.  This  was  held 
voidable.  Leacox  v.  Griffith,  76  la. 
89;  40  N.  W.  109. 

7  Conn  V.  Coburn,  7  N.  H.  368 ;  26 
Am.  Dec.  746;  Haines  Admr.  v.  Tar- 
rant, 2  Hill  (S.  C.)  400.  Contra, 
Ayers  v.  Burns,  87  Ind.  245;  44  Am. 
Rep.  759. 

8  Hesser  v.  Steiner,  5  Watts  &  S. 
(Pa.)  476. 

9  Keokuk,  etc..  Bank  v.  Hall,  106 
la.  540;  76  N.  W.  832;  citing  and 
following,  Baker  v.  Kennett,  54  Mo. 
82  Patterson  v.  Cave,  61  Mo.  439. 


10  Frazier  v.  Massey,  14  Ind.  382; 
Hardy  vt  Waters,  38  Me.  450; 
Nightingale  v.  Withington,  15  Mass. 
272;  8  Am.  Dec.  101.  This  is  true 
even  if  the  indorsement  is  made  by 
an  agent.  Hardy  v.  Waters,  38  Me. 
450;  Whitney  v.  Dutch,  14  Mass. 
457 ;  7  Am.  Dec.  229.  However, 
early  authority  holds  under  the  old 
rule  given  in  §  855  that  an  indorse- 
ment made  by  one  for  an  infant 
even  in  her  presence  and  with  her 
consent  is  void,  so  that  it  passes  no 
title  even  though  the  infant  does 
nothing  to  avoid  it.  Hence  the 
holder  cannot  use  it  as  a  set-off. 
Semple  v.  Morrison,  7  T.  B.  Mon. 
(Ky.)    298. 

11  Nightingale  v.  Withington,  15 
Mass.  272;  8  Am.  Dec.  101;  Dulty 
V.  Brownfield,  1  Pa.  St.  497. 

12  Hastings  v.  Dollarhide,  24  Cal. 
195. 

13  In  Briggs  v.  McCabe,  27  Ind. 
327,  the  court  said  that  in  such  case 
the  infant  could  recover,  prefacing 
their  remarks  with  "  as  to  what 
would  be  the  effect  of  payment  by 
the  maker  of  a  note  to  the  assigTiee 


1360  PAGE    ON    CONTRACTS. 

fant's  contracts  are  made  void  bj  statute,  this  will  include  com- 
niercial  paper.  Thus,  in  England  an  infant  cannot  bind  him- 
self by  the  acceptance  of  a  bill  of  exchange  given  for  necessaries 
under  such  a  statute.^* 

§878.     Contracts  of  partnership. 

An  infant's  contract  of  partnership  usually  presents  one  of 
four  points  for  adjudication:  (1)  can  an  infant  empower  his 
partners  to  bind  him ;  (2)  can  an  infant  be  held  personally  liable 
by  the  partnership  creditors;  (3)  can  an  infant  recover  his  prop- 
erty contributed  to  the  partnership  as  against  the  rights  of  part- 
nership creditors;  and  (4)  can  an  infant  recover  such  property 
as  against  his  partners.  As  we  have  seen/  an  infant's  appoint- 
ment of  an  agent  is  by  the  better  view,  voidable  and  not  void. 
Hence  his  authority  to  his  partners  to  bind  him,  is  voidable.^ 
Until  avoided  the  contract  is  valid.  Hence  it  may  be  dissolved 
and  a  receiver  appointed,^  and  an  assignment  of  the  property 
of  a  firm  which  is  largely  indebted  but  not  insolvent  may  be 
avoided  by  an  infant  partner.*  It  is  well  settled,  moreover,  that 
an  infant  can  avoid  his  contract  of  partnership  to  the  extent  of 
relieving  himself  from  his  individual  liabilty  for  partnershp 
debts.^     So  a  continuing  partner  who  assumes  all  the  firm  lia- 

of  an  infant  payee  before  disaffirm-  2  Whitney  v.  Dutch,  14  Mass.  457 ; 

anee,  it  is  not  now  necessary  for  us  7  Am.  Dec.  229;  Dunton  v.  Brown, 

to  decide."     In  Welch  v.  Welch,  103  31  Mich.  182;   Folds  v.  Allardt,   35 

Mass.    562,    quoting    from    Nightin-  Minn.  488;  29  N.  W.  201. 

gale   V.   Withington,    15  Mass.   272;  3  Bush  v.  Linthicum,  59  Md.  344. 

8  Am.  Dec.  101,  is  a  dictum  that  in  4  Foot  v.  Goldman,  68  Miss.  529; 

such  a  case  the  minor  could  not  re-  10  So.  62. 

coVer;   but  in  Nightingale  v.  With-  s  Lovell  v.  Beauchamp   (1894),  A. 

ington  there  was  no  revocation ;  and  C.  607 ;   Goode  v.  Harrison,  5  Barn, 

in   Welch   v.   Welch   the    court   held  &   Aid.    147;    Conklin   v.   Ogborn,   7 

that  one  who  had  on  order  of  an  in-  Ind.   553;    Mehlhop   v.   Rae,   90    la. 

fant  paid  over  the  infant's  money  to  30;  57  N".  W.  650;  Neal  v.  Berry,  86 

the    necessary    support    of    the    in-  Me.    193;    29    Atl.    987;    Mason    v. 

fant's    father    could     not    be    com-  Wright,  13  Met.   (Mass.)  306;  Tobey 

pelled  to  pay  it  again  to  the  infant.  v.  Wood,  123  Mass.  88;  25  Am.  Rep. 

14  7w  re  Soltykoflf   (1891)    1  Q.  B.  27;   Osburn  v.  Farr,  42  Mich.   134; 

413.  3  N.  W.  299;   Folds  v.  Allardt,  35 

1  See  §  859.  Minn.  488;  29  N.  W.  201. 


CONTEACTS    OF    IXFAXTS. 


1361 


bilities  cannot  recover  from  a  minor  partner  his  sliare  of  a  firm 
note  excluded  from  such  liabilities."  He  may  even  disaffirm 
his  individual  liability  without  disaffirming  his  contract  with  his 
partners/  Whether  on  disaffirming  he  can  recover  property 
contributed  by  him  to  the  partnership  assets,  to  the  prejudice  of 
partnership  creditors  is  not  so  clear.  In  some  cases,  it  has 
merely  been  held  that  the  proceeding  in  question  was  not  a 
proper  one  for  asserting  such  a  right,  without  always  deciding 
whether  the  right  existed.^  Thus  pleading  infancy  in  a  suit  on 
a  partnership  debt,"  suing  the  assignee  in  insolvency  to  recover 
one-half  of  the  partnership  assets,^"  or  suing  to  renounce  the 
partnership  and  have  a  receiver  appointed,  with  a  prayer  for 
priority  in  payment  of  money  advanced,^^  have  each  been  held 
not  to  permit  the  infant  to  recover  his  share  of  the  assets  to  the 
prejudice  of  the  firm  creditors.  But  where  the  courts  have  ex- 
pressed an  opinion  on  thi's  point  they  have  denied  the  existence 
of  this  right.^^     The  weight  of  authority  clearly  is  that  an  in- 


6Neal  V.  Berry,  86  Me.  193;  29 
Atl.  987. 

7Mehlhop  V.  Rae,  90  la.  30;  57 
N.  W.  650;  Conary  v.  Sawyer,  92 
Me.  463;  69  Am.  St.  Rep.  525;  43 
Atl.  27;  Tobey  v.  Wood,  123  Mass. 
88 ;  25  Am.  Rep.  27 ;  apparently  con- 
tra, Miller  v.  Sims,  2  Hill  (S.  C.) 
479;  Salinas  v.  Bennett,  33  S.  C. 
285;  11  S.  E.  968. 

8 "  If  an  infant  partner  can  re- 
pudiate his  contract  and  call  for  a 
return  of  his  share  of  the  capital, 
without  regard  to  the  account  of 
profit  and  loss,  it  must  be  upon 
some  proceeding  instituted  for  that 
purpose,  and  on  which  the  rights  of 
the  other  partners  and  of  creditors 
of  the  firm  may  be  considered  and 
protected."  Gay  v.  Johnson,  32  N. 
H.  167,  169. 

9  Gay  V.  Johnson,  32  N.  H.  167 

10  Conary  v.  Sawyer,  92  Me.  463 ; 
69  Am.  St.  Rep.  525-,  43  Atl.  27. 

"Shirk  V.  Shultz,  113  Ind.  571; 
15  N.  E.  12. 
86 


12  Shirk  V.  Shultz,  113  Ind.  571; 
15  N.  E.  12;  Conary  v.  Sawyer,  92 
Me.  463;  69  Am.  St.  Rep.  525;  43 
Atl,  27;  Bush  v.  Linthicum,  59  Md. 
344;  Pelletier  v.  Couture,  148  Mass. 
269;  1  L.  R.  A.  863;  19  N.  E.  400; 
Yates  V.  Lyon,  61  N.  Y.  344;  revers- 
ing, Yates  V.  Lyon,  61  Barb.  (N.  Y.) 
205.  "The  plaintiff,  however,  con- 
tends  that  inasmuch  as  he  was  a 
minor  and  had  disaffirmed  his  per- 
sonal liability  for  the  debts  of  the 
firm,  he  has  an  individual  interest 
in  such  of  the  partnership  property 
as  had  been  fully  paid  for  at  the 
time  when  insolvency  proceedings 
were  instituted.  We  do  not  think 
that  such  a  contention  is  maintain- 
able either  on  principle  or  on  au- 
thority. ...  It  will  be  observed 
that  he  did  not  and  does  not  dis- 
affirm his  contract  of  copartnership, 
but  only  his  liability  for  firm  debts. 
He  claims  title  to  the  goods  sued  for 
as  a  partner,  such  goods  having  been 
paid  for  by  the  firm  and  being  part- 


1362 


PAGE    ON    CONTRACTS. 


fant  cannot  on  rescinding  Lis  contract  on  that  ground  alone  re- 
cover from  his  partners  what  he  has  advanced  to  the  assets  of  the 
firm,  but  only  his  proportionate  share  after  payment  of  all 
debts/^  This  of  course  eliminates  the  question  of  fraud  and  the 
like.  Thus  a  loss  of  capital  must  be  divided  equally,  and  not 
be  borne  exclusively  by  the  adult  partners.^*  Unfortunately, 
many  of  the  decided  cases  rest  on  the  proposition  that  a  minor 
cannot  recover  back  money  paid  by  him ;  and  sound  reason 
seems  to  be  with  the  minority  view  that  the  minor  may  recover 
money  advanced  by  him.^^ 


iiersliip  assets."  Conaiy  v.  Sa\\'yer, 
92  Me.  463,  467;  69  Am.  St,  Rep. 
525;  43  Atl.  27.  "It  is  not  too 
much  to  say  that  if  an  infant  goes 
into  a  mercantile  venture  which 
proves  unsuccessful  he  ought,  at 
least,  to  be  held  so  far  that  the  as- 
sets acquired  by  the  firm  should  be 
applied  to  the  payment  of  the  debts 
of  the  concern.  If  he  has  been  ca- 
joled into  any  waste  of  his  capital, 
it  hardly  seems  equitable  that  the 
creditor  of  his  firm  should,  either 
directly  or  indirectly,  be  called  upon 
for  reimbursement."  Yates  v.  Lyon, 
61  jST.  Y.  344,  346;  reversing,  Yates 
V.  Lyon,  61  Barb.  (N.  Y.)  205. 
But  Yates  v.  Lyon  is  obiter  in  this 
point,  as  the  question  was  whether 
an  assignment  by  a  firm  of  which 
an  infant  was  a  member  was  void. 
The  distinction  suggested  by  the 
note  to  Craig  v.  Van  Bebber,  18  Am. 
St.  Rep.  569,  604,  one  of  the  clear- 
est discussions  of  the  rights  of  in- 
fants yet  written,  between  creditors 
who  have  disposed  of  property  to 
the  firm  which  it  still  retains  and 
others,  is  ignored  4n  Conary  v.  Saw- 
yer, 92  Me.  463;  69  Am.  St.  Rep. 
525;   43  Atl.  27. 

13  Ex  'parte  Taylor,  8  De  Gex,  M. 
&  G.  254;  Adams  v.  Beall,  67  Md. 
63;  1  Am.  St.  Rep.  379;  8  Atl.  664; 


Page  V.  Morse,  128  Mass.  99;  Moley 
V.  Brine,  120  Mass.  324;  Breed  v. 
Judd,  1  Gray  (Mass.)  455. 

li  Moley  V.  Brine,  120  Mass.  324. 
"  Whilst  fully  recognizing  the  privi- 
lege which  the  law  accords  minors 
in  regard  to  contracts  made  during 
their  minority,  yet  in  a  case  like  the 
present,  where  money  is  paid  by  a 
minor  in  consideration  of  being  ad- 
mitted as  a  partner  in  the  business 
of  the  appellant,  and  he  does  become 
and  remains  a  partner  for  a  given 
time,  he  ought  not  to  be  allowed  to 
recover  back  the  money  thus  paid, 
unless  he  was  induced  to  enter  into 
the  partnership  by  the  fraudulent 
representations  of  the  appellant." 
Adams  v.  Beall,  67  Md.  53,  59;  1 
Am.  St.  Rep.  379;  8  Atl.  664. 

15  Sparman  v.  Keim,  83  N.  Y.  245. 
In  Heath  v.  Stevens,  48  N.  H.  251, 
an  agreement  by  A  to  pay  the  fare 
of  B,  a  minor,  to  New  York,  and  if 
he  was  not  accepted  for  enlistment, 
to  pay  his  expenses  home  again;  if 
B  was  accepted  and  received  a  boun- 
ty, B  was  to  pay  A  $200.  B  was 
accepted,  received  a  bounty  of  $700, 
and  paid  A  $200.  B  subsequently 
sued  to  rescind,  and  he  was  allowed 
to  do  so,  and  to  recover  $200  less  his 
expenses  to  New  York.  The  facts 
of  this  case  resemble  Breed  v.  Judd, 


CONTRACTS    OF    INFANTS. 


1363 


§879.    Infant  as  member  of  corporation. 

The  courts  are  divided  as  to  whether  an  infant  can  be  a 
member  of  a  mutual  or  assessment  corporation.^  So  there  is  a 
conflict  of  authority  as  to  whether  an  infant  can  be  an  incorpora- 
tor of  an  ordinary  stock  corporation.  It  has  been  held  that  he 
might  be  an  incorporator  as  far  as  collateral  attack  was  con- 
cerned ;"  but  on  direct  attack  it  has  been  held  that  he  could  not 
be  an  incorporator.^  As  between  vendor  and  vendee,  there  is 
no  difference  between  a  sale  of  corporation  stock  and  other 
chattels,  but  the  minor  may  disaffirm.*  This  is  true  even  if  the 
vendor  is  the  corporation  itself,  which  issues  its  shares  to  the 
infant  to  take  up  shares  in  a  dissolved  corporation  whose  prop- 
erty has  been  transferred  to  the  corporation  issuing  stock.^  It 
has  been  held  that  the  directors  may  refuse  to  allow  a  transfer 
to  a  minor  to  be  made  on  the  books  of  the  company  f  but  if  they 
do,  the  transfer  is  merely  voidable,'^  is  good  until  avoided,®  and 
cannot  afterward  be  ignored  by  the  corporation  f  and  a  corpora- 


1  Gray  (Mass.)  455,  in  which  the 
infant  was  sent  to  California  for  a 
third  of  his  earnings;  but  the  result 
was  exactly  opposite. 

1  In  Chicago,  etc.,  Association  v. 
Hunt,  127  111.  257;  2  L.  R.  A.  549; 
20  N.  E.  55,  it  was  held  that  he 
could  be  a  member  of  such  a  cor- 
poration. In  In  re  Globe,  etc.,  As- 
sociation, 135  N.  Y.  280;  17  L.  E. 
A.  547;  32  N.  E.  122,  affirming  63 
Hun  (N.  Y.)  263,  it  was  held  that 
the  statutes  contemplated  only  mem- 
bers who  could  not  avoid  their  con- 
tracts; and  hence  an  infant  could 
not  be  a  member  or  incorporator. 

2  In  re  Nassau  Phosphate  Co.,  2 
Ch,  Div.  610;  In  re  Saxon  &  Co. 
(1892),  3  Ch.  555;  but  in  these 
cases  the  validity  of  the  corporation 
was  not  directly  attacked  by  the 
state,  but  collaterally. 

3  In  Hamilton,  etc.,  Co.  v.  Town- 
send,  13  Ont.  App.  534;  16  Am.  & 
Eng.    Corp.    Cas.    645,    it    was   held 


that  a  statute  authorizing  five  per- 
sons to  form  a  corporation  meant 
five  persons  of  full  age,  and  that  if 
one  was  a  minor,  even  if  he  ratified 
his  act  after  majority,  the  incor- 
poration was  defective. 

4  Indianapolis,  etc.,  Co.  v.  Wilcox, 
59  Ind.  429;  Robinson  v.  Weeks,  56 
Me.  102. 

5  White  V.  Cotton- Waste  Corpora- 
tion, 178  Mass.  20;  59  N.  E.  642. 

6  Symon's  Case,  L.  R.  5  Ch.  App. 
C.  298.  , 

7Maguire's  Case,  3  De  Gex  &  S. 
31 ;  Lumsden's  Case,  L.  R.  4  Ch. 
App.  C.  31;  Ebbett's  Case,  L.  R.  5 
Ch.  App,  C.  302;  Baker's  Case,  L. 
R.   7  Ch.  App.  C.  115. 

8  In  re  Nassau  Phosphate  Co.,  2 
Ch.  Div.  610. 

9  Hart's  Case,  L.  R.  6  Eq.  512 
Wilson's  Case,  L.  R.  8  Eq.  240 
Mitchell's  Case,  L.  R.  9  Eq.  363 
Creed  v.  Bank,  1  O.  S.  1. 


1364  PAGE    ON    CONTRACTS. 

tion  wliich  makes  transfer  on  its  books  of  shares  of  stock  sold 
by  a  minor  is  not  liable  therefor/"  Under  the  English  statutes, 
an  avoidance  bj  a  minor  relieves  him  from  liability  for  calls  on 
liis  stock  bought  or  subscribed  for  by  him/^  if  in  a  reasonable 
time,^^  and  subject  to  the  rule  that  he  cannot  retain  the  shares 
and  repudiate  his  liability  for  calls.^^  He  must  avoid  the  whole 
contract  to  escape  this  liability/*  Of  course  if  he  ratifies  his 
contract  after  majority  he  cannot  escape  liability/^  It  may  un- 
doubtedly be  provided  by  statute  that  the  property  of  a  minor 
in  the  hands  of  his  guardian  may  be  taken  on  his  stock-liability ; 
and  under  such  a  statute  his  real  estate  may  be  levied  on/®  Of 
course  one  subscribing  for  stock  in  name  of  minors,  who  himself 
receives  the  benefit  of  stock  is  personally  liable  for  debt/^ 

§880.     Concealment  or  misrepresentation  of  minority. 

Mere  omission  to  disclose  minority  does  not  estop  the  infant 
to  avoid  the  contract,  or  give  to  the  adversary  party  any  right  of 
action,  either  in  law  or  equity.^  l^To  estoppel  can  arise  by  reason 
of  matter  occurring  after  the  transaction  in  question.  Thus 
■where  A  conveyed  realty  to  B  when  a  minor,  and  thereafter 
brought  suit  to  have  such  deed  set  aside  on  the  ground  of  fraud 

10  Smith  V.  Ry.  Co.,  91  Tenn.  221;  Mar.  (Ky.)  1;  Roman  v.  Fry,  5  J. 
18  S.  W.  546.  J.  Mar.  (Ky.)   634. 

11  Newry,  etc.,  Ry.  v.  Coombe,  3  i  Confederation  Loan  Association 
Ex.  565;  Northwestern  Ry.  v.  Mc-  v.  Kinnear,  23  Ont.  App.  497; 
Michael,  5  Ex.  114.  Davidson    v.    Young,    38    111.    145; 

12  Dublin,  etc.,  Ry.  v.  Black,  8  Ex.  Alvey  v.  Reed,  115  Ind.  148;  7  Am. 
181.            «  St.  Rep.  418;    17  N.  E.   265;   Price 

13  Leed,  etc.,  Ry.  v.  Fearnley,  4  v.  Jennings,  62  Ind.  Ill;  Sewell  v. 
Ex.  26.  Sewell.  92  Ky.  500;  36  Am.  St.  Rep. 

1*  Northwestern  Ry.  V.  McMichael,  606;   18  S.  W.  162;  Bailey  v.  Barn- 

5  Ex.  114.  berger,     11     B.     Mon.     (Ky.)     113; 

15  Cork,  etc.,  Ry.  v.  Cazenove,   10  Baker    v.    Stone,    136    Mass.    405; 

Q.    B.    935    (10   Ad.    &    El.).     Thig  Brantley    v.    Wolf,    60    Miss.    420; 

case  has  been  criticised,  but  on  the  Stack  v.  Cavanaugh,  67  N.  H.  149; 

question  whether  the  act  of  retain-  30   Atl.   350;    Waugh    v.   Beck,    114 

ing  stock  after  majority  was  a  rat-  Pa.  St.  422;  60  Am.  Rep.  354;  6  Atl. 

ification.  384;     Bible    v.     Wisecarver     (Tenn. 

leMansur  v.  Pratt,  101  Mass.  60.  Ch.  App.),  50  S.  W.  670. 

17  Castleman   v.   Holmes,   4   J.   J. 


CONTKACTS    OF    INFANTS. 


136; 


alleging  that  he  was  of  age  when  such  conveyance  was  made, 
he  is  not  estopped  to  allege  thereafter  in  a  subsquent  suit  that 
he  was  a  minor. ^  Where  the  infant  has  made  false  representa- 
tions as  to  his  age  no  estoppel  can  arise  where  the  other  party 
is  not  in  fact  deceived  thereby.^  So  no  estoppel  can  arise  out  of 
a  representation  of  infancy  made  to  the  agent  of  the  mortgagee 
and  known  to  him  to  be  false  ;*  or  where  before  his  conveyance 
a  minor  testified ,  that  he  was  of  full  age,  it  not  being  shown 
that  grantee  knew  of  and  relied  on  such  statement.^  Even  where 
the  adversary  party  is  deceived,  no  estoppel  can  arise  in  an 
action  at  law,°  except  where  the  Common  Law  is  modified  bj 
statute.^  So  a  misrepresentation  by  an  infant  that  his  disability 
to  contract;  has  been  removed  by  decree  of  court  does  not  estop 
him  from  pleading  infancy  as  a  defense.^  In  Kentucky  the  doc- 
trine of  estoppel  seems  to  be  applied  in  such  cases,  even  at  law,* 


2Ridgeway  v.  Herbert,  150  Mo. 
606;  73  Am.  St.  Rep.  464;  51  S.  W. 
1040. 

3  Watson  V.  Billings,  38  Ark.  278 ; 
42  Am.  Rep.  1;  Bradshavv  v.  Van 
Winkle,  133  Ind.  134;  32  N.  E.  877; 
Ridgeway  v.  Herbert,  150  Mo.  606; 
73  Am.  St.  Rep.  464;  51  S.  W.  1040; 
Charles  v.  HasLedt,  51  N.  J.  Eq. 
171;  26  All.  564. 

4  Charles  v.  Hastedt,  51  N.  J.  Eq. 
171 ;  26  Atl.  564. 

5  Bradshaw  v.  Van  Winkle,  133 
Ind.  134;  32  N.  E.  877. 

6  Burdett  v.  Williams,  30  Fed. 
697;  Oliver  v.  McClelland,  21  Ala. 
675;  Watson  v.  Billings,  38  Ark. 
278;  42  Am.  Rep.  1;  Wieland  v. 
Kobick,  110  111.  16;  51  Am.  Rep. 
676;  Vallandingham  v.  Johnson,  85 
Ky.  288;  3  S.  W.  173;  WMlson  v. 
Wilson  (Ky.),  50  S.  W.  260;  Merri- 
man     v.     Cunningham,     11     Cush. 

(Mass.)  40;  Folds  v.  Allardt,  35 
Minn.  488;  29  N.  W.  201;  Conrad 
V.  Lane.  26  Minn.  389;  37  Am.  Rep. 
412;  4  N.  W.  695;  Ridgeway  v.  Her- 


bert, 150  Mo.  606;  73  Am.  St.  Rep. 
404;  51  S.  W.  1040;  Burley  v.  Rus- 
sell, 10  N.  H.  184;  34  Am.  Dec. 
146;  Houston  v.  Cooper,  3  N.  J.  L. 
866;  Studwell  v.  Shapter,  54  N.  Y. 
249 ;  Conroe  v.  Birdsall,  1  Johnson's 
Cases  (N.  Y.)  127;  1  Am.  Dec.  105; 
Carolina,  etc..  Association  v.  Black, 
119  N.  C.  323;  25  S.  E.  975; 
Cresinger  v.  Welch,  15  Ohio  156;  45 
Am.  Dec.  565;  Whitcomb  v.  Joslyn, 
51  Vt.  79;  31  Am.  Rep.  678;  Eliot 
V.  Eliot,  81  W'is.  295;  15  L.  R.  A. 
259;  51  N.  W.  81. 

7  Dillon  V.  Burnham,  43  Kan.  77 ; 
22  Pac.  1016.  Thus  in  Kansas  a 
minor  who  by  representations  that 
he  is  of  full  age,  or  by  engaging  in 
business  as  an  adult,  deceives  the 
other  party,  cannot  rescind.  Dil- 
lon V.  Burnham,  43  Kan.  77;  22 
Pac.  1016. 

8  Wilkinson  v.  Buster.  124  Ala. 
574;  26  So.  940. 

9  Damron  v.  Commonwealth,  110 
Ky.  268;  96  Am.  St.  Rep.  453;  6i 
S.  W.  459. 


13G6 


PAGE    ON    CONTRACTS. 


In  equity,  however,  an  infant,  who  by  representations  or  by 
conduct,  misleads  the  other  party  into  believing  that  the  infant 
is  of  full  age,  is  estopped  to  allege  his  infancy;"  as  where  a 
minor  obtained  a  settlement  with  his  guardian  by  representing 
that  he  w^as  of  age,^^  or  where  the  infant  in  order  to  induce  the 
purchaser  to  buy,  has  made  affidavit  that  he  was  of  age.^"  In 
Minnesota  it  has  been  held  that  a  minor  is  not  estopped  by  his 
representation  that  he  is  of  age  to  avoid  a  mortgage/'*  Whether 
an  infant  who  falsely  represents  himself  as  being  of  full  age  and 
thereby  induces  one  to  sell  him  chattels  is  liable  on  an  action 
for  fraud,  is  a  question  on  which  the  authorities  are  in  conflict. 
In  the  majority  of  cases  it  has  been  held  that  he  is  not  liable  f* 
but  in  other  cases  it  has  been  held  that  he  is  liable.^^  It  has  been 
held  that  if  the  infant  has  induced  the  adversary  party  to  enter 


10  Schmitheimer  v.  Eiseman,  7 
Bush.  (Ky.)  298;  Ferguson  v.  Bobo, 
54  Miss.  121 ;  Ryan  v.  Growney,  125 
Mo.  474,  484;  28  S.  W.  189,  755; 
Hayes  v.  Parker,  41  K  J.  Eq.  630; 
7  Atl.  511;  Pemberton,  etc..  Asso- 
ciation V.  Adams,  53  N.  J.  Eq.  258; 
31  Atl.  280;  Adams  v.  Fite,  3  Baxt. 
(Tenn.)  69;  Harsein  v.  Cohen  (Tex, 
Civ.  App.),  25  S.  W.  977.  On  re- 
hearing in  Eyan  v.  Growney,  125 
Mo.  474;  28  S.  W.  189,  the  court 
on  account  of  the  insufficiency  of  the 
record  finally  on  motion  for  rehear- 
ing remanded  the  case  "  in  order 
that  the  lower  court  may  rehear  the 
case,  unboimd  by  any^iing  said  in 
the  original  opinion." 

"Hayes  v.  Parker,  41  N.  J.  Eq. 
630;  7  Atl.  511. 

12  Schmitheimer  v.  Eiseman,  7 
Bush.  (Ky.)  298;  Ryan  v.  Growney, 
125  Mo.  474,  484;  28  S.  W.  189, 
755. 

13  Alt  V.  Groff,  65  Minn.  191;  68 
N.  W.  9.  This  case  was  brought  at 
law,  but  the  validity  of  the  mort- 
gage was  raised  by  the  answer  and 


denied   by   the   reply,   and   raised   a 
question  in  equity. 

14  Johnson  v.  Pie,  1  Lev.  169;  1 
Sid.  258;  1  Keb.  905;  Grove  v. 
yevill,  1  Keb.  778;  Jennings  v.  Run- 
dall,  8  T.  R.  335;  Green  v.  Green- 
bank,  2  Marsh.  485;  Price  v.  Hew- 
ett,  8  Exch.  146 ;  Wright  v.  Leonard, 
11  C.  B.  (N.  S.)  258;  De  Roo  v. 
Foster,  12  C.  B.  (N.  S.)  272; 
Brown  v.  Dunham,  1  Root  (Conn.) 
272;  Geer  v.  Ho\y,  1  Root  (Conn.) 
179;  Burns  v.  Hill,  19  Ga.  22;  Slay- 
ton  V.  Barry,  175  Mass.  513;  78  Am. 
St.  Rep.  510;  49  L.  R.  A.  560;  56  N. 
E.  574;  Merriam  v.  Cunningham,  11 
Cush.  (Mass.)  40;  Wilt  v.  Welsh,  6 
Watts  (Pa.)  9;  Kilgore  v.  Jordan, 
17  Tex.  341;  Nash  v.  Jewett,  61  Vt. 
501;  15  Am.  St.  Rep.  931;  4  L.  R. 
A.  561 ;  18  Atl.  47 ;  Gilson  v.  Spear, 
38  Vt.  311;  88  Am.  Dec.  659. 

15  Rice  V.  Boyer.  108  Ind.  472;  58 
Am.  Rep.  53;  9  N.  E.  420;  Hall  v. 
Butterfield,  59  X.  H.  354;  47  Am. 
Rep.  209;  Eaton  v.  Hill.  50  X.  H. 
235 ;  9  Am.  Rep.  189 ;  Fitts  v.  Hall, 
9  N.  H.  441;  Wallace  v.  Morss,  5 
Hill    (X.  Y.)    391. 


CONTKACTS    OF    INFAffTS.  1367 

into  the  contract  by  a  fraudulent  representation  as  to  the  age 
of  the  infant,  he  must  account  for  the  consideration  even  if  he 
has  wasted  it.^** 

§881.    Ratification. —  Who  can  ratify. 

The  proposition  that  an  infant's  contracts  in  general  are 
voidable  implies  that  they  may  be  ratified.  This  cannot  be  done 
by  an  infant  before  reaching-  majority  as  his  ratification  would 
have  no  greater  effect  than  his  original  contract.^  In  case  the 
infant  dies  before  reaching  majority  his  personal  representative 
may  affirm,^  even  before  the  infant  would  have  reached  majority 
had  he  lived.^  Like  other  agreements,  a  valid  ratification  must 
be  made  by  one  who  is  competent  to  contract  and  free  from 
restraint.*  Hence  a  ratification  is  ineffectual  if  made  after 
majority  by  one  who  has  been  put  under  guardianship  as  a 
spendthrift,  the  statute  making  void  his  contracts  after  the 
appointment  of  a  guardian.^  A  threat  of  a  civil  action  does 
not  prevent  a  ratification  from  being  binding.®  By  the  better 
reasoning  it  has  been  held  that  a  ratification  after  majority  is 
valid  though  the  fonner  infant  did  not  know  that  by  kw  infancy 
wa?  a  defense.^     The  amount  of  legal  knowledge  poes^ssed  by 

16  Pemberton.   etc.,   Association  v.  300 ;  McCarty  v.  Carter,  4?  JU.  53  ; 

Adams.   53   N.   J.   Eq.   258;    31   Atl.  95  Am.  Dec.  572. 

280.     See    obiter    in    Petty    v.    Rob-  ^  Chandler  v.   Simmons,   97   Mass. 

erts,  7  Bush.  (Ky.)  410.  508;  9S  Am.  Dec.  117. 

1  Sanger    v.     Hibbard,     104     Fed.  6  Bestor  v.  Hickey,  71  Conn.  18i  : 
455;    43    C.    C.    A.    635;    Dana    v.  41  Atl.  555. 

Coombs,   6  Greenleaf    (Me.)    89;    19  ^  American,    etc.,    Co.    v.    Wright. 

Am.  Dec.  194;  Chandler  v.  Simmons,  101  Ala.  658;   14  So.  399;  Bestor  v. 

97    Mass.    508;    93    Am.    Dec.    117;  Hickey,  71   Conn.   18;   41   Atl.   555; 

Corey    v.     Burton,     32    Mich.     30;  Clark  v.  Van  Court,   100  Ind.   113; 

Ridgeway  v.  Herbert,  150  Mo.  606;  50  Am.  Rep.  774;  Morse  v.  Wheeler, 

73  Am.  St.  Rep.  464;  51  S.  W.  1040;  4    All.     (Mass.)     570;    Anderson    v. 

Cheshire  v.  Barrett,  4  McCord.    (S.  Soward,  40  0.  S.  325;  48  Am.  Rep. 

C.)  241;  17  Am.  Dec.  735;  O'Dell  v.  687.     "The  contract  of  a  minor,  in- 

Rogers,  44  Wis.  136.  eluding  the  power,  on  coming  of  age, 

2  Bozeman   v.    Browning,   31    Ark.  without   any   new   consideration,    to 
364.  make   the   contract  binding  on  him, 

3  Shropshire    v.    Burns,    46    Ala.  is  a  transaction  sui  generis,  and  is 
108.  not  strictly  analogous  to  any  other 

4  Sims    V.    Everhardt,    102    U.    S.  known  to  the  law.     The  nature  and 


1368 


PAGE    ON    CONTRACTS. 


any  one  at  a  given  time  in  the  past  is  a  question  almost  impos- 
sible to  determine  from  evidence,  as  the  person  himself  is  usually 
the  only  one  who  knows  how  much  he  knew ;  and  the  rule  just 
given  is  a  wise  and  safe  one ;  yet  it  must  be  admitted  that  a  con- 
siderable number  of  cases,  mostly  however,  in  mere  dicta,  hold 
that  a  ratification  is  invalid  unless  made  with  knowledge  that 
infancy  was  a  defense.^ 


§882.     Nature  and  eflfect  of  ratification. 

Ratification  is  not  the  making  of  a  new  contract,  but  is  an 
election  by  the  infant  between  his  two  antagonistic  rights  of 
treating  a  pre-existing  contract  as  void  or  valid,  in  favor  of 
treating  it  as  valid.^  No  new  consideration  is  therefore  neces- 
sary," and  on  ratification  the  contract  becomes  valid  from  the 


validity  of  the  contract  depend  on 
the  acts  of  a  minor  who  has  the 
capacity  to  assent,  but  not  the  ca- 
pacity to  bind  himself  during  mi- 
nority; the  right  to  enforce  the  con- 
tract depends  on  the  acts  of  an 
adult  who  has  no  special  incapaci- 
ties nor  privileges.  When  he  exer- 
cises his  option,  which  results  from 
his  contract  made  while  a  minor, 
to  bind  or  not  to  bind  himself  by 
the  contract  to  which  he  has  as- 
sented, he  stands  as  every  one  else 
stands  in  the  performance  of  a  vol- 
untary act;  he  is  presimied  to  know 
the  law.  So  in  the  present  case,  the 
defendant  knew  he  had,  while  a 
minor,  agreed,  for  a  fair  considera- 
tion which  he  had  received  and  en- 
joyed, to  pay  the  amount  in  ques- 
tion to  the  plaintiflf,  and  voluntarily, 
in  specific  terms,  promised  to  pay 
that  sum.  This  promise  bound  him 
to  make  the  payment  by  force  of 
the  same  law  that  exempted  him 
from  liability  until  the  promise 
was  made.  It  is  immaterial  whether 
he  knew  or  did  not  know  the  law; 


if  such  knowledge  could  affect  his 
act,  he  is  charged  with  the  knowl- 
edge, and  cannot  be  permitted  to 
show  the  contrary."  Bestor  v. 
Hickey,  71  Conn.  181,  186;  41  Atl, 
555. 

sHarmer  v.  Killing,  5  Esp.  102; 
Tucker  v.  Moreland,  10  Pet.  (U.  S.) 
59;  Petty  v.  Roberts,  7  Bush.  (Ky.) 
410;  Owen  v.  Long,  112  Mass.  403; 
Hinely  v.  Margaritz,  3  Pa.  St.  428; 
Scott  V.  Buchanan,  11  Humph. 
(Tenn.)  468;  Hatch  v.  Hatch,  60 
Vt.  160;  13  Atl.  791. 

1  The  act  of  an  infant  in  making 
valid  his  prior  voidable  contract  is 
said  to  be  "  analogous  either  to  a 
waiver  or  a  ratification  or  a  new 
contract.  Such  a  promise  is  fre- 
quently indicated  by  all  these 
names;  they  have  been  indifferently 
used  in  several  of  our  decisions  as 
terms  of  convenience  and  partial  il- 
lustration, but  it  certainly  cannot 
be  accurately  described  by  either." 
Bestor  v.  Hickey.  71  Conn.  181,  187; 
41  Atl.  555. 

2  American,  etc.,  Co.  v.  Dykes,  111 


CONTRACTS  OF  INFANTS.  1369 

date  oii  which  it  was  made,  and  not  merely  from  the  date  of 
the  ratification.^  Hence  a  deed  when  ratified  prevails  over  a 
gratuitous  conveyance  of  the  same  property  made  between  the 
original  deed  and  the  ratification.*  A  ratification  once  made 
without  fraud,  duress  and  the  like  is  final,  and  the  former  infant 
cannot  thereafter  rescind.^  The  proposition  has  been  repeatedly 
advanced  that  a  ratification,  after  suit  was  brought,  is  of  no 
effect.  The  reason  given  is  that  "  There  must  be  a  subsisting 
right  of  action  at  the  time  of  suing  out  the  plaintiff's  writ, 
which  right  of  action  no  subsequent  promise  can  give."®  Evi- 
dently this  reasoning  misapprehends  the  real  nature  of  ratifi- 
cation, and  rests  upon  the  fallacy  that  an  infant's  executory  con- 
tract is  of  no  effect  until  ratified.^  It  is  even  said  that  a 
"  promise  cannot  relate  back  .  .  .  so  as  to  make  the  orig- 
inal contract  a  good  foundation  for  an  action  from  the 
beginning."^  An  examination  of  the  cases  usually  cited  in  sup- 
jiort  of  this  proposition  shows  that  in  some  it  is  a  dictum,  as 
there  was  no  valid  ratification  at  all,  either  before  or  after  suit  ;* 
while  in  others  it  is  apparently  necessary  to  the  decision. ^° 
Even  in  some  of  the  cases  last  cited  it  seems  from  somewhat  in- 
complete statements  of  fact  that  the  facts  relied  on  as  a  ratifi- 
cation occurred  after  a  disaffirmance  of  liability  by  a  plea  of  in- 
fancy. 

Ala.    178;    56  Am.   St.  Rep.   38;    18  Carthy  v.  Nicrosi,   72  Ala.  332;   47 

So.  292;   Conklin  v.  Ogborn,  7  Ind.  Am.   Rep.  418;   Hastings  v.  Dollar- 

553;  Grant  v.  Beard,  50  N.  H.  129.  hide,  24  Cal.  195;  Yonmans  v.  For- 

3  American,  etc.,  Co.  v.  Dykes,  111  syth,  86  Hun  (N.  Y.)  370;  Luce  v. 
Ala.  178;  56  Am.  St.  Rep.  38;  18  Jestrab,  —  N.  D.  — ;  97  N.  W.  848. 
So.  292;  Hall  v.  Jones,  21  Md.  439;  6  Hale  v.  Gerrish,  8  N.  H.  374. 
Durfee  ex  rel.  Lantz  v.  Abbott,  61  375. 

Mich.  471;  28  N.  W.  521;  Minock  v.  7  See  §  872. 

Shortridge,    21    Mich.    304;    Tibbets  » Merriam    v.    Wilkins,    6    N.    H. 

V.   Gerrish,   25   N.   H.   41 ;    57   Am.  432,  433 ;  25  Am.  Dec.  472. 

Dec.  307;  Holt  v.  Underbill,  10  N.  9  Thing    v.    Libbey,    16    Me.    55; 

H.  220;    34  Am.  Dec.   148;    Harner  Ford   v.    Phillips,    1    Pick.    (Mass.) 

V.  Dipple,  31  0.  S.  72;  27  Am.  Rep.  202. 

496;  Cheshire  v.  Barrett,  4  McCord.  lo  Freeman  v.   Nichols.   138  Mass. 

(S.  C.)   241;   17  Am.  Dec.  735.  313;   Hale  v.  Gerrish,  8  N.  H.  374; 

4  Palmer  v.  Miller,  25  Barb.  (N.  Merriam  v.  Wilkins,  6  N.  H.  432; 
Y.)   399.  25  Am.  Dec.  472. 

sVoltz  V.  Voltz,  75  Ala.  555;  Mc- 


1370 


PAGE    ON    CONTEACTS. 


§883.    What  constitutes  ratification. 

An  express  promise  by  the  former  infant  to  comply  with  the 
terms  of  the  contract^  or  his  conduct  in  keeping  realty  purchased, 
and  treating  it  as  his  own  after  hc  comes  of  age,"  or  selling  it,^ 
or  a  suit  for,  and  receipt  of  purchase  price  after  majority,*  is 
a  ratification ;  even  if  made  after  a  suit  to  disaffirm  the  con- 
tract.^ Thus  a  sale  of  property  which  an  infant  bought,  sub- 
ject to  liens,  and  on  which  the  infant  gave  a  mortgage  to  raise 
money  to  discharge  the  liens,  is  a  ratification  of  the  entire 
transaction  including  the  mortgage.^  So  is  a  recital  in  a  mort- 
gage given  after  majority,  that  the  realty  is  subject  to  the  lien 
of  another  mortgage  given  during  minority.^  Where  the  prop- 
erty is  sold  before  majority,  giving  a  deed  therefor  after  ma- 
jority is  a  ratification.^  So  is  the  retention  and  use  of  the 
proceeds  after  majority.^     An  oral  promise  to  perform  a  bond 


1  Bestor  v.  Hickey,  71  Conn.  181; 
41  Atl.  555;  Barlow  v.  Robinson.  174 
111.  317;  51  N.  E.  1045;  Whitney  v. 
Dutch,  14  Mass.  457;  7  Am.  Dec. 
229;  Martin  v.  Mayo,  10  Mass. 
137;  6  Am.  Dec.  103;  Tyler  v.  Gal- 
lop, 68  Mich.  185;  13  Am.  St.  Rep. 
336 ;  35  N.  W.  902 ;  Hoiilton  v.  Man- 
teuffel,  51  Minn.  185;  53  N.  W. 
541;  Edgerly  v.  Shaw.  25  N.  H.  514; 
57  Am.  Dec.  349;  Tibbets  v.  Ger- 
rish,  25  N.  H.  41;  57  Am.  Dec.  307; 
Hatch  V.  Hatch,  60  Vt.  160;  13  Atl. 
791. 

2  American,  etc.,  Co.  v.  Dykes, 
111  Ala.  178;  56  Am.  St.  Rep.  38; 
18  So.  292 :  Ellis  v.  Alford,  64  Miss. 
8;  1  So.  155;  Baxter  v.  Bush.  29 
Vt.  465;  70  Am.  Dec.  429. 

3  Buchanan  v.  Hubbard,  119  Ind. 
187;  21  N.  E.  538;  Leathers  v.  Ross, 
74  la.  630;  38  N.  W.  516;  Dana  v. 
Coombs.  6  Greenl.  (Me.)  89;  19  Am. 
Dec.  194;  Uecker  v.  Koehn,  21  Neb. 
559;  59  Am.  Rep.  849;  32  N.  W. 
583;  Lynde  v.  Budd.  2  Paisje  Ch. 
(N.  Y.)   191;  21  Am.  Dec.  84. 


4Lathrop  v.  Doty,  82  la.  272;  47 
N.  W.  1089. 

5  Buchanan  v.  Hubbard,  119  Ind. 
187;  21  N.  E.  538. 

6  Langdon  v.  Clayson,  75  Mich. 
204;  42  N.  W.  805.  In  this  case 
the  infant  on  reaching  majority 
quit-claimed  the  land  to  A,  and 
afterward  made  a  warranty  deed  to 
A,  reciting  therein  that  it  was  for 
the  purpose  of  "  expressly  revoking 
all  former  deeds  and  mortgages 
made  by  me  before  I  became  of 
age." 

7  Ward  V.  Anderson,  111  N.  C. 
115;  15  S.  E.  933. 

8  Wall  V.  Mines,  130  Cal.  27;  62 
Pac.  386. 

9  Waters  v.  Lyon,  141  Ind.  170; 
40  N.  E.  662.  In  Owens  v.  Phelps, 
95  N.  C.  286,  this  was  said  to  be  ad- 
missible in  evidence,  though  not  of 
itself  a  ratification.  Contra,  in 
Walsh  V.  Powers,  43  N.  Y.  23,  3 
Am.  Rep.  654;  retention  of  the  pro- 
ceeds of  the  sale  of  real  estate  was 
held  not  to  ratify  a  mortgage  given 
thereon  during  minority. 


CONTRACTS    OF    INFANTS. 


1371 


to  convey  realty  and  a  request  for  a  payment  thereon/"  a  prom- 
ise after  majority  to  pay  the  note  given  for  laud  and  take 
the  land,  if  the  vendor  will  remit  the  accrued  interest,"  and  an 
oral  statement  of  satisfaction  with  a  deed  executed  during 
minority^^  have  each  been  held  to  be  a  ratification.  But  where 
A,  while  a  minor,  gave  notes  secured  by  a  real  estate  mortgage, 
then  married,  and  after  coming  of  age  executed  an  instrument 
without  any  consideration,  reciting  that  she  took  "  pride  and 
pleasure  in  ratifying,  affirming  and  indorsing  the  said  acts  as 
fully  "  as  if  she  had  been  of  age,  this  did  not  affirm  the  mort- 
gage,  because  it  was  not  executed  in  the  method  prescribed 
by  the  Tennessee  statute  for  the  conveyance  by  married  women 
of  their  interests  in  realty.^^  While  good  as  against  the  infant, 
an  oral  affirmance  has,  under  recording  statutes,  been  held  in- 
valid as  to  subsequent  purchasers  for  value  who  know  of  the 
deed  made  by  the  infant,  but  are  ignorant  of  his  ratification.^* 
So  conduct  in  keeping  personalty  and  using  it  as  his  own  after 
majority,^^  or  demanding  and  receiving  it  after  majority,"  or 
selling  it,"  or  exchanging  it,^*  is  a  ratification.  Thus  an  infant 
partner  cannot  retain  partnership  property  transferred  to  him 
on  his  promise  to  pay  partnership  debts  and  refuse  to  pay  such 
debts.^^  But  retaining  possession  for  three  months,  notice  of 
rescission   being  promptly   given   is  not  ratification,^*'   nor  is 

10  Barlow    v.    Robinson,    174    111.  Tex.  240;  sm 6  ?iom.,  Manney  v.  Allen, 
317;   51  N.  E.   1045.  13     S.    W.    989.     Contra,    Paul    v. 

11  Houlton  V.  Manteuffel,  51  Minn.  Smith,   41    Mo.   Ap.   275    (retaining 
185;  53  N.  W.  541.  property   did   not  amount  to  ratifi- 

12  Ferguson  v.  Bell,  17  Mo.  347.  cation  in  conformity  with  Missouri 

13  Walton    V.    Gaines,    94    Tenn.  statute). 

420;   29  S.  W.  458.  le  Nanny  v.   Allen,   77   Tex.   240; 

1*  Black  V.  Hills,  36  111.  376;    87  sub  nomine,  Manney  v.  Allen,  13  S. 

Am.  Dec.  224.  W.  989. 

isLawson    v.    Lovejoy,    8    Greenl.  i^  Hilton  v.  Shepherd,  92  Me.  160; 

(Me.)  405;  23  Am.  Dec.  526;  Delano  42  Atl.  387. 

V.  Blake,  11  Wend.    (N.  Y.)    85;  25  is  Curry  v.  Plow  Co.,  55  111.  App. 

Am.  Dec.  617;   Cheshire  v.  Barrett,  82. 

4  McCord  (S.  C.)  241;  17  Am.  Dec.  is  Kitchen   v.    Lee,   11    Paige    (N. 

735;  Ihley  v.  Padgett,  27  S.  C.  300;  Y.)   107;  42  Am.  Dec.  101. 

3   S.   E.   468;    Nanny   v.   Allen,    77  20  Scott  v.  Scott,  29  S.  C.  414;   7 

S.  E.  811. 


1372  PAGE    ON    CONTKACTS. 

retaining  property  if  claimed  by  a  different  title,  as  where  the 
property  in  question  was  partnership  property  which  was  at- 
tached, sold,  bought  in  by  the  infant's  grandfather,  and  sold 
by  him  to  the  infant."^  Acting  as  a  partner  for  a  few  days  after 
majority,  by  drawing  profits  has  been  held  not  to  be  a  ratification 
of  individual  liability  if  in  ignorance  of  outstanding  debts,^^ 
but  otherwise  it  is."^  By  the  weight  of  authority  the  rule  in 
ratification  of  an  infant's  contracts,  different  from  that  in  waiv- 
ing the  statute  of  limitations,  is  that  a  mere  acknowledgment 
that  the  obligation  has  been  incurred,'*  or  even  a  part  payment 
thereon,"^  is  not  a  ratification.  Even  payment  of  interest,  part 
payment  of  principal,  and  a  mere  acknowledgment  of  the 
debt,"''  or  a  statement,  "  I  owe  a  debt,  and  you  will  get  your 
pay,"  was  held  not  to  be  a  ratification  f^  nor  is  an  acknowledg- 
ment of  the  debt  coupled  with  a  statement  that  he  would  not 
pay  it,"*  or  with  an  offer  to  compromise,  if  not  accepted.""  A 
provision  in  a  will  directing  just  debts  to  be  paid,  does  not 
authorize  the  executors  to  pay  debts  contracted  during  infancy.^" 
If  a  conditional  ratification  is  made,  the  offer  must  be  accepted 
and  the  condition  complied  with  to  make  it  a  valid  ratification.^^ 

21  Todd  V.  Clapp,  118  Mass.  495.  transaction  was  just  and  giving  a 

22Tobey  v.  ^Yood,   123   Mass.  88;  watch  to  be  taken  as  part  payment 

25  Am.  Rep.  27.  if  it  kept  good  time  was  a  ratifica- 

23  Salinas    v.    Bennett,    33    S.    C.  tion. 

285;  11  S.  E.  968.  26  Kendrick  v.  Xeisz,  17  Colo.  506; 

24  Fetrow    v.    Wiseman,    40    Ind.      30  Pac.  245. 

148;  Martin  V.  Mayo,  10  Mass.  137;  2- Hale  v.   Gerrish,   8   N.  H.   374. 

6   Am.   Dec.   103;    (obiter)    Reed   v.  28  Minock  v.  Shortridge,  21  Mich. 

Boshears,    4     Sneed     (Tenn.)     118;  304. 

Hatch  V.  Hatch,  60  Vt.  160;  13  Atl.  29  Bennett  v.  Collins.  52  Conn.  1. 

791.  30  Jackson  v.  Mayo.  11  Mass.  147: 

25Thrupp  V.  Fielder.  2  Esp.  628;  6  Am.  Dec.   167;   Smith  v.  Mayo.  9 

Kendrick  v.  Neisz,  17  Colo.  506;  30  Mass.  62;   6  Am.  Dec.  28.     Contra, 

Pac.    245;     Catlin    v.    Haddox,    49  Merchants',  etc.,  Ins.   Co.  v.  Grant, 

Conn.  492;  44  Am.  Rep.  249;  Barn-  2  Edw.  Ch.    (N.  W.)    544. 

aby    V.    Barnaby,    1    Pick.     (Mass.)  3i  Craig  v.  Van  Bebber,   100   Mo. 

221;  Hinely  v.  Margaritz,  3  Pa.  St.  584;   10  Am.  St.  Rep.  569;  13  S.  W. 

428 ;    Rapid,    etc.,    Co.    v.    Sanford  906 ;  State  ex  rel.  Peacock  v.  Binder, 

(Tex.    Civ.    App.),    24    S.    W.    587.  57  N.  J.  L.  374;   31  Atl.  215:   Bre- 

But   in   Little   v.   Duncan,    9   Rich,  see  v.  Stanley,  119  N.  C.  278;  25  S. 

Law  (S.  C.)  55;  64  Am.  Dec.  760,  it  E.  870. 
was   held   that    admitting   that  the 


CONTEACTS  OF  INFANTS.  1373 

Thus  neither  a  promise  by  a  minor  after  coming  of  age  to  pay  if 
he  was  ever  to  do  so  without  inconvenience/"  nor  an  offer  after 
majority  to  execute  a  deed  of  confirmation  on  jjayment  of  the 
balance  of  the  purchase  money/''  is  a  ratification.  So  to  enforce 
a  contract  which  the  former  infant  promised  to  perform  if  able, 
it  must  be  shown  that  he  is  able.^*  If  an  express  promise  is 
relied  on  as  a  ratification,  it  must  be  made  to  the  adversary 
party  or  his  agent ;  not  to  a  stranger,^^  Hence  it  may  be  made 
to  an  attorney  with  whom  the  debt  is  placed  for  collection,^®  or 
his  clerk,^^  even  if  there  is  nothing  to  show  that  the  former  infant 
knew  of  his  agency.^*  At  Common  Law  an  infant's  ratification 
may  be  made  orally  f^  but  by  statutes  of  certain  states  this  rule  is 
modified  and  an  infant's  express  ratification  must  be  in  writ- 
ing.*** The  express  promise  must  be  absolute.  A  conditional 
promise  to  pay  an  open  account,  contained  in  a  letter  written 
after  majority,  is  not  a  compliance  with  the  Virginia  statute.*'' 
These  statutes  do  not  apply  to  contracts  ratified  by  the  conduct 
of  the  infant,  as  by  selling*"  or  retaining  possession  of  the 
property  purchased.*^  Mere  failure  to  disaffirm  promptly  is 
not  a  ratification.**     Thus,  continuing  to  live  with  his  parents 

32  Bresee  V.  Stanley,  119  N.C.  278;  lips  v.  Green,  5  T.  B.  Mon.  (Ky.) 
25  S.  E.  870.  344;     Wheaton    v.     East,     5    Yerg. 

33  Craig  V.  Van  Bebber,  100  Mo.  (Tenn.)  41;  26  Am.  Dec.  251; 
584;  18  Am.  St.  Rep.  569;  13  S.  Stokes  v.  Brown,  4  Chand.  (Wis.) 
W.  906.  39;  3  Pinney   (Wis.)   311. 

34  Proctor  V.  Sears,  4  All.  (Mass.)  4o  Hartley  v.  Wharton,  11  Ad.  & 
95;  Thompson  v.  Lay,  4  Pick.  El.  934;  Stern  v.  Freeman,  4  Met. 
(Mass.)   48;   16  Am.  Dec.  325.  (Ky.)    309;    Neal  v.   Berry.   86  Me. 

35Hoit  V.  Underbill,  9  N.  H.  436;  193;  29  Atl.  987;  Bird  v.  Swain,  79 

32  Am.  Dec.  380;   Chandler  v.  Glo-  Me.   529;    11   Atl.  421;   Thurlow  v. 

ver,  32  Pa.  St.  509.  Gilmore,  40  Me.  378;  Ward  v.  Sche- 

30  Hodges  V.  Hunt,  22  Barb.    (N.  rer,  96  Va.  318;  31  S.  E.  518. 
Y.)    150.  41  Ward  v.   Scherer,   96   Va.   318; 

37  Mayer  v.  McLure,  36  Miss.  389;  31   S.  E.  518. 
72  Am.  Dec.  190.  42  Hilton  v.  Shepherd.  92  Me.  160; 

38Hoit    V.    Underbill,    10    N.    H.  42  Atl.  387. 
220;    34   Am.   Dee.    148.  43  McKaniy  v.  Cooper,  81  Ga.  679; 

39  West   V.    Penny,    16    Ala.    180;  8  S.  E.  312. 
Jeffords   v.    Ringgold,    6    Ala.    544;  44  Hill  v.  Xelms,   86   Ala.   442:   5 

Vaughan  v.  Parr,  20  Ark.  600 ;  Phil-  So.   796 ;    Hoffert  v.  Miller,   86   Ky. 


1374 


PAGE    ON    CONTRACTS. 


after  majority  is  not  a  ratification  hy  an  infant  of  an  applica- 
tion by  his  father  of  such  infant's  wages  to  the  rent.*^  How- 
ever, silence,  where  circumstances  impose  on  the  minor  the  duty 
of  speaking,  may  operate  as  a  ratification,"  as  where  he  stands 
by,  knowing  that  the  grantee,*'  or  the  vendee  of  his  grantee,** 
is  making  valuable  improvements  on  realty  sold  by  him,  in 
reliance  on  the  title.  The  mere  erection  of  valuable  improve- 
ments, unknown  to  the  minor,  as  where  he  was  absent  from  the 
state,  does  not  affect  his  right  to  disaffirm.*^ 

§884.     Who  can  disaffirm. 

The  infant  may  elect  the  other  alternative  and  rescind  the 
contract.  This  privilege  is  personal  to  himself  and  his  repre- 
sentatives. The  adversary  party  to  the  contract  cannot  avoid 
it.^  Thus  insurance  of  a  property  of  a  minor  is  enforceable 
where  the  party  taking  insurance  had  no  notice  of  a  rule  not 
to  insure  property  of  minors.^     So  an  employer  of  an  infant 


572;   6  S.  W.  447;  Lynch  v.  John- 
son,  109  Mich.  640;  67  X.  W.  908. 

i5  Lymansville  Co.  v.  Nieber,  19  R. 
I.  398;  36  Atl.  1133.  Contra,  obi- 
ter, Ridgeway  v.  Herbert,  150  Mo. 
606;  73  Am.  St.  Rep.  464;  51  S. 
W.    1040. 

46  Wheaton  v.  East,  5  Yerg. 
(Tenn.)  41;  26  Am.  Dec.  251;  Bige- 

low  V.  Kinney,  3   Vt.  353;   21   Am. 
Dec.  589. 

47  Davis  V.  Diidey,  70  Me.  236; 
35  Am.  Rep.  318. 

48  Lacy  V.  Pixler,  120  Mo.  383 ;  25 
S.  W.  206.  (In  this  case  the  infant 
also  received  part  of  the  purchase 
price   after  majority.) 

49  Birch  V.  Linton.  78  Va.  584 ;  49 
Am.  Rep.  381. 

iSeaton  v.  Tohill,  11  Colo.  App. 
211;  53  Pac.  170;  Gooden  v.  Rayl, 
85  la.  592;  52  N.  W.  506;  Resso  v. 


Lehan,  96  la.  45;  64  N.  W.  689; 
Arnous  v.  Lesassier,  10  La.  592 ;  29 
Am.  Dec.  470;  Oliver  v.  Houdlet,  13 
Mass.  237;  7  Am.  Dec.  134;  Patter- 
son V.  Lippincott,  47  N.  J.  L.  457; 
54  Am.  Rep.  178;  1  Atl.  506;  Wil- 
lard  V.  Stone,  7  Cow.  (N.  Y.)  22; 
17  Am.  Dec.  496;  Hunt  v.  Peake,  5 
Cow.  (N.  Y.)  475;  15  Am.  Dec.  475; 
Hicks  V.  Beam,  112  N.  C.  642;  34 
Am.  St.  Rep.  521;  17  S.  E.  490; 
Withers  v.  Ewing.  40  O.  S.  400;  As- 
signees of  Hull  V.  Connolly,  3  Me- 
Cord  (S.  C.)  6;  15  Am.  Dec.  612; 
Warwick  v.  Cooper,  5  Sneed  (Tenn.) 
659;  Stringfellow  v.  Early,  15  Tex. 
Civ.  App.  .597;  40  S.  W.  871;  Plate 
v.  Durst,  42  W.  Va.  63;  32  L.  R. 
A.  404;  24  S.  E.  580;  Johnson  v. 
Insurance  Co.,  93  Wis.  223;  67  N. 
W.  416. 

2  .Johnson    v.    Insurance    Co.,    93 
Wis.  223;  67  N.  W.  416. 


CONTRACTS    OF    INFANTS. 


1375 


cannot  avoid  his  contract  on  the  ground  of  infancy.'  So  a 
vendee  of  realty  cannot  disaffirm  a  contract  for  the  purchase 
thereof  because  the  vendor  is  a  minor.*  A  stranger  to  the  con- 
tract cannot  avoid  it.^  Thus,  an  insurance  company  cannot 
refuse  to  pay  a  policy  on  the  ground  that  it  was  assigned  to 
the  holder  by  a  minor,  the  minor  having  died  during  minority  f 
nor  can  a  railroad  company  plead  the  infancy  of  the  owner  of 
property  which  it  has  destroyed.'  So  a  surety  on  a  note  given 
by  an  infant  for  a  premium  for  an  insurance  policy  cannot 
avoid  the  insurance  policy.*  The  infant's  blood  representatives, 
such  as  his  heirs,^  or  his  personal  representatives,  such  as  his 
executor  or  administrator,^"  or  a  beneficiary  of  insurance  taken 
by  a  minor,^^  may  avoid  his  contracts.  Those  who  have  merely 
acquired  the  infant's  estate  by  bargain  and  sale,^^  or  by  pur- 
chase at  a  foreclosure  sale,^'  cannot  avoid  the  infant's  contracts 


3  Hicks  V.  Beam,  112  N.  C.  642; 
34  Am.  St.  Rep.  521;  17  S.  E.  490. 

4Dentler  v.  O'Brien,  56  Ark.  49; 
19  S.  W.  111. 

5  Hooper  v.  Payne,  94  Ala.  223; 
10  So.  431;  La  Grange  College  v. 
Anderson,  63  Ind.  367;  30  Am.  Rep. 
224;  Cannon  v.  Alsbury,  1  A.  K. 
Marsh.  (Ky.)  76;  10  Am.  Dec.  709; 
Beeler  v.  Bullitt,  3  A.  K.  Marsh. 
(Ky.)  280;  13  Am.  Dee.  161; 
Thompson  v.  Hamilton,  12  Pick. 
(Mass.)  425;  23  Am.  Dec.  619; 
Nightingale  v.  Withington,  15  Mass. 
272;  8  Am.  Dec.  101;  HiVl  v.  Tay- 
lor, 125  Mo.  331;  28  S.  W.  599; 
Mott  V.  Purcell.  98  Mo.  247;  11  S. 
W.  564;  Bordentown  v.  Wallace,  50 
N.  J.  L.  13;  11  Atl.  267;  Grogan  v. 
Insurance  Co.,  90  Hun  (N.  Y.)  521; 
Curtiss  V.  McDougal.  26  O.  S.  66; 
Blankenship  v.  Ry.  Co.,  43  W.  Va. 
135;   27  S.  E.   355. 

6  Grogan  v.  United  States,  etc., 
Insurance  Co.,  90  Hun   (N.  Y.)  521. 

7  Blankenship  v.  Ry.  Co.,  43  W. 
Va.    135;    27   S.    E.   355. 

8  Union   Central   Life   Ins.   Co.   v. 


Hilliard,  63  0.  S.  478;  81  Am.  St. 
Rep.  644;  53  L.  R.  A.  462;  59  N. 
E.  230. 

9  Bozeman  v.  Browning,  31  Ark. 
364;  Illinois,  etc.,  Co.  v.  Bonner,  75 
111.  315;  Gillenwater  v.  Campbell, 
142  Ind.  529;  41  N.  E.  1041;  Hill 
V.  Keyes,  10  All.  (Mass.)  258;  Har- 
ris V.  Ross,  86  Mo.  89;  56  Am.  R6p. 
411;  Ihley  v.  Padgett,  27  S.  C.  300; 
3  S.  E.  468;  Walton  v.  Gaines,  94 
Tenn.  420;  29  S.  W.  458. 

10  Shropshire  v.  Burns,  46  Ala. 
108;  Vaughn  v.  Parr,  20  Ark.  600; 
Hill  V.  Keyes,  10  All.  (Mass.)  258; 
Hussey  v.  Jewett,  9  Mass.  100;  Par- 
sons V.  Hill,  8  Mo.  135;  Roberts  v. 
Wiggin,  1  N.  H.  73;  8  Am.  Dec. 
38;  Tillinghast  v.  Holbrook,  7  R.  I. 
230;  Person  v.  Chase,  37  Vt.  647; 
88  Am.  Dec.  630. 

"O'Rourk  V.  Ins.  Co.,  23  R.  I. 
457;  91  Am.  St.  Rep.  643;  57  L.  R. 
A.  496;  50  Atl.  834. 

12  Curtiss  V.  McDougal,  26  O.  S. 
66. 

13  Harris  v.  Ross,  112  Ind.  314; 
13  N.  E.  873. 


1376 


PAGE    ON    CONTKACTS. 


with  reference  to  such  property.  An  infant's  guardian  ap- 
pointed on  the  ground  of  infancy,  cannot  avoid  a  contract  of 
the  infant;"  but  a  guardian  appointed  after  majority  on  the 
ground  that  the  former  minor  is  a  spendthrift  may  avoid  a 
conveyance  made  by  the  infant/^  So  it  has  been  held 'that 
neither  an  infant's  assignee  in  insolvency/"  nor  his  trustee/'^ 
can  avoid  his  contract.  A  parent  cannot  avoid  a  contract  of 
employment  made  by  the  infant.^®  An  infant  cannot  avoid  a 
contract  for  his  employment  made  by  his  father.^^ 

§885.     When  infant  can  disaffirm. 

An  infant  can  disaffirm  any  contract  during  minority/  except 
a  contract  executed  by  the  conveyance  of  real  estate,  which  can 
be  disaffirmed  only  after  he  reaches  majority.^     On  reaching 


14  Oliver  v.  Houdlet,  13  Mass.  237; 
7  Am.  Dec.  134.  In  this  ease  the 
above  proposition  was  limited  to 
contracts  beneficial  to  the  infant. 
So  in  case  of  a  mortgage  of  realty. 
Shreeves  v.  Caldwell,  —  Mich.  — ; 
97  N.  W.  764. 

15  Chandler  v.  Simmons,  97  Mass. 
508;   93  Am.  Dee.  117. 

16  Mansfield  v.  Gordon,  144  Mass. 
168;   10  N.  E.  773. 

IT  Des  Moines  Insurance  Co.  v. 
Mclntire,  99  la.  50;   68  N.  W.  565. 

18  Ping,  etc.,  Co.  v.  Grant,  — 
Kan.  — ;    75  Pac.   1044. 

19  Tennessee  Mfg.  Co.  v.  James, 
91  Tenn.  154;  30  Am.  St.  Rep.  865; 
15  L.  R.  A.  211;  18  S.  W.  262. 

1  Carpenter  v.  Carpenter,  45  Ind. 
142;  Indianapolis,  etc.,  Co.  v.  Wil- 
cox, 59  Ind.  429;  Clark  v.  Van 
Court,  100  Ind.  113;  50  Am.  Rep. 
774;  House  v.  Alexander,  105  Ind. 
109;  55  Am.  Rep.  189;  4  N.  E.  891; 
Rice  v.  Boyer,  108  Ind.  472;  58  Am. 
Rep.  53;  9  N.  E.  420;  7  West.  68; 
Shirk  V.  Shultz,  113  Ind.  571;  15  N. 
E.  12;  Childs  v.  Dobbins,  55  la. 
205;   7  N.  W.  496;   Bailey  v.  Bam- 


berger, 11  B.  Mon.  (Ky.)  113; 
Adams  v.  Beall.  67  Md.  53;  1  Am. 
St.  Rep.  379;  8  Atl.  664;  Blooming- 
dale  V.  Chittenden,  74  Mich.  698;  42 
N.  W.  166;  Carr  v.  Clough,  26  N. 
H.  280;  59  Am.  Dec.  345;  Grace  v. 
Hale,  2  Humph.  (Tenn.)  27;  36  Am. 
Dec.  296;  Price  v.  Furman,  27  Vt 
268;  65  Am.  Dec.  194.  Contra,  as 
to  a  compromise  of  personal  inju- 
ries which  cannot  be  avoided  by  the 
infant  during  minority.  Lansing  v. 
R.  R.,  126  Mich.  663;  86  Am.  St. 
Rep.  567;  86  N.  W.  147  (citing 
Dunton  v.  Brown,  31  Mich.  182; 
Armitage  v.  W^idoe,  36  Mich.  124; 
Osburn  v.  Farr,  42  Mich.  134;  3 
N.    W.   299). 

sProut  v.  Cock  (1896),  2  Ch. 
808;  Welch  v.  Bunce,  83  Ind.  382; 
Phillips  v.  Green,  3  A.  K.  Marsh. 
(Ky.)  7;  13  Am.  Dec.  124;  Ridge- 
way  V.  Herbert,  150  Mo.  606;  73 
Am.  St.  Rep.  464;  51  S.  W.  1040; 
Shipley  v.  Bunn,  125  Mo.  445;  28 
S.  W.  754;  Walsh  v.  Powers,  43  N. 
Y.  23;  3  Am.  Rep.  654;  Logan  v. 
Gardner,  136  Pa.  St.  588:  20  Am. 
St.    Rep.    939;    20    Atl.    625;    Scott 


CONTEACTS  OF  INFANTS.  1377 

majority  he  can  disaffirm  a  deed  given  by  him  during  minority.' 
His  right  to  disaffirm  contracts  concerning  personalty  during 
minority  has  been  limited  to  cases  where  such  a  course  was 
evidently  necessary  to  protect  his  interests,*  but  this  rule  has 
been  abandoned  and  he  can  now  disaffirm  such  contracts  at 
any  time  before  minority  that  he  sees  fit.^  Rescission  of  prop- 
erty made  during  minority  is  final  and  the  infant  or  his  repre- 
sentatives cannot  thereafter  rescind  such  rescission.  Thus  if 
an  infant  surrenders  a  life  insurance  policy  taken  out  by  him 
and  accepts  cash  therefor,  his  administrator  cannot  avoid  such 
surrender  and  enforce  payment  of  the  policy,  since  the  surrender 
is  a  rescission  by  the  infant.*'  So  stringent  is  the  rule  that  con- 
veyances of  realty  cannot  be  avoided  during  minority  that  a 
minor  cannot  redeem  realty  mortgaged  by  his  father  and  devised 
to  himself  and  his  mother,  of  which  the  mortgagee  has  obtained 
possession  by  acquiring  the  widow's  estate.^  But  an  infant  at 
majority  may  avoid  a  deed  of  his  interest  in  remainder,  though 
the  life  estate  has  not  expired.®  With  reference  to  his  executed 
contracts  for  conveying  realty,  it  has  been  held  that  he  could 
at  least  enter  during  minority  and  take  the  rents  and  profits,* 
but  this  view  seems  illogical  and  has  been  stoutly  denied.^" 
With  reference  to  the  rule  as  to  the  length  of  time  allowed 
to  an  infant  in  which  to  disaffirm  his  contracts  and  conveyances 
after  reaching  majority,  it  must  be  admitted  that  the  decisions 
are  sharply  at  variance.  The  English  courts,  followed  by  a 
very  considerable  number  of  American  courts,  hold  that  the 
infant  must  rescind  within  a  reasonable  time  after  majority  ;^^ 

V.    Buchanan,    11    Humph.    (Tenn.)  23;  57  L.  R.  A.  505;  40  S.  E.  822, 

468.     Contra,  Harrod  v.  Myers,   21  7  Prout    v.    Cock    (1896),    2    Ch. 

Ark.      592;      76      Am.      Dec.      409  808. 

(obiter).  8  ihley  v.  Padgett,  27  S.  C.  300; 

3  Shroyer    v.    Pittinger,     31    Ind.  3  S.  E.  468. 

App.  158;  67  N.  E.  475.  9  Bool  v.  Mix,  17  Wend.    (N.  Y.) 

4Farr  v.   Sumner,   12  Vt.  28;    36  119;    31   Am.  Dec.   285;    Cummings 

Am.  Dee.  327.  v.  Powell,  8  Tex.  80. 

5  See  cases  cited  in  third  preced-  lo  Shipley  v.  Bunn,  125  Mo.  445; 

ing  note.   And  see  Shipley  v.  Smith,  28  8.  W.  754. 

_  Ind.  _;   70  N.  E.  803.  ii  Edwards   v.   Carter    (1893),   A. 

ePippen   v.   Ins.    Co.,    130   N.    C.  C.  360;  Viditz  v.  O'Hagan   (1899), 
87 


1378 


PAGE    ON    CONTKACTS. 


and  this  conclusion  is  in  some  states  the  result  of  specific  statu- 
tory provisions/^  This  rule  is  insisted  on  with  especial  force 
in  contracts  relating  to  personalty.^^  What  a  reasonable  time 
is,  is  a  question  of  fact,  depending  on  the  circumstances  of  each 
case.  It  may  be  said  at  the  outset  that  if  any  acts  of  ratification 
liave  taken  place,  the  question  of  the  lapse  of  time  becomes 
wholly  immaterial.  Where  there  are  no  circumstances  to  show 
a  ratification,  a  delay  of  thirty-two  days,"  of  three  and  a  half 
months,^^  of  four  months,^^  or  of  eighteen  months,^^  has  in  each 
case  been  held  reasonable.  Delay  for  a  much  greater  time  has 
been  held  not  to  be  unreasonable  where  there  are  circumstances 
to  explain  the  delay.  Thus  where  coverture  prevents  the  wife 
from  suing  without  the  consent  of  her  husband,  a  delay  after 
majority,  if  due  to  coverture,  of  nineteen  years,^^  of  twenty- 


2  Ch.  569;  68  L.  J.  Ch.  N.  S.  553; 
McDonald  v.  Salmon  Club,  33  N. 
B.  472;  Watson  v.  Billings,  38  Ark. 
278;  42  Am.  Rep.  1;  Hastings  v. 
Dollarhide,  24  Cal.  195;  Kline  v. 
Beebe,  6  Conn.  494;  Wallace  v. 
Lewis,  4  Harr.  (Del.)  75;  Tunnison 
V.  Cbamberlin,  88  111.  378;  Buchan- 
an V.  Hubbard,  96  Ind.  1;  Stringer 
V.  Ins.  Co.,  82  Ind.  100;  Petty  v. 
Roberts,  7  Bush.  (Ky.),  410;  Boo- 
dy  V.  McKenney,  23  Me.  517;  Amey 
V.  Cockey,  73  Md.  297;  20  Atl.  1071; 
Goodnow  V.  Lumber  Co.,  31  Minn. 
468;  47  Am.  Rep.  798;  18  N.  W. 
283;  Dolph  v.  Hand,  156  Pa.  St. 
91;  36  Am.  St.  Rep.  25;  27  Atl. 
114;  Walton  v.  Gaines,  94  Tenn. 
420;  29  S.  W.  458;  Searcy  v.  Hun- 
ter. 81  Tex.  644;  26  Am.  St.  Rep. 
837;  17  S.  W.  372;  Askey  v.  Wil- 
liams, 74  Tex.  294;  5  L.  R.  A.  176; 
11  S.  W.  1101;  Bingham  v.  Barley, 
55  Tex.  281 ;  40  Am.  Rep.  801 ;  Sim- 
kins  V.  Searcy,  10  Tex.  Civ.  App. 
406;  32  S.  W.  849;  Richardson  v. 
Boright,  9  Vt.  368;  Thormaehlen  v. 


Kaeppel,  86  Wis.  378;  56  N.  W. 
1089. 

i2Bentley  v.  Greer,  100  Ga.  35; 
27  S.  E.  974;  Green  v.  Wilding,  59 
la.  679;  44  Am.  Rep.  696;  13  N. 
W.  761;  Englebert  v.  Troxell,  40 
Neb.  195;  42  Am.  St.  Rep.  665;  26 
L.  R.  A.  177;  58  N.  W.  852;  O'Brien 
V.  Gaslin,  20  Neb.  347;  30  N.  W. 
274. 

isMcKamey  v.  Cooper,  81  Ga. 
679;  8  S.  E.  312;  Deason  v.  Boyd, 
1  Dana  (Ky.)  45;  Robinson  v. 
Hoskins,  14  Bush.  (Ky.)  393;  De- 
lano V.  Blake,  11  Wend.  (N.  Y.) 
85;  25  Am.  Dec.  617. 

"Leacox  v.  Griffith,  76  la.  89; 
40  N.  W.  109. 

15  Thormaehlen  v.  Kaeppel,  86 
Wis.  378 :  56  N.  W.  1089. 

16  Rapid,  etc.,  Co.  v.  Sanford 
(Tex.  Civ.  App.),  24  S.  W.  587. 

".Johnson  v.  Storie,  32  Neb.  610; 
49  N.  W.  371. 

18  Richardson  v.  Pate,  93  Ind. 
423;    47   Am.   Rep.    374. 


CONTKACTS    OF    INFANTS. 


1379 


eight  years/"  of  thirty-two  years/*^  or  of  thirty-five  years,^^  has 
in  each  case  been  held  reasonable.  Where  there  are  no  special 
circumstances  to  explain  the  delay,  a  delay  of  forty  years 
after  executing  a  deed,  and  five  years  after  the  disability  of 
coverture  is  removed  f'  a  delay  for  fifteen  years  after  majority, 
vs^ith  the  erection  of  improvements  and  the  appreciation  of  the 
value  of  the  realty  ;"^  a  delay  of  fourteen  years  ;"*  a  delay  of  six 
years,  together  with  treating  the  property  purchased  by  him  as 
his  own;"^  a  delay  of  four  years ;-°  a  delay  of  three  years  and  a 
half  ;-^  and  in  extreme  cases,  where  the  facts  pointed  strongly 
to  a  ratification,  a  delay  of  two  months,^^  or  one,""  has  in  each 
case  been  held  an  unreasonable  delay.  The  other  rule,  which 
is  followed  by  an  equal  number  of  American  states,  is  that  an 
infant  has  the  time  fixed  by  the  statute  of  limitations  for  bring- 
ing an  action  to  recover  real  property,  after  reaching  majority 
before  his  failure  to  disaffirm  will  bar  his  right  so  to  do.^"     So 


isMcMorris  v.  Webb,  17  S.  C. 
558;  43  Am.  Rep.  629. 

20  Wilson  V.  Branch,  77  Va.  65; 
46  Am.  Rep.  709.  But  in  Virginia 
the  infant  has  the  entire  period 
fixed  by  the  statute  of  limitationa 
in  which  to  disaffirm.  See  cases 
cited   in   note   30,   this    section. 

21  Sims  V.  Bardoner,  86  Ind.  87 ; 
44  Am.  Rep.  263. 

22Amey  \.  Cockey,  73  Md.  297; 
20  Atl.  1071. 

23  Dolph  V.  Hand,  156  Pa.  St.  91 ; 
36  Am.  St.  Rep.  25;  27  Atl.  114. 

24lhley  V.  Padgett,  27  S.  C.  300; 
3  S.  E.  468. 

25 Land  Co.  v.  Nixon  (Tenn.  Ch. 
App.),  48   S.  W.  405. 

26  Carter  v.  Silber  (1892).  2  Ch. 
278;  reversing   (1891)    3  Ch.  553. 

27  Goodnow  V.  Lumber  Co.,  31 
Minn.  468;  47  Am.  Rep.  798;  18  N. 
W.  283. 

28Spicer  v.  Earl,  41  Mich.  191; 
32  Am.  Rep.  152;   1  N.  W.  923. 

29  Forsyth  v.  Hastings,  27  Vt. 
646. 


30  Sims  V.  Everhardt,  102  U.  S. 
300;  Irvine  v.  Irvine,  9  Wall.  (U. 
S.)  617;  Gilkinson  v.  Miller.  74 
Fed.  131;  Hill  v.  Nelms,  86  Ala. 
442;  5  So.  796;  McCarthy  v.  Ni- 
crosi,  72  Ala.  332;  47  Am.  Rep. 
418;  Eureka  Co.  v.  Edwards,  71  Ala. 
248;  46  Am.  Rep.  314;  Stull  v.  Har- 
ris, 51  Ark.  294;  2  L.  R.  A.  741;  11 
S.  W.  104;  Kountz  v.  Davis,  34 
Ark.  590 ;  Hoffert  v.  Miller,  86  Ky. 
572;  6  S.  W.  447;  Davis  v.  Dudley. 
70  Me.  236;  35  Am.  Rep.  318; 
Donovan  v.  Ward,  100  Mich.  601; 
59  N.  W.  254;  Shipp  v.  McKee.  80 
Miss.  741;  92  Am.  St.  Rep.  616; 
.32  So.  281;  31  So.  197;  Allen  v. 
Poole.  54  Miss.  323;  Wallace  v, 
Latham,  52  Miss.  291 ;  Peterson  v. 
Laik.  24  Mo.  541;  Huth  v.  Ry..  56 
Mo.  292;  Thomas  v.  Pullis.  56  Mo. 
211;  Lacy  v.  Pixler,  120  Mo.  383; 
25  S.  W.  206;  Emmons  v.  Murray. 
16  N.  H.  385;  Green  v.  Green.  69 
N.  Y.  553;  25  Am.  Rep.  233:  Cre- 
singer   v.   Welch.    15   Ohio    156;    45 


1380  PAGE    ON    CONTKACTS. 

where  an  infant  delayed  disaffirming  a  deed  for  eighteen  years/^ 
or  twenty  years  and  seven  months,^^  he  was  still  allowed  to 
disaffirm.  A  compromise  rule  has  been  suggested  in  Illinois, 
where  it  was  held  that  the  minor  would  have  a  reasonable  time 
to  avoid  his  deed,  and  that  the  court  would  by  analogy  adopt 
the  time  fixed  by  the  statute  of  limitations  for  one  under  dis- 
ability when  his  cause  of  action  accrued  to  bring  an  action  after 
his  disability  was  removed  by  statute,  three  years.^^  Equity 
will  compel  an  infant  on  reaching  majority  to  adopt  or  abandon 
an  agreement  for  quieting  title  to  realty.^* 

§886.     What  constitutes  disaffirmance. 

The  modern  rule  is  that  no  set  form  of  disaffirmance  is  neces- 
sary, but  that  the  infant's  intention  to  disaffirm  together  with 
any  conduct  on  his  part  which  makes  this  intention  clear  consti- 
tutes a  sufficient  disaffirmance.^  It  was  once  held  that  a  Com- 
mon Law  conveyance  such  as  feoffment,  could  be  avoided 
only  by  an  act  of  equal  notoriety ;"  but  this  rule  has 
no  application  to  modern  forms  of  conveyances.^  Undoubt- 
edly, re-entry  with  intent  to  hold  land  adversely  will  avoid  a 
deed,*  or  a  grant  of  an  easement,  as  a  right  to  construct  a  sewer 
across  his  land.^  However,  the  act  of  an  executor  in  taking 
possession  of  realty  does  not  bind  a  minor  heir  to  avoid  the  deed.^ 

Am.  Dec.  565;   Drake  v.  Ramsay,  5  158;  67  X.  E.  475;  Co.irley  v.  Cush- 

Ohio  252;    Birch  v.   Linton,   78   Va.  man,   16  Minn.  397;   Chapin  v.  Sha- 

584;  49  Am.  Rep.  381;   Gillespie  v.  fer,  49  N.  Y.  407. 

Bailey.   12  W.  Va.  70;  29  Am.  Rep.  2  Jackson    v.    Burchin.    14    Johns. 

445.  (N.  Y.)   124;  Bool  v.  Mix,  17  Wend. 

31  Birch    V.    Linton,    78    Va.    584;  (N.  Y.)   119;  31  Am.  Dec.  285. 

49  Am.  Rep.  381.  s  Slaughter     v.     Cunningham,     24 

32Cresinger    v.    Welch.     15    Ohio  Ala.  260;   60  Am.  Dec.  463. 

156;   45  Am.  Dec.  565.  *  Harrod  v.  Myers,  21   Ark.   592; 

33Keil  V.  Healey,  84  111.  104;   25  76  Am.  Dee.  409    (obiter). 

Am.  Rep.  434.  ^  McCarthy    v.    Nicrosi,    72    Ala. 

34  0verbaeh       v.       Heermance,      1  332;   47  Am.  Rep.  418. 

Hopk.  Ch.  (X.  Y.)  337;  14  Am.  Dec.  6  Cardwell  v.  Rogers.  76  Tex.  37; 

546.  12  S.  W.   1006    (the  deed  was  made 

1  Bagley  v.  Fletcher.  44  Ark.  153;  hy   the   donee    of   an   invalid   power 

Long    V.    Williams,    74    Ind.     115;  given   by   the   testator   who   deviseu 

Shrryer  v.   Pittinger,   31   Ind.   App.  the  land  to  the  infant). 


COi^TEACTS    OF    INFAIMTS.  13S1 

An  executed  conveyance  of  realty  may  also  be  avoided  by  an 
action  of  ejectment ;"  or  by  a  suit  to  cancel  the  deed  ;*  or  by  an 
answer  in  an  ejectment  suit,  where  the  infant  or  one  claiming 
under  him  is  in  possession  of  the  realty  f  or  by  a  deed  executed 
by  the  former  infant  after  majority,  and  inconsistent  with  the 
deed  executed  by  him  before  majority/**  Thus,  an  infant  can 
disaffirm  a  mortgage  by  giving  notice  on  the  day  of  the  fore- 
closure sale  that  her  interest  cannot  be  sold  and  by  conveying 
her  laud  by  warranty  deed/^  A  deed  to  an  infant  may  be 
disaffirmed  by  him  at  majority  by  a  letter  demanding  back 
the  installment  of  the  purchase  price  already  paid  in/^  An 
executed  contract  for  the  sale  or  mortgage  of  personal  property 
may  also  be  avoided  by  an  act  inconsistent  with  the  former  act 
such  as  a  second  conveyance/^  As  a  sale  of  property  mortgaged 
by  an  infant  is  a  disaffirmance  of  the  mortgage  it  is  hence  not 
a  crime/*  A  purchase  of  personalty  by  an  infant  may  be 
avoided  by  notice  of  disaffirmance  ;^^  or  by  suit  for  the  purchase 
price  ;^®  or  by  delivering  the  chattel  bought  to  the  vendor,  and 

7  Cole  V.  Pennoyer,  14  111.  158;  Mich.  731;  30  N.  W.  385;  Haynes 
Haynes  v.  Bennett,  53  Mich.  15;  18  v.  Bennett,  53  Mich.  15;  18  N.  W. 
N.  W.  539;  Craig  v.  Van  Bebber,  539;  Dawson  v.  Helmes,  30  Minn. 
100  Mo.  584;  18  Am.  St.  Rep.  569;  107;  14  X.  W.  462;  Ridgeway  v. 
13S.  W.  906;  Harris  v.  Ross,  86  Mo.  Herbert,  150  Mo.  606;  73  Am.  St. 
89;  56  Am.  Rep.  411;  Drake  v.  Ram-  Rep.  464;  51  S.  W.  1040;  Peterson 
say,  5  Ohio  252;  Birch  v.  Linton,  v.  Laik,  24  Mo.  541;  69  Am.  Dec. 
78  Va.  584;  49  Am.  Rep.  381.  441;    Roberts    v.    Wiggin,    1    X.   H. 

8  Englebert  v.  Troxell.  40  Xeb.  73 ;  8  Am.  Dee.  38 ;  Bool  v.  Mix,  17 
195;  42  Am.  St.  Rep.  665;  26  L,  Wend.  (X.  Y.)  119;  31  Am.  Dee. 
R.  A.  177;   58  X.  W.  852.  285;    Cresinger    v.   Welch,    15    Ohio 

0  Ridgeway    v.    Herbert.    150    Mo.  156;  45  Am.  Dec.  565. 
606;    73   Am.    St.    Rep.   464;    51    S.  n  Scott  v.   Brown,   106   Ala.  604; 

W.   1040.  17   So.   731. 

10  Tucker  V.  Moreland,  10  Pet.  (U.  i2MeCarty  v.   Iron   Co.,    92   Ala. 

S.)    58;    Scott  V.    Brown,    106   Ala.  463;  12  L.  R.  A.  136;  8  So.  417. 
604;    17   So.   731;   Hastings  v.  Dol-  i3  Chapin  v.  Shafer,  49  N.  Y.  407.« 

larhide.  24  Cal.  195;  Losey  v.  Bond,  i*  State  v.  Plaisted.  43  X.  H.  413; 

94  Ind.   67;    Long  v.   Williams,   74  Jones  v.  State,  31  Tex.  Crim.  Rep. 

Ind.    115;    Estep    v.    Estep     (Ky.),  252;  20  S.  W.  578. 
73   S.  W.   777;   Moore  v.  Baker.   92  is  Stack  v.   Cavanaugh.   67   X.  H. 

Ky.  518;   18  S.  W.  363;  Vallanding-  149;   30  Atl.  350. 
ham   V.  .Johnson,   85  Ky.  288;   3   S.  is  Lemmon   v.    Beeman,   45   O.   S. 

W.     173;     Corbett    v.    Spencer,    63  505;  15  N.  E.  476. 


1382  PAGE    ON    CONTEACTS. 

acquiescing  in  a  suit  by  his  next  friend  to  recover  the  money 
paid  for  it/^  So  a  mortgage  may  be  disaffirmed  by  a  plea  of 
infancy  in  a  suit  to  enforce  it.  Thus,  a  minor  mortgaged  a 
steamboat.  At  the  time  the  mortgage  became  due  the  court 
appointed  a  receiver  and  granted  an  injunction.  Both  orders 
were  set  aside  on  motion,  it  appearing  that  the  mortgagor  had 
not  affirmed  the  mortgage  after  reaching  majority  and  now  dis- 
affirmed it  by  plea.^*  An  executory  contract  may  be  disaffirmed 
by  notice  or  its  equivalent,^''  or  by  interposing  infancy  as  a  de- 
fense to  a  suit  thereon. ^°  An  infant  should  offer  to  rescind 
to  the  adversary  party  —  not  to  a  purchaser  from  the  adver- 
sary.^' 

§887.    Partial  disaffirmance  impossible. 

The  infant  cannot,  without  the  consent  of  the  adversary  party, 
affirm  that  part  of  the  transaction  which  is  advantageous  to 
him  and  disaffirm  the  rest;  but  he  must  treat  the  entire  trans- 
action as  a  unit.^  Thus,  an  infant  cannot  avoid  a  contract 
made  by  both  herself  and  her  father,  by  which  it  is  agreed 
that  she  shall  draw  her  wages  subject  to  the  conditions  of  the 

17  Pyne  v.  Wood,   145  Mass.  558;  562;    Biederman    v.    O'Connor.    117 

14  N.  E.  775.  111.  493;   57  Am.  Rep.  876;  4  West. 

isSparr  v.  Ry.  Co.,  25  Fla.  185;  152;    7    N.    E.    463;    Carpenter    v. 

6  So.  60.  Carpenter,  45  Ind.  142 ;  Robinson  v. 

19  Mustard  V.  Wohlford,  15  Gratt.  Berry,    93    Me.    320;     45    Atl.    34; 

(Va.)    329;    76   Am.  Dec.    209    (as  White  v.  Mount  Pleasant,  etc.,  Corp., 

where   a   minor   avoided   a   contract  172    Mass.    462;     52    N.    E.     632; 

to  sell  land  by  selling  the  property  Strong  v.  Ehle,  86  Mich.  42;  48  N. 

to   another  after  majority).  W.  868;   Ladd  v.  Wiggin,  35  N.  H. 

2oSparr   v.   Ry.,    25    Fla.    185;    6  428;  Henry  v.  Root,  33  N.  Y.  526; 

So.     60;     Fetrow    v.    Wiseman.    40  Overbaeh    v.    Heermance,     1    Hopk. 

Ind.  148;  Stern  v.  Freeman,  4  Met.  Ch.   (N.  Y.)   337;   14  Am.  Dec.  546; 

(Ky.)     309;    Freeman    v.    Nichols,  Kitchen  v.  Lee,    11   Paige    (N.  Y.) 

138  Mass.  313.  107;   42  Am.  Dec.   101;   Kincaid  v. 

21  Downing  v.  Stone,  47  Mo.  App.  Kincaid,  85  Hun  (K  Y.)  141;  Cur- 

144.  tiss  V.  McDougal,  26  O.  S.  66;  Ten- 

1  Peers    v.    McLaughlin,    88    Cal.  nessee,  etc.,  Co.  v.  James,  91  Tenn. 

294;  22  Am.  St.  Rep.  306;  26  Pac.  154;  30  Am.  St.  Rep.  865;  15  L.  R. 

119;    Howard    v.    Cassels,    105    Ga.  A.  211 ;  18  S.  W^  262. 
412;   70  Am.  St.  Rep.  44;   31  S.  E. 


CONTRACTS  OF  INFANTS.  1383 

contract,  and  recover  the  wages  unconditionally.^  A  minor 
bought  stock  from  a  corporation.  Subsequently  such  corpora- 
tion transferred  its  business  to  another  under  a  contract  that 
upon  repayment  to  such  other  of  the  purchase  price  of  such 
plant  it  would  issue  certificates  of  its  own  stock.  The  infant 
sued  such  other  corporation  to  recover  the  price  paid  for  the 
stock.  It  was  held  that  he  could  not  recover.^  In  another  case 
a  contract  was  made  by  infants  for  the  purchase  of  lands,  which 
lands  were  deeded  to  them,  and  paid  for  in  part  by  cash  and 
the  rest  by  notes  given  by  their  guardian  in  his  official  capacity. 
Subsequently  suit  was  brought  on  the  notes  and  a  judgment 
was  obtained,  on  which  the  realty  was  sold.  It  was  held  that 
the  infants  could  not  demand  that  the  vendors  make  title  on 
payment  to  them  of  the  balance  of  the  purchase  price.*  So  a 
minor  cannot  adopt  the  acts  of  his  agent  in  part  and  repudiate 
them  in  part.^  The  infant  cannot  claim  the  benefit  of  a  condi- 
tional contract,  and  refuse  to  be  bound  by  the  condition.^  So  a 
minor  purchasing  goods  by  conditional  sale  cannot,  after  con- 
dition broken,  interpose  infancy  as  a  defense.'^  So,  an  infant 
cannot  retain  property  purchased  by  him,  whether  realty,*  or 
personalty,^  and  avoid  a  purchase-money  mortgage  given  there- 
for, or  a  vendor's  lien  reversed  in  the  deed,^"  or  refuse  to  pay 
therefor  on  the  ground  of  infancy,^^  even  if  the  mortgage 
was  given  to  a  third  person  who  advanced  the  purchase  money.^^ 

2  Tennessee,  etc.,  Co.  v.  James,  91  «  Strong  v.  Ehle,  86  Mich.  42;  48 
Tenn.  154;  30  Am.  St.  Rep.  865;  N.  W.  868;  Uecker  v.  Koehn,  21 
15  L.  R.  A.  211;  18  S.  W.  262.  Neb.  559;   59  Am.  Rep.  849;   32  N. 

3  White  V.  Mount  Pleasant,  etc.,  W.  583;  Bigelow  v.  Kinney,  3  Vt. 
Corp.,    172    Mass.    462;     52    N.    E.  353;   21  Am.  Dec.  589. 

632.  9  Heath  v.   West,   28   N.   H.    101; 

4  Howard  v.  Cassels,  105  Ga.  412;  Curtiss  v.  McDougal,  26  O.  S.  66; 
70  Am.  St.  Rep.  44;  31  S.  E.  5G2.  Knaggs  v.   Green,  48  Wis.   601;    33 

5  State   V.   New   Orleans,    105   La.  Am.  Rep.  838;  4  N.  W.  760. 
768;  30  So.  97.  lo  Smith  v.  Henkel,  81  Va.  524. 

6  Biedermann  v.  O'Connor,  117  n  Thomason  v.  Phillips,  73  Ga. 
HI.  493;  57  Am.  Rep.  876;  7  N.  E.  140. 

463;  Lowry  V.  Drake,  1  Dana  (Ky.)  12  Ready    v.    Pinkham,    181    Mass. 

46.  351 ;  63  N.  E.  887.     So  Thurston  v. 

7  Robinson  v.   Berry,   93  Me.  320;  Building  Society   (1902),  1  Ch.  1. 
45   Atl.   34. 


^384  PAGE    ON    CONTRACTS. 

An  advance  to  an  infant  to  enable  liim  to  purchase  land  forms 
fln  entire  transaction  with  the  purchase  of  such  land,  and  the 
infant  cannot  jDrevent  the  lender  from  being  subrogated  to  the 
rights  of  the  vendor  and  enforcing  a  vendor's  lien,  though  a 
mortgage  given  by  the  infant  to  secure  such  debt  in  part  is  not 
valid,^^  while,  an  advance  to  an  infant  to  enable  him  to  erect 
buildings  on  land  purchased  is  not  an  entire  transaction  with  the 
purchase,  and  the  infant  niaj  retain  such  land  and  repudiate 
liability  for  such  advances.^*  This  view  is  not,  however,  en- 
tertained in  all  cases.  Thus  where  A  borrowed  money  from 
B  to  enable  him  to  pay  X  for  certain  realty,  and  A  gave  to  B  a 
mortgage  on  such  realty,  it  was  held  that  A  could  repudiate 
the  mortgage  while  retaining  the  realty.  ^^  So  if  an  infant 
repudiates  a  sale,  one  claiming  under  him  cannot  enforce  a 
chattel  mortgage  given  as  part  of  the  transaction.^^  But  where 
A,  a  minor,  sold  a  horse  which  he  warranted  sound,  and  after 
majority  the  note  given  in  part  payment  therefor  was  paid  and 
A  endorsed  "  The  note  being  paid,  I  discharge  property  thereby 
secured,"  it  was  held  that  this  did  not  ratify  the  warranty.^'^ 
In  a  recent  case,  however,  the  infant's  representative  has  been 
allowed  to  avoid  a  contract  in  part.^^  Tlie  infant  had  secured 
a  life  insurance  policy  by  an  application  in  which  he  warranted 
certain  facts  which  were  not  true.  The  policy  of  an  adult 
could  have  been  avoided  by  the  insurance  company  for  such 
false  warranties,  but  it  was  held  that  the  beneficiary  could  avoid 
such  warranties  and  enforce  the  rest  of  the  policy.  The  court 
based  its  decision  on  the  rule  that  an  infant  was  not  liable 
on  his  warranty  collateral  to  an  executed  contract  of  sale.^^ 
This  latter  rule  is  absolutely  correct,^"  but  it  does  not  apply 
to  the  case  at  bar.     In  a  warranty  collateral  to  a  sale,  the  infant 

i3Thuston    V.     Building     Society  it  Bird  v.  Swain,  79  Me.  529;  11 

(1902),  1  Ch.  1.  Atl.  421. 

14  Thurston    v.    Building    Society  is  O'Rourke  v.   Ins.  Co.,  23  R.  I. 
(1902),   1   Ch.   1.  457;  91  Am.  St.  Rep.  643;  57  L.  R. 

15  Citizens',    etc.,    Association    v.  A.  496;  50  Atl.  834. 

Arvin,    207    Pa.    St.    293;  56    Atl.  is  Citing   West   v.   Moore,    J4   Vt. 

870.  447;   39  Am.  Dec.  235. 

16  Hyde   v.    Courtwright,  14    Ind.  20  See  §  872  et  seq. 
App.  106;  42  N.  E.  647. 


CONTRACTS  OF  INFANTS.  13S5 

is  merely  resisting  the  enforcement  of  a  contract,  executory  as 
to  himself.  The  adversary  party  might  possibly  have  rescinded 
the  contract  for  fraud  or  for  breach,  but  he  has  elected  to  affirm 
it  and  enforce  the  executory  contract.  In  O'Eourk  v.  Ins.  Co. 
the  infant's  representative  is  seeking  to  enforce  that  part  of 
a  contract  favorable  to  herself  and  to  avoid  the  part  unfavorable 
to  her. 

§888.     Restoration  of  consideration  on  disaffirmance. 

It  is  difficult  to  state  a  general  rule  which  will  in  every  case 
operate  fairly  between  the  infant  who  disaffirms  a  contract  and 
the  adversary  party.  It  is  evident,  however,  that  if  the  infant 
is  in  every  case  bound  to  return  the  consideration  which  he  has 
received,  or  its  equivalent,  his  disability  will  amount  to  little 
except  in  executory  contracts,  and  in  cases  where  the  infant 
is  so  prudent  and  careful  in  his  management  of  the  property 
which  he  receives  under  the  contract,  that  he  really  does  not 
need  the  protection  of  the  law.  After  some  conflict,  it  has 
finally  been  held  by  the  weight  of  judicial  opinion,  that  an 
infant  is  bound  to  restore  so  much  of  the  consideration  as  he 
has  when  he  disaffirms  the  contract,  if  during  minority;  or 
when  he  comes  of  age,  if  he  disaffirms  when  his  minority  ends.^ 

iMacGreal  v.  Taylor,  167  U.  S.  Van  Bebber,  100  Mo.  584;  18  Am. 
688;  Tucker  v.  Moreland,  10  Pet.  St.  Rep.  569;  13  S.  W.  906;  Betts 
(U.  S.)  58;  American,  etc.,  Co.  v.  v.  Carroll,  6  Mo.  App.  518;  Bloom- 
Dykes,  111  Ala.  178;  56  Am.  St.  er  v.  Nolan,  36  Neb.  51;  38  Am.  St. 
Eep.  38;  18  So.  292;  Jenkins  v.  Eep.  690;  53  N.  W.  1039;  Hamblett 
Jenkins,  12  la.  195;  Bennett  v.Mc-  v.  Hamblett,  6  N.  H.  339;  Green  v. 
Laiighlin,  13  111.  App.  349;  Shirk  v.  Green,  69  N.  Y.  553;  25  Am.  Rep. 
Shultz,  113  Ind.  571;  15  N.  E.  12;  233;  Lane  v.  Coal  Co.,  101  Tenn. 
Sanger  v.  Hibbard,  2  Ind.  Ter.  547;  581;  48  S.  W.  1094;  Grace  v.  Hale, 
63  S.  W.  330;  Burgett  v.  Barrick,  2  Humph.  (Tenn.)  27;  36  Am.  Dec, 
25  Kan.  527;  Morse  v.  Ely,  154  296;  Bullock  v.  Sprowls,  93  Tex. 
Mass.  458;  26  Am.  St.  Rep.  263;  28  188;  77  Am.  St.  Rep.  849;  47  L. 
N.  E.  577;  Dube  v.  Beaudry,  150  R.  A.  326;  54  S.  W.  661;  Abernathy 
Mass.  448;  15  Am.  St.  Rep.  228;  6  v.  Phillips,  82  Va.  769;  1  S.  E.  113; 
L.  R.  A.  146 ;  23  N.  E.  222 ;  Dawson  Bedinger  v.  Wharton,  27  Gratt. 
V.  Helmes,  30  Minn.  107;  14  N.  W.  (Va.)  '857;  Young  v.  Ry.  Co.,  42 
462;  Brantley  v.  Wolf.  60  Miss.  429;  W.  Va.  112;  24  S.  E.  615;  Gillespie 
Harvey  v.  Briggs,  68  Miss.  60;  10  v.  Bailey.  12  W.  Va.  70;  29  Am. 
L.   R.   A.   62;    8   So.   274;    Craig  v.  R.-p.  445. 


1386 


PAGE    OKT    CONTRACTS. 


If  before  this  time  be  bas  wasted  or  lost  the  property  received 
by  bim  under  the  contract,  be  is  not  bound  to  retura  its  equiva- 
lent.^ By  statute  in  Indiana  a  minor  married  woman  w^bo  bas 
joined  witb  ber  busband  in  conveying  realty  must  first  restore 
tbe  consideration  before  repudiating  tbe  sale.^  Even  if  tbe  prop- 
erty bas  depreciated  in  value,*  as  tbrougb  tbe  misuse  tbereof  by 
tbe  infant,^  or  if  tbe  infant  bas  consumed  tbe  property,®  or  sold 
it,^  be  need  not  account  for  tbe  loss.  If  tbe  consideration  for  tbe 
contract  of  tbe  infant  was  money  paid  not  to  bim  but  to  some 
other  person/  as  where  it  is  paid  to  tbe  infant's  husband,^ 


2  Fox  V.  Drewry,  62  Ark.  316; 
35  S.  W.  533 ;  Reynolds  v.  McCurry, 
100  111,  356;  Featherstone  v.  Betle- 
jewski,  75  111.  App.  59;  United 
States,  etc.,  Co.  v.  Harris,  142  Ind. 
226;  40  N.  E.  1072;  41  N.  E.  451; 
Gillenwaters  v.  Campbell,  142  Ind. 
629;  41  N.  E.  1041;  Shipley  v. 
Smith,  —  Ind.  — ;  70  N.  E.  803; 
White  V.  Cotton- Waste  Corporation, 
178  Mass.  20;  59  X.  E.  642;  Walsh 
V.  Young,  110  Mass.  396;  Chandler 
V.  Simmons,  97  Mass.  508;  93  Am. 
Dec.  117;  Corey  v.  Burton,  32  Mich. 
30;  Miller  v.  Smith,  26  Minn.  248; 
37  Am.  Rep.  407;  2  N.  W.  942; 
Ridgeway  v.  Herbert.  150  Mo.  606; 
73  Am.  St.  Rep.  464;  51  S.  W. 
1040;  Craig  v.  Van  Bebber,  100  Mo. 
584;  18  Am.  St.  Rep.  569;  13  S. 
W.  906;  Tower-Doyle  Commission 
Co.  V.  Smith,  86  Mo.  App.  490; 
Clark  V.  Tate,  7  Mont.  171 ;  14  Pac. 
761;  Englebert  v.  Troxell,  40  Xeb. 
195;  42  Am.  St.  Rep.  665;  26  L.  R. 
A.  177;  58  N.  W.  852;  Bloomer  v. 
Xolan,  36  Xeb.  51 ;  38  Am.  St.  Rep. 
690;  53  X.  W.  1039;  Green  v. 
Green,  69  X.  Y.  553;  25  Am.  Rep. 
233;  Petrie  v.  Williams,  68  Hun 
fX.  Y.)  589;  Kincaid  v.  Kincaid, 
85  Hun  (X.  Y.)  141;  Youmans  v. 
Forsythe.  86  Hun  (X^.  Y.)  370; 
Lemmon  v.   Beeman,  45  O.   S.   505; 


15  X.  E.  476;  Lane  v.  Dayton,  etc., 
Co.,  101  Tenn.  581;  48  S.  W.  1094; 
Bullock  V.  Sprowls,  93  Tex.  188; 
77  Am.  St.  Rep.  849;  47  L.  R.  A. 
326;  54  S.  W.  661;  Wiser  v.  Lock- 
wood,  42  Vt.  720;  Price  v.  Furman, 
27  Vt.  268;  65  Am.  Dec.  194;  Thor- 
maehlen  v.  Kaeppel,  86  Wis.  378;  56 
X.  W.  1089. 

3  Blair  v.  Whitaker  (Ind.  App.\, 
69  X.  E.   182. 

4\Vhitconib  v.  Joslyn,  51  Vt.  79; 
31  Am.  Rep.  678. 

5  White  V.  Branch,  51  Ind.  210. 

eXichol  V.  Steger,  6  Lea  (Tenn) 
393 ;  affirming  2  Tenn.  Ch.  328. 

7Beickler  v.  Guenther,  121  la. 
419;   96  X.  W.  895. 

8  Law  V.  Long,  41  Ind.  586;  Wade 
V.  Love,  69  Tex.  522;  7  S.  W.  225; 
Vogelsang  v,  Xull,  67  Tex.  465;  3 
S.  W.  451 ;  Thormaehlen  v.  Kaep- 
pel, 86  Wis.  378;  56  X.  W.  1089. 

9  Fox  V.  Drewry,  62  Ark.  316;  35 
S.  W.  533 ;  Stull  v.  Harris,  51  Ark. 
294;  2  L.  R.  A.  741;  11  S.  W. 
104;  Richardson  v.  Pate,  93  Ind- 
423;  47  Am.  Rep.  374;  Bradshaw 
V.  Van  Valkenburg,  97  Tenn.  316; 
37  S.  W.  88;  Smith  v.  Evans,  5 
Humph.  (Tenn.)  70;  Thormaehlen 
V.  Kaeppel,  86  Wis.  378;  56  X,  W. 
1089. 


CONTRACTS    OF    INFANTS. 


1387 


or  father/"  or  agent,"  and  the  infant  never  in  fact  re- 
ceives it,  he  is  not  bound  to  restore  an  equivalent.  So  if  an 
infant  has  not  received  anything  under  his  contract  he  is  not 
bound  to  restore  anjthing.^^  The  earlier  cases  tend  to  require 
an  infant  to  return  the  consideration  received  by  him,  or  its 
equivalent  if  he  has  squandered  it;  but  these  cases  have  for 
the  most  part  been  overruled  or  limited  by  later  cases.^^  Where 
the  infant  has  sold  the  property  received  by  him,  or  changed 
its  form  in  some  other  way,  it  becomes  a  difficult  question  to 
determine  how  far  the  fund  or  property  may  be  traced  in  order 
to  compel  its  return  by  the  infant.  Where  the  money  received 
was  in  part  spent  on  necessaries,  it  has  been  held  that  the 
infant  is  not  bound  to  repay  the  value  of  the  necessaries  thus 
obtained.^*     It  seems  only  fair  that  if  the  infant  has  expended 


10  Clark  v.  Tate,  7  Mont.  171;  14 
Pac.  761;  Griffis  v.  Younger,  41 
N.   C.   520;    51   Am.  Dec.  438. 

11  Vogelsang  v.  Null,  67  Tex.  465; 
3   S.  W.  451. 

12  Shroyer  v.  Pittinger,  31  Ind. 
App.  158;   67  N.  E.  475. 

13  St.  Louis,  etc.,  Ry.  v.  Higgins, 
44  Ark.  293 ;  overruling  Bozeman 
V.  Browning,  31  Ark.  364;  Chandler 
V.  Simmons,  97  Mass.  508;  93  Am. 
Dec.  117;  not  following  Bartlett  v. 
Cowles,  15  Gray  (Mass.)  445;  Craig 
V.  Van  Bebber,  100  Mo.  584;  18  Am. 
St.  Rep.  569;  13  S.  W.  906;  limiting 
Kerr  v.  Bell,  44  Mo.  120;  Higbley  v. 
Barron,  49  Mo.  103;  Baker  v.  Ken- 
nett,  54  Mo.  82,  in  which  it  had 
been  said,  without  making  any  ex- 
ception, that  an  infant  must  restore 
the  consideration  on  disaffirmance; 
Bullock  V.  Sprowls,  93  Tex.  188 ;  77 
Am.  St.  Rep.  849;  47  L.  R.  A.  326; 
54  S.  W.  661 ;  limiting  the  general 
language  used  in  Cummings  v. 
Powell,  8  Tex.  93 ;  Womack  v.  Wom- 
ack,  8  Tex.  397;  58  Am.  Dec.  119; 
Kilgore    v.    Jordan,    17    Tex.    341; 

Stuart  V.  Baker,  17  Tex.  417;  Bing- 


ham V.  Barley,  55  Tex.  281;  40  Am. 
Rep.  801 ;  Graves  v.  Hickman,  59 
Tex.  383;  Harris  v.  Musgrove,  59 
Tex.  403;.  Vogelsang  v.  Null,  67 
Tex.  465;  3  S.  W.  451;  Wade  v. 
Love,  69  Tex.  522;  7  S.  W.  225; 
Ferguson  v.  Ry.,  73  Tex.  344;  11  S. 
W.  347;  Houston,  etc.,  Ry.  v.  Fer- 
guson, 73  Tex.  349;  13  S.  W.  57; 
Whitcomb  v.  Joslyn,  51  Vt.  79;  31 
Am.  Rep.  678;  modifying  the  views 
expressed  in  Farr  v.  Sumner,  12  Vt. 
28;  36  Am.  Dec.  327;  Taft  v.  Pike, 
14  Vt.  405;   39  Am.  Dec.  228. 

1*  Featherstone  v.  Betlejewski,  73 
111.  App.  59;  Bedinger  v.  Wharton, 
27  Gratt.  (Va.)  857.  In  Bullock  v. 
Sprowls,  93  Tex.  188;  77  Am.  St. 
Rep.  849;  47  L.  R.  A.  326;  54  S. 
W.  661,  the  court  allowed  a  writ 
of  error,  on  the  authority  of  Searcy 
v.  Hunter,  81  Tex.  644;  26  Am.  St. 
Rep.  837;  17  S.  W.  372;  it  being 
stated  by  the  court  of  civil  appeals 
that  part  of  the  consideration  was 
used  to  buy  supplies  and  clothing, 
and  the  court  at  the  outset  being 
under  the  impression  that  he  should 
account  for  the  value  of  such  neces- 


1388  PAGE    ON    CONTRACTS. 

the  consideration  received  by  him  for  necessaries  which  he  has 
consumed  or  for  property  which  he  still  has,  that  he  should 
account  for  the  reasonable  valne  of  the  necessaries,  or  return  the 
property  thus  acquired  by  him.     In  some  cases  this  view  has 
been  enforced. ^^     Thus  where  money  borrowed  was  spent  in 
paying  off  valid  liens  and  making  valuable  improvements  on 
the  infant's  realty,  the  infant  was  obliged  to  account  therefor.^* 
In  some  states  it  has  been  held  that  unless  the  identical  money 
is  under  the  control  of  the  minor  he  need  not  return  it;^^  and 
property  for  which  the  consideration  has  been  exchanged  need 
not  be  returned  as  a  condition  of  rescission.^^     Where  the  pur- 
chase money  for  an  infant's  realty  was  paid  to  her  husband, 
and  with  it  he  bought  other  land  in  which  she  had  a  dower 
interest,  she  was  not  required  to  repay  the  purchase  money  in 
order  to  disaffirm  f^  and  a  similar  view  was  taken  where  an 
infant  sold  land,   and  the  price  was  paid  to  his  father  who 
invested  the  proceeds  in  a  piano  for  the  infant.""     Where  an 
infant  bought  goods  on  credit,  intermingled  them  with  his  own 
goods  so  as  to  be  indistinguishable,  and  transferred  the  entire 

saries;    but  this   point  was  not  de-  simply   as   a    shield   to   protect   the 

cided,  as  it  was  not  raised  by  the  infant    from    injustice   and   wrong." 

record.  McGreal  v.  Taylor,   167   U.   S.   688, 

15  If    the    consideration    received  701. 

consisted  in  part  of  necessaries  the  it  Hawes  v.   Burlington,  etc.,   Ry. 

infant  must  account  for  such  neces-  Co.,  64  la.  315;   20  N.  W.  717;   cit- 

saries.     Stiill    v.    Harris,    51    Ark.  ing   and   following   Jenkins   v.   Jen- 

294;  2  L.  R.  A.  741;  11  S.  W.  104.  kins,   12  la.   194. 

16  United  States  Investment  Cor-  is  Leacox  v.  Griffith,  76  la.  89 ;  40 
poration  v.  Ulrickson,  84  Minn.  14;  X.  W.  109;  Englebert  v.  Troxell, 
87  Am.  St.  Rep.  326;  86  N.  W.  40  Neb.  195;  42  Am.  St.  Rep.  665; 
613.  ".  .  .  To  say  that  the  26  L.  R.  A.  177;  58  N.  W.  852; 
consideration  paid  to  Mrs.  M.  for  Walsh  v.  Powers,  43  N,  Y.  23;  3 
the  deed  of  trust  of  1889  is  not  in  Am.  Rep.  654. 

her  hands,  when  the  money  has  been  i9  Richardson  v.  Pate,  93  Ind.  423; 
put  into  her  property  in  conform-  47  Am.  Rep.  374. 
ity  with  the  disaffirmed  contract,  20  Englebert  v.  Troxell,  40  Neb. 
and  notwithstanding  such  property,  195;  42  Am.  St.  Rep.  665;  26  L. 
is  still  held  and  enjoyed  by  her,  is  R.  A.  177;  58  N.  W.  852.  The  cases 
to  sacrifice  substance  to  form,  and  last  cited  really  limit  the  question 
to  make  the  privilege  of  infancy  a  to  whether  the  return  of  the  prop- 
sword  to  be  used  to  the  injury  of  erty  thus  acquired  was  a  condition 
others,  although  the  law  intends  it  precedent   to  disaffirmance. 


CONTRACTS  OF  INFANTS.  1389 

stock  to  his  father  in  fraud,  it  was  held  that  the  entire  stock 
or  the  proceeds  thereof  could  be  subjected  to  the  debt."^  In 
Indiana  the  earlier  cases  denied  the  duty  of  the  infant  to  return 
the  purchase  price  as  a  condition  precedent  to  disaffirming  a 
sale  of  realty."  A  later  case  has  gone  farther  and  taken  the 
position  that  the  infant  was  not  liable  to  return  the  purchase 
money  at  all,  even  after  rescission.^^ 

Local  statutes  in  some  states  modify  the  Common  Law  rules. 
In  Iowa  a  minor  must  restore  "  all  money  or  property  received 
by  him  by  virtue  of  the  contract  and  remaining  within  his  con- 
trol at  any  time  after  he  has  attained  his  majority."^*  In  Cali- 
fornia a  minor  must  return  the  property  received  by  him  in 
consideration  of  the  conveyance  "  or  its  equivalent,"  by  force 
of  which  statute  he  must  return  the  equivalent  of  what  he  has 
wasted.^^  In  Indiana  an  infant  may  disaffirm  a  sale  of  realty 
without  returning  the  price  unless  he  has  falsely  represented 
himself  an  adult."*'  Since  a  mortgage  is  a  conveyance  an  in- 
fant feme  covert  cannot  disaffirm  a  mortgage  in  which  her  hus- 
band, who  is  of  full  age,  has  joined,  without  returning  the  con- 
sideration."^    If  two  infants  contract  with  each  other,  the  one 

21  Evans  v.  Morgan,  69  Miss.  328 ;  him  to  account  for  the  property  or 
12  So.  270;  and  to  substantially  the  repay  the  money  upon  his  disaf- 
same  effect  is  Sanger  v.  Hibbard,  firmance  of  the  contract.  It  is  not 
2  Ind.  Ter.  547;  53  S.  W.  330,  necessary     that     the     other     party 

22  Towell   V.   Pence,   47   Ind.   304 ;  should  be  placed  in  statu  quo."   Dill 
Miles    V.    Lingeman,    24    Ind.    385;  v.  Bowen,  54  Ind.  204,  208. 
Pitcher  v.  Laycock,  7  Ind.  398.  24  Statute  quoted  in  Stout  v.  Mer- 

23  Dill  V.  Bowen,  54  Ind.  204.  rill,  35  la.  47;  and- see  Hawes  v. 
"Having  disaffirmed  the  contract,  Burlington  By.  Co.,  64  la.  315;  20 
the  law  imposes  on  her  no  legal  N.  W.  717;  Leacox  v.  Griffith,  76  la. 
obligation    to    repay    the    purchase  89;   40  N.  W.    109. 

money.     ...     If    an    infant    dis-  25  Whyte  v.  Bosencrantz,  123  Cal. 

affirm    a    contract    after    coming   of  634;    69  Am.   St.  Bep.  90;   56  Pac. 

age  he  must  do  it  in  toto ;  that  is  to  436. 

say,    if    he    has    property    in    his  26  Gillenwater    v.    Campbell,     142 

Tiands  acquired  by  the  contract  the  Ind.  529;  41  N.  E.  1041. 

other    party   may    reclaim    it.     But  27  United  States,  etc.,  Co.  v.  Har- 

if  the  property  has  passed  from  his  ris,    142   Ind.   226;    40  N.  E.   1072; 

liands  or  if  he  has  received  money,  '   41  N.   E.  451. 

the  law  imposes  no  obligation  upon 


1390  PAGE    ON    CONTRACTS. 

who  seeks  to  disaffirm  the  contract  is  not  liable  for  what  he  has 
spent  before  disaffirmance.^^ 

§889.     When  restoration  of  consideration  must  be  made. 

Whether  restoration  of  consideration  by  an  infant  is  on  the 
one  hand  a  condition  precedent  to  disaffirmance  or  concurrent 
with  it,  or,  on  the  other,  it  is  not  a  condition  precedent,  but  on 
disaffirmance  the  adversary  party  has  merely  a  right  of  action 
against  the  infant  for  so  much  of  the  consideration  as  he  is 
bound  to  return  is  a  question  on  which  there  is  a  hopeless  divi- 
sion of  authority.  There  is  a  tendency  not  to  insist  on  restora- 
tion as  a  condition  precedent  at  law,  as  the  infant  is  either 
resisting  enforcement  of  the  contract,  if  defendant ;  or,  if  plain- 
tiff, has  avoided  the  contract  by  his  o^vn  conduct  without  the 
aid  of  the  court  and  is  suing  to  regain  possession  of  what  he  has 
parted  with  or  to  obtain  judgment  for  its  equivalent.^  There 
is  a  tendency  in  equity  to  insist  on  restoration  as  a  condition 
precedent  to  the  right  of  disaffirmance  or  concurrent  with  it, 
on  the  principle  that  he  who  seeks  equity  must  do  eqiiity.^ 
Some  courts  suggest  the  distinction  that  an  infant  must  return 
the  consideration  to  rescind  an  executed  contract  but  not  to 
rescind  one  executory  as  to  him  f  but  this  rule  has  been  said  to 
exist  only  in  equity.*  This  distinction  reconciles  many  of  the 
cases  but  by  no  means  all.  Thus  a  return  of  the  consideration 
has  been  treated  as  a  condition  precedent  to  allow  infancy  to 
be  interposed  as  a  defense  to  a  promissory  note.^     To  work  out 

28 Drude  V.  Curtis,  183  Mass.  317;  Bamberger,  11  B.  Mon.   (Ky.)    113; 

62  L.  R.  A.  755;  67  N.  E.  317.  Badger   v.   Phinney,   15   Mass.    359; 

1  Shuford  V.  Alexander,  74  Ga.  8  Am.  Dec.  105 ;  Craighead  v.  Wells, 
293;  Clark  v.  Van  Court,  100  Ind.  21  Mo.  404;  Bedinger  v.  Wharton, 
113;  50  Am.  Rep.  774;  Briggs  v.  27  Gratt.  (Va.)  857;  Mustard  v. 
MeCabe,  27  Ind.  327;  89  Am.  Dec.  Wohlford,  15  Gratt.  (Va.)  329;  76 
503.  Am.   Dec.   209. 

2  Eureka  Co.  v.  Edwards,  71  Ala.  *  Smith  v.  Evans,  5  Humph. 
248;    46   Am.   Rep.    314;    Englebert  (Tenn.)    70. 

V,  Troxell,  40  Neb.  195;  42  Am.  St.  s  At    law.     Philpot    v.    Mfg.    Co., 

Rep.  665;   26  L.  R.  A.   177;   58   N.  18    Neb.    54;     24    N.    W.    428.     In 

W.    852.  equity.     Pemberton,     etc..     Associa- 

sEvireka  Co.  v.  Edwards.  71  Ala.  '  tion  v.  Adams,  53  N.  J.  Eq.  258;  31 

248;    46    Am.    Rep.    314;    Bailey    v.  Atl.  280. 


CONTRACTS    OF    INFANTS. 


1391 


this  distinction :  if  the  contract  has  been  executed  by  the  infant 
and  he  is  suing  to  recover  what  he  has  parted  with,  restoration 
is  not  a  condition  precedent  at  hiw.''  At  equity,  however, 
restoration  is  a  condition  precedent  to  relief  if  the  infant  is  ask- 
ing affirmative  relief, '^  or  restoration  is  decreed  in  the  same  ac- 
tion in  which  the  infant  seeks  relief.^  In  a  suit  in  equity  to 
recover  realty  conveyed  by  the  infant,  restoration  of  the  consid- 
eration seems  to  be  at  least  a  concurrent  condition.'' 

If  the  contract  is  executory  as  to  the  infant  and  he  is  resist- 
ing the  enforcement  of  it  at  law,  he  need  not  restore  the  con- 
sideration as  a  condition  precedent.^"  If  he  is  defending  in 
equity  he  need  not  restore  the  consideration  as  a  condition 
precedent  to  avoiding  the  contract.^^ 

In  some  jurisdictions  an  attempt  has  been  made  to  reconcile 
authorities  by  holding  that  an  infant  need  not  repay  the  consid- 
eration still  held  by  him  as  to  condition  precedent  to  avoiding  a 
conveyance  of  realty  ;^^  but  that  he  must  do  so  to  avoid  an  exe- 
cuted sale  by  him  of  personalty. ^^     Other  courts  have  held  that 


6  Miller  v.  Smith,  26  Minn.  248; 
37  Am.  Rep.  407;  2  N.  W.  942. 
(His    ability    to    restore    was    not 

shown,  however.)  Ruehizky  v.  De 
Haven,  97  Pa.  St.  202;  Shaw  v. 
Boyd,  5  Serg.  &  R.  (Pa.)  309;  9 
Am.  Dee.  368.  The  court,  in  speak- 
ing of  the  proposition  that  restora- 
tion is  a  condition  precedent,  said: 
"  As  a  general  rule  it  is  unsound." 
Ruehizky  v.  De  Haven,  97  Pa.  St. 
202.  Contra,  Carr  v.  Clough,  26  N. 
H.  280;   .59  Am.  Dec.  345. 

7  Eureka  Co.  v.  Edwards.  71  Ala. 
248;  46  Am.  Rep.  314;  Utermehle 
V.  McGreal,  1  D.  C.  App.  359;  En- 
glebert  v.  Troxell,  40  Neb.  195;  42 
Am.  St.  Rep.  665;  26  L.  R.  A.  177; 
58  N.  W.  852. 

8  Smith  V.  Evans,  5  Humph. 
(Tenn.)    70. 

9  Bozeman  v.  Browning,  31  Ark. 
364;    Bryant  v.   Pottinger,  6  Bush. 

(Ky.)    473. 


10  Craighead  v.  Wells,  21  Mo. 
404.  Contra,  Philpot  v.  Mfg.  Co., 
18  Neb.  54;   24  N.  W.  428. 

"Petty  v.  Roberts,  7  Bush.  (Ky.) 
410.  Contra,  that  the  infant  can- 
not defend  against  his  note  and 
mortgage  without  restoring  the  con- 
sideration received  by  him.  Pember- 
ton,  etc.,  Association  v.  Adams,  53 
N.  J.  Eq.  258;  31  Atl.  280.  (The 
infant  had,  however,  made  a  false 
representation  as  to  his  age.) 

12  Carpenter  v.  Carpenter,  45  Ind. 
142;  Moore  v.  Baker,  92  Ky.  518; 
18  S.  W.  363;  Dawson  v.  Helmes, 
30  Minn.  107;  14  N.  W.  462;  Cresin- 
ger  V.  Welch,  15  Ohio  156;  45  Am. 
Dec.  565. 

13  Bailey  v.  Bamberger,  11  B. 
Mon.  (Ky.)  113;  Philpot  v.  Mfg. 
Co.,  18  Neb.  54;  24  N.  W.  428; 
Stack  V.  Cavanaugh,  67  N.  H.  149; 
30  Atl.  350. 


1392  PAGE    ON    CONTRACTS. 

an  infant  is  obliged  to  return  the  purchase  price  as  to  condition 
precedent  to  avoiding  a  conveyance  of  realty/*  If  the  infant 
after  coming  of  age  has  conveyed  to  a  bona  fide  purchaser  and 
has  thereby  rescinded  a  prior  deed  made  during  infancy,  the 
second  purchaser  may  recover  the  realty  from  the  first  without 
restoring  to  the  latter  the  consideration  paid  by  him/^  It  has 
been  held  that  equity  will  not  enjoin  an  infant  from  disaffirm- 
ing a  sale  of  land  without  returning  the  purchase  money  ;^*'  but 
in  other  jurisdictions  equity  will  enjoin  an  infant  from  enforc- 
ing a  judgment  in  ejectment  before  he  restores  the  money  paid 
for  the  land  to  his  guardian  and  by  him  paid  to  the  infant/^ 

Even  where  restoration  is  a  condition  concurrent  or  prece- 
dent, it  must  be  shown  that  the  infant  actually  received  the  con- 
sideration/* and  that  he  has  it/®  If  he  has  wasted  it,  he  is  not 
bound  to  restore  it  at  all/^  Even  where  the  return  of  the  con- 
sideration is  said  to  be  a  condition  precedent,  if  the  infant  in 
his  petition  to  recover  realty  offers  to  pay  whatever  has  been  ex- 
pended by  grantee  in  behalf  of  the  infant,  alleges  that  he  does 
not  know  what  the  amount  is  and  asks  for  an  accounting,  this  is 
sufficient  without  an  actual  tender/^ 

§890.     Results  of  disaffirmance. 

On  disaffirmance  of  the  contract  by  the  infant,  the  rights  of 
the  parties  are  to  be  determined  without  any  reference  to  the 
provisions  of  the  contract.^     Thus,  an  infant  agreeing  to  work 

i4Hobbs  V.  R.  E.,   122  Ala.  602;  82  Am.  St.  Rep.  103;  26  So.  139. 
82  Am.   St.  Rep.    103;    26   So.   139;  is  At   law.     Manning  v.   Johnson, 

Stout  V.   Merrill,   35  la.  47;    Ring-  26  Ala.  446;   62  Am.  Dec.  732.     In 

ham  V.  Rarley.  55  Tex.  281;  40  Am.  equity.     Monumental,    etc.,   Associa- 

Rep.   801.  tion  v.  Herman,  33  Md.  128. 

15  Moore  v.  Baker,  92  Ky.  518;  18  i9  Miller  v.  Smith,  26  Minn.  248; 
S.  W.  363;  Vallandingham  v.  John-  37  Am.  Rep.  407;  2  N.  W.  942. 
son,  85  Ky.  288;  3  S.  W.  173;  Cre-  20  Green  v.  Green.  69  N.  Y.  553; 
singer   v.   Welch,    15   Ohio    156;    45  25  Am.  Rep.  233.     See  §  888. 

Am.  Dec.  565.  21  Graves    v.    Hickman,    59    Tex. 

16  Brawner    v.    Franklin,    4    Gill      381. 

(Md.)    463;    Mustard   v.    Wohlford,  1  Myers  v.  Rehkopf.   30   111.   App. 

15  Gratt.    (Va.)    329;    76  Am.  Dec.  209;  Danville  v.  Mfg.  Co.,  62  N.  H. 

209.  133. 

17  Hobs   V.   R.   R.,    122    Ala.    602; 


CONTEACTS  OF  INFAKTS.  1393 

for  necessaries  may  repudiate  his  contract  and  recover  a  reason- 
able compensation.''^  If  he  repudiates  the  contract  of  employ- 
ment he  can  recover  the  difference  between  the  reasonable  value 
of  his  services  and  what  has  been  paid  him.^  So  a  minor  who 
works  for  five  months  under  a  contract  for  two  years,  and  is  paid 
for  four  months  and  then  avoids  his  contract  cannot  recover 
more  than  a  fair  value  for  his  work  less  what  he  has  received,* 
In  an  action  by  a  minor  for  his  wages  it  is  no  defense  that  he 
agreed  to  forfeit  wages  by  leaving  without  two  weeks'  notice.^ 
So  an  infant  lessee  who  avoids  the  lease  at  majority  is  not  liable 
for  a  breach  of  conditions.^  So  on  avoiding  a  sale  by  the  in- 
fant's recovering  mortgaged  property  and  vendor's  recovering 
projDerty  sold,  no  liability  remains.^  The  better  view,  there- 
fore, is  that  on  repudiating  a  contract  the  infant  cannot  be  held 
for  damages  caused  by  the  breach  of  his  contract;^  though  the 
contrary  view  has  been  expressed.*^  Since  an  infant  who  repu- 
diates his  contract  cannot  be  held  for  damages,  directly,  the 
same  result  cannot  be  accomplished  indirectly  by  allowing  a  lien 
to  be  enforced  against  his  property.^''  A  minor  on  rescinding  a 
purchase  of  realty  is  chargeable  with  the  rents  and  profits  from 
the  time  of  taking  possession.^^     He  has  a  lien  on  the  realty  to 

2  Meredith   v.    Crawford,    34    Ind.  6  Harrison  v.  Burns,  84  la.  446; 

399;  Wheatly  v.  Miscal,  5  Ind.  142;  51  N.  W.  165. 

Van  Pelt  v.   Corwine,   6   Ind.   363 ;  7  Stotts  v.  Leonhard,  40  Mo.  App. 

overruling     Harney     v.     Owen,      4  336. 

Blackf.     (Ind.)     337;    30   Am.    Dec.  sDerocher  v.  Mills,   58  Me.   217; 

662;   Morse  v.  Ely,  154  Mass.  458;  4  Am.  Eep.  286;  Widrig  v.  Taggart, 

26  Am.  St.  Rep.  263;  28  N.  E.  577;  51   Mich.   103;    16  N.  W.  251. 

Tower-Doyle     Commission     Co.     v.  "  9 Moses  v.  Stevens,  2  Pick. (Mass.) 

Smith,  86  Mo.  App.  490.  332;  Lowe  v.  Sinklear.  27  Mo.  308; 

3Hagerty  v.  Lock  Co.,  62   N.  H.  Thomas    v.    Dike,    11    Vt.    273;    34 

576     (if   his   services   at    first   were  Am.   Dec.   690. 

worth   less  than   he  was   paid,   this  lo  McCarty  v.  Carter,  49  111.  53 ; 

fact    must    be    considered)  ;     Hoxie  95  Am.  Dec.  572;  Alvey  v.  Reed,  115 

V.  Lincoln.  25  Vt.  206.  Ind.   148;    7  Am.   St.  Rep.  418;    17 

4Hagerty  v.  Lock  Co.,  62  N.  H.  N.   E.    265;    Bloomer   v.   Nolan,    35 

576.  Neb.  51;    38  Am.  St.  Rep.  690;   53 

5  Danville   v.   Manufacturing   Co.,  N.  W.  1039. 

62  N.  H.    133;    and   see  Dearden  v.  "Scott  v.  Scott,  29  S.  C.  414;   7 

Adams,  19  R.  L  217;  36  Atl.  3.  S.  E.  811. 


139-i  PAGE    ON    CONTRACTS. 

secure  the  return  of  the  purchase  money  paid  in  by  him/^  but 
the  infant  cannot  recover  money  paid  in  under  the  contract  by 
another.  Thus,  land  was  deeded  to  A,  an  infant  feme  covert, 
under  contract  with  B,  A's  husband,  to  build  a  house  thereon. 
B  furnished  some  money  to  complete  the  house.  On  rescind- 
ing, A  cannot  recover  the  money  paid  by  B,^^  His  mere  dis- 
affirmance of  the  sale  of  realty  to  him  does  not  re-vest  the  legal 
title  in  the  vendor,  but  a  suit  in  equity  to  cancel  the'  conveyance 
is  an  appropriate  remedy.^*  On  rescinding  a  sale  of  realty,  the 
infant  may  be  held  liable  for  the  value  of  the  improvements 
erected  upon  the  realty  by  the  purchaser,^^  though  it  has  been 
held  that  his  liability  is  limited  to  the  increased  rental  value  of 
the  property.^®  AVhile  as  we  have  seen  the  adversary  party  may 
be  subrogated  to  the  rights  of  the  lien-holders  whom  he  has  paid, 
the  facts  which  entitle  him  to  subrogation  must  be  alleged  by 
him.^^  His  mere  disaffirmance  of  a  conveyance  made  by  him 
is  now  held  to  re-vest  the  legal  title  in  him,  so  as  to  allow  him 
to  sue  in  ejectment.^*  In  sales  of  personalty  to  the  infant,  the 
title  is  re-vested  in  the  vendor  on  disaffirmance  and  he  may 
recover  the  specific  chattel  if  in  the  infant's  possession,^^  or  its 
value  if  he  has  had  it  in  his  possession  or  under  his  control  after 
rescinding."" 

12  Scott  V.  Scott,  29  S.  C.  414;  7  i9  Bennett  v.  McLaughlin,   13   111. 

S.   E.    811;    Morris   v.   Holland,    10  App.  349;  Shirk  v.  Shultz,  113  Ind. 

Tex.  Civ.  App.  474;  31  S.  W.  690.  571;  15  N.  E.  12;  Bailey  v.  Barn- 
is  Jennings  v.  Hare,  47  S.  C.  279;  berger,     11     B.    Mon.     (Ky.)     113; 

25   S.   E.    198;   distinguishing  Scott  Badger   v.   Phinney.    15   Mass.    359; 

V.  Scott,  29  S.  C.  414;  7  S.  E.  811;  '8  Am.  Dec.  105;  Heath  v.  West.  28 

in  which  the  minor   had   furnished  N.  H.  101;  Kitchen  v.  Lee,  11  Paige 

the  money  and  was  allowed  to   re-  (N.    Y.)     107;    42    Am.    Dec.    101; 

cover  it  on  rescinding.  Lynde  v.  Budd,  2  Paige  Ch.  (N.  Y.) 

i4McCarty   v.   Iron   Co.,    92    Ala.  191;  21  Am.  Dec.  84;  Farr  v.  Sum- 

463;  12  L.  R.  A,  136;  8  So.  417.  ner,  12  Vt.  28;   36  Am.  Dec.  327. 

15  Runale    v.    Spencer,    67    Mich,  20  Shuford    v.    Alexander,    74    Ga. 
189;  34  N.  W.  548.  293;   Strain   v.  Wright,  7  Ga.  568; 

16  Sewell  V.   Sewell,   92  Ky.   500 ;  Jefford    v.    Ringgold,    6    Ala.    544 ; 
36  Am.  St.  Rep.  606;   18  S.  W.  162.  Briggs  v.  McCabe,  27  Ind.  327;   89 

17  Bradshaw   v.   Van   Valkenburg,  Am.  Dee.  503 ;  Carpenter  v.  Carpen- 
97  Tenn.  316;  37  S.  W.  88.  ter,   45   Ind.    142;    Shirk   v.   Shultz, 

18  See  §§  873,  886.  113  Ind.  571;   15  N.  E.   12;   Badger 

V.    Phinnev,    15   Mass.    359;    8    Am. 


CONTKACTS    OF    INFANTS. 


1395 


^891.     Other  theory  of  infant's  contracts. 

There  is  another  theory  of  the  nature  and  effect  of  an  in- 
fant's voidable  contract,  which  is  inconsistent  with  the  opera- 
tion of  the  principles  already  laid  down,  and  often  gives,  in 
particular  cases,  the  opposite  result  from  that  which  they  would 
indicate.  This  theory  is  that  a  contract  of  an  infant,  if  fair 
and  reasonable,  cannot  be  rescinded  as  far  as  it  is  executed  un- 
less the  adversary  party  is  placed  substantially  in  statu  quo} 
The  list  of  cases  cited  might  be  greatly  increased  by  adding  cases 
which  involve  this  general  principle,  but  which  have  been  over- 
ruled on  the  specific  point  decided.  The  operation  of  this  prin- 
ciple places  an  infant's  contracts  ou  much  the  same  footing  as  a 
contract  for  necessaries,  that  is,  they  are  to  be  enforced  if  fair 
and  reasonable,  as  far  as  they  are  executed,  though  the  reason- 
able value  rather  than  the  contract  price  controls.  This  prin- 
ciple is  enforced  to  its  fullest  extent  in  New  Hampshire,  where 
the  adversary  party  must  be  put  in  statu  quo,~  at  least  to  the 
full  extent  of  the  benefit  received  by  the  infant.^  Thus  an 
agreement  by  a  minor  to  apply  certain  chattels  to  a  debt  due  to 
him  can  be  repudiated  to  the  extent  that  only  the  value  of  the 
chattels  need  be  applied  on  the  debt.*  In  other  jurisdictions  it 
has  been  applied  to  special  cases  rather  than  broadly  and  gener- 
ally. Thus,  it  has  been  held  that  an  infant  lessee  who  avoids 
his  lease  cannot  recover  the  rent  paid  for  the  time  that  he  used 
the  premises.^  So  beneficial  legal  legal  services  may  be  en- 
Dec.  105;  Walker  v.  Davis,  1  Gray  47  Am.  Rep.  209;  Heath  v.  Stevens, 
(Mass.)  506;  Taft  v.  Pike,  14  Vt.  48  N.  H.  251;  Rice  v.  Butler,  160 
405;  39  Am.  Dee.  228;  Mustard  v.  N.  Y.  578;  73  Am.  St.  Rep.  703; 
Wohlford,  15  Gratt.  (Va.)  329;  76  47  L.  R.  A.  303;  55  N.  E.  275; 
Am.  Dec.  209.  Searcy  v.  Hunter,  81   Tex.  644;   26 

iValentini    v.    Canali,    L.    R.    24      Am.  St.  Rep.  837;  17  S.  W.  372. 
Q.   B.   D.   166;    Adams  v.   Beall.   67  2  Heath  v.  Stevens.  48  N.  H.  251; 

Md.  53;  1  Am.  St.  Rep.  379;  8  Atl.      Locke  v.  Smith,  41  N.  H.  346. 
664 ;    Johnson   v.   Insurance  Co.,   56  3  Bartlett  v.  Bailey.  59  N.  H.  408 ; 

Minn.  372;  45  Am.  St.  Rep.  473;  26      Hall   v.   Butterfield,   59  N.   H.   354; 
L.   R.   A.    187;    .59   N.   W.    992;    57      47  Am.  Rep.  209. 
N.  W.  934 ;  Epperson  v.  Nugent.  57  *  Kimball  v.  Bruce.  58  N.  H.  327. 

Miss.  45;   34  Am.  Rep.  434;    Clark  s  Valentini    v.    Canali,    L.    R.    24 

v.  Tate,  7  Mont.  171;    14  Pac.  761;      Q.   B..  D.   166. 
Hall  V.   Butterfield,   59   N.  H.   354; 


1396 


PAGE    ON    CONTEACTS. 


forced  against  the  infant's  estate/'  So  a  minor  cannot  recover 
premiums  paid  hy  him  for  insurance/  at  least,  where  not  in 
excess  of  a  fair  value  of  the  risk  actually  incurred  by  the  com- 
pany; though  where  an  additional  sum  is  added  thereto  to  form 
an  accumulating  fund,  as  is  generally  done  under  modern  meth- 
ods of  insurance,  he  may  recover  this  additional  sum.*  So,  in 
order  to  avoid  a  minor's  assignment  of  a  life  insurance  policy  on 
his  father's  life  he  must  repay  the  premiums  paid  by  the 
assignee  before  the  assignment  was  avoided,  to  keep  the  policy 
up/  So  an  infant  who  buys  goods,  not  necessaries,  must  ac- 
count for  the  benefit  derived  therefrom/"  Thus  where  an  in- 
fant bought  a  bicycle  on  the  installment  plan,  paid  for  it  in  part, 
used  it  awhile,  and  then  returned  it  and  sued  to  rescind,  it  was 
held  that  she  must  account  for  a  reasonable  value  for  its  use, 
which  in  this  case,  equaled  what  she  had  paid  in/^  ^^^lile  this 
theory  may  in  some  cases  be  reconciled  with  the  one  generally 
received,  it  cannot  be  so  reconciled  in  others,  and  it  had  better 
be  classed  as  a  divergent  holding;  nor  can  it  be  classed  as  an 


6  Epperson  v.  Nugent,  57  Miss. 
45;  34  Am.  Rep.  434;  Searcy  v. 
Hunter,  81  Tex.  644;  26  Am.  St. 
Rep.  837;  17  S.  W.  372.  In  the 
case  last  cited  it  was  said  that  they 
might  be  considered  as  necessaries. 

7  Metropolitan  Life  Ins.  Co.  v. 
Bowser,  20  Ind.  App.  557 ;  50  N.  E. 
86.  "  We  do  not  assent  to  the  view 
that  as  a  further  consequence  of  his 
disability,  he  may  recover  back  the 
dues  and  assessments  he  may  have 
already  paid."  Chicago,  etc..  Asso- 
ciation v.  Hunt,  127  111.  257,  277; 
2  L.  R.  A.  549;  20  N.  E.  55. 

8  Johnson  v.  Ins.  Co.,  56  Minn. 
372;  45  Am.  St.  Rep.  473;  26  L.  R. 
A.  187;  59  N.  W.  992;  57  X.  W. 
934  (note  the  modification  on  re- 
hearing, in  accordance  with  the 
text).  Contra,  under  general  theory 
of  infancy.  Simpson  v.  Ins.  Co.. 
184  Mass.  348;  68  X.  E.  073. 

9  City  Savings  Rank  v.  Whittle, 
63  N.  H.  587 ;  3  Atl.  645. 


10  Hall  v.  Butterfield.  59  X.  H. 
3.54;  47  Am.  Rep.  209;  Rice  v.  But- 
ler, 160  X.  Y.  578;  73  Am.  St.  Rep. 
703;  47  L.  R.  A.  303;  55  N.  E. 
275. 

11  "  The  plaintiff,  having  had  the 
use  of  the  bicycle  during  the  time 
intervening  between  her  purchase 
and  its  return,  ought,  in  justice  and 
fairness,  to  account  for  its  reason- 
able use  or  deterioration  in  value, 
otherwise  she  would  be  making  use 
of  the  privilege  of  infancy  as  a 
sword,  and  not  as  a  shield."  Rice 
V.  Butler,  160  X.  Y.  578,  583; 
73  Am.  St.  Rep.  703;  47  L.  R. 
A.  303;  55  X.  E.  275;  criticising 
Pyne  v.  Wood.  145  Mass.  558;  14  X. 
E.  775;  McCarthy  v.  Henderson,  138 
^lass.  310.  Contra,  as  to  a  sale  of 
a  bicycle  on  the  installment  plan. 
Gillis  V.  Goodwin.  180  Mass.  140; 
91  Am.  St.  Rep.  265;  61  N.  E. 
813. 


CONTEACTS  OF  INFANTS.  1397 

obsolete  theory.  It  must  be  reckoned  with  at  Modern  Law 
as  a  principle  that  still  shows  evidences  of  vitality.  Even 
where  the  theory  discussed  in  this  section  is  in  force,  an  infant 
may  avoid  any  contract  which  is  not  fair  and  reasonable,  with- 
out making  any  compensation  beyond  returning  so  much  of  the 
consideration  received  by  him  as  he  has  left.^^ 

§892.     Infant  as  bankrupt. 

Under  the  United  States  bankruptcy  act  it  has  been  held  that 
an  infant  cannot  be  made  a  bankrupt,^  even  as  a  member  of  a 
firm,^  on  the  ground  ^hat  he  might  avoid  his  contracts  at  ma- 
jority. The  English  cases  took  the  same  view,^  except  where 
the  infant  had  estopped  himself,  under  the  equitable  principles 
controlling  a  court  of  bankruptcy,  by  a  false  representation  that 
he  was  of  age.*  Under  the  present  English  statute  making  an 
infant's  contracts  void  except  for  necessaries  he  cannot  be  made 
a  bankrupt  for  his  general  debts,^  and  it  has  been  doubted  if  he 
can  be  forced  into  involuntary  bankruptcy  even  for  necessaries.*^ 

§893.     Infant's  torts  arising  out  of  contract. 

While  an  infant  is  as  a  general  rule  liable  for  his  torts,  yet 
if  the  tort  is  so  connected  with  contract  that  without  the  contract 
no  cause  of  action  in  tort  could  exist,  the  infant  cannot  be  held 
in  tort.^     Thus  if  an  infant  makes  a  fraudulent  warranty  of 

12  Braucht     v.     Graves-May     Co.,  Ex  parte   Bates,   2   Mont.   D.   &  D. 

—  Minn.  — ;  99  N.  W.  417.  337;   In  re  Unity,  etc..  Association, 

1/to    re    Derby,    Fed.    Cas.    3815  3  De  Gex  &  J.   63. 

(where  this  rule  was  said  to  apply  ^  Ex  parte  Kibble,   L.   R.    10   Ch. 

to   voluntary   and    involuntary   pro-  373;   Ex  parte  Jones,  L.  R.   18  Ch, 

eeedings     alike).     Apparently     con-  Div.    109. 

*ra,  /n  re  Book.  3  McLean  317.  ^  In    re    SoltykofT     (1891),    1    Q. 

2  7w  re  Duguid,   100   Fed.  274    (a  B.  413. 

ease  of  involuntary  bankruptcy) .  i  Burns   v.    Smith,    29    Ind.    App. 

3  Belton  V.  Hodges,  9  Bing.  365;  181;  94  Am.  St.  Rep.  268;  64  N.  E. 
O'Brien  v.  Currie,  3  Car.  &  P.  283;  94;  Lowery  v.  Cate,  108  Tenn.  54; 
Ex  parte  Layton,  6  Ves.  4.34;  Ex  91  Am.  St.  Rep.  744;  57  L.  R.  A. 
parte  Barwis,  6  Ves.  601.  073;  64  S.  W.  1068;  West  v.  Moore, 

^Ex  parte  Watson,   16  Ves.   265;       14  Vt.  447;   39  Am.  Dec.  235. 


139S  PAGE    ON    CONTRACTS. 

goods  sold  hj  him,"  or  makes  a  fraudulent  representation  as  to 
its  ownership,'^  he  cannot  be  held  liable  thereon.  So  an  infant 
emiDloyer  cannot  be  held  liable  for  damages  caused  by  the  negli- 
gence of  her  servant.*  So  an  infant  cannot  be  held  liable  for 
his  own  negligence  if  it  amounts  merely  to  improper  perform- 
ance of  a  contract.  Thus  where  an  infant  agreed  to  thresh  cer- 
tain wheat,  and  performed  the  contract  in  a  negligent  manner  so 
that  the  wheat  and  the  barn  in  which  it  was  stored  were  burned, 
no  recovery  can  be  had  against  him  for  such  negligence.^  If 
the  infant  by  word  or  act  repudiates  the  contract  and  is  then 
guilty  of  a  tort  with  reference  to  the  subject-matter  he  is  liable 
in  damages,  although  the  contract  afforded  him  the  means  of 
committing  the  tort.  Thus  if  an  infant  hires  a  horse  for  a 
specified  journey  and  drives  to  another  place,®  or  drives  beyond 
the  place  to  which  he  had  agreed  to  go,^  he  is  liable  for  any  dam- 
age suffered  by  such  horse,  on  the  theory  that  he  has  converted 
it  to  his  own  use.  While  an  infant  is  not  liable  for  breach  of  a 
promise  to  marry,*  he  is  liable  for  seduction  accomplished  by 
means  of  such  promise. **  So  an  infant  caused  an  old  man  to  be- 
come intoxicated  and  then  induced  him  to  sell  a  cow  for  the 
infant's  note.  It  was  held  that  the  vendor  could  recover  the 
cow  in  the  action  of  trover.^" 

2  Morrill  v.  Aden,  19  Vt.  505.  v.  Wiley,  23  Vt.  355;   56  Am.  Dec. 

3  Doran  v.  Smith,  49  Vt.  353.  85 ;   Ray  v.   Tubbs,  50  Vt.   688 ;   28 

4  Burns   v.    Smith,    29    Ind.    App.  Am.  Rep.  519, 
181;  94  Am.  St.  Rep.  268;  64  N.  E.  «  See  §  861. 

94.  9  Hawk  v.  Harris,  112  la.  543;  84 

sLowery  v.   Cate,   108   Tenn.   54;  Am.   St.   Rep.   352;    84   N.   W.   664. 

91  Am.   St.   Rep.  744;    57  L.  R.  A.  Suit  by   parent.     Fry  v.   Leslie,   87 

673;   64  S.  W.  1068.  Va.    269;     12    S.    E.    671.     By    the 

6  Churchill  v.  White,  58  Neb.  22;  woman  who  was  seduced.     Becker  v. 
76  Am.  St.  Rep.  64 ;  78  N.  W.  369.  Mason,    93    Mich.    336;    53    N.    W. 

7  Homer      v.      Thwing,      3      Pick.  361. 

(Mass.)  492 ;  Freeman  V.  Boland,  14  lo  Walker     v.     Davis,      1      Gray 

R.  I.  39;   51  Am.  Rep.  340;  Towne       (Mass.)   506, 


CONTRACTS   OF   INSANE.  1399 


CHAPTER  XXXIX. 

CONTRACTS   OF   INSANE. 

§894.    Nature  of  insanity  in  contract  law. 

In  order  to  affect  the  power  of  a  person  to  bind  himself  by 
contract,  it  is  now  held  that  there  must  be  such  a  degree  of  men- 
tal weakness  at  the  time  of  making  the  contract  as  will  mate- 
rially affect  his  ability  to  contract.  Slight  departure  from  the 
normal  type  is  insufficient  to  affect  his  legal  status.^  A  person 
may  be  absent-minded,"  or  ill,  infirm  and  subject  to  the  influence 
of  others,^  without  being  insane  in  this  sense.  It  is  not  neces- 
sary that  he  should  be  at  his  best,  mentally.^  Impairment  of 
mental  power  is  not  necessarily  incapacity  f  and  old  age  and 
weakness  of  mind  do  not  necessarily  incapacitate.''  Nor  is  it 
insanity  where  a  grantor  is  so  worried  over  financial  troubles 
as  to  make  a  foolish  contract.^  So  the  fact  that  one  has  been 
deaf  and  dumb  from  birth  does  not  conclusively  establish  his 

iMann     v.     Bank,     86     Fed.     51;  821;   36  S.  E.  100;   Seward  v.  Sew- 

White  V.  Farley,  81  Ala.  563;  8  So.  ard,  59  Kan.  387;  53  Pac.  63;  Paine 

215;   Waterman  v.  Higgins,  28  Fla.  v.  Aldrich,  133  N.  Y.  544;  30  N.  E. 

660;     10     So.     97;     Richardson     v.  725;   Chadd  v.  Moser,  25  Utah  369; 

Adams,  110  Ga.  425;  35  S.  E.  648;  71  Pac.  870. 

Kelly  V.   Perrault,    5   Ida.   221;    48  *  Ralston    v.    Turpin,    129    U.    S. 

Pae.   45;    Shea  v.  Murphy,   164   111.  663. 

614;  56  Am.  St.  Rep.  215;  45  N.  E.  5  Harrison  v.  Otley,   101   la.  652; 

1021;  Hall  v.  Ins.  Co.   (Ky.)  ;  43  S.  70  N.  W.  724;  Paine  v.  Aldrich,  133 

W.    194;    Frush    v.    Green,    86    Md.  N.  Y.  544;  30  N.  E.  725. 

494;   39  Atl.   863;   Cutler  v.  Zollin-  e  Wheatley   v.    Wheatley,    102   la. 

ger,    117    Mo.    95;    22    S.    W.    895;  737 ;  70  N.  W.  689 ;  Trinibo  v.  Ti-im- 

Swank    v.    Swank,    37    Or.    439;    61  bo,   47   Minn.   389;    50  N.   W.   350; 

Pac.   846.  Delaplain  v.  Grubb,  44  W.  Va.  612; 

2Galer  v.  Galer,   108  la.  496;    79  67  Am.  St.  Rep.  788;  30  S.  E.  201. 

N.  W.  257.  '^  De    Witt    v.   Mattison,    26    Neb. 

3  Nance   v.    Stockburger,    111    Ga.  655;   42  N.  W.  742. 


1-iOO 


PAGE    ON    CONTRACTS. 


insanity;^  and  a  belief  in  spiritualism  is  compatible  with 
capacity  to  convey  realty.^  On  the  other  hand,  a  person  may 
be  so  insane  as  to  affect  his  capacity  to  make  a  valid  contract 
without  being  totally  devoid  of  reason.'" 

The  test  now  adopted  by  the  weight  of  authority  is  that  in 
order  to  affect  contractual  power,  the  insanity  must  be  of  such 
a  sort  that  it  renders  the  victim  incapable  of  understanding 
with  reasonable  clearness  what  he  is  doing;  what  is  the  nature 
and  effect  of  the  transaction  in  which  he  is  engaging.^^  This 
rule  recognizes  that  a  man  may  have  full  power  to  make  con- 
tracts without  being  able  to  manage  his  own  affairs  in  a  reason- 
able and  prudent  manner.^^  The  statement  of  the  rule  further 
shows  that  in  order  to  affect  contractual  capacity,  the  mental 
derangement  must  be  such  as  not  merely  can  prevent  this  fair 
and  reasonable  understajidiug  on  his  part  of  some  of  his  acts; 
but  it  must  further  be  such  as  does  in  fact  prevent  his  under- 
standing the  nature  and  result  of  the  act  under  judicial  investi- 
gation.^^    As  expressed  in  a  recent  Massachusetts  case,  an  in- 


8  Christmas  v.  Mitchell,  3  Ired. 
Eg.    (N.  C.)    535. 

9  Connor  v.  Stanley,  72  Cal.  556; 
1  Am.  St.  Rep.  84;  14  Pac.  306; 
Lewis  V.  Arbuckle,  85  la.  335;  16 
L.  R.  A.  677 ;  52  N.  W.  237. 

10  Dominiek  v.  Randolph,  124  Ala. 
557;  27  So.  481;  Hay  v.  Miller,  48 
Xeb.  156;  66  N.  W.  1115;  Dewey 
V.  Algire,  37  Neb.  6;  40  Am.  St. 
Rep.  468;  55  N.  W.  276. 

11  Griffith  V.  Godey.  113  U.  S.  89; 
Allore  V.  Jewell.  94  U.  S.  506 ;  Sands 
V.  Potter,  165  111.  397;  56  Am.  St. 
Rep.  253;  46  N.  E.  282;  affirming 
59  111.  App.  206;  Lindsey  v.  Lind- 
sey,  50  111.  79;  99  Am.  Dec.  489; 
Teegarden  v.  Lewis,  145  Ind.  98; 
40  N.  E.  1047;  44  N.  E.  9;  Ray- 
mond V.  Wathen,  142  Ind.  367;  41 
X.  E.  815;  Elwood  v.  O'Brien.  105 
la.  239;  74  N.  W.  740;  Milks  v. 
Milks,  129  Mich.  164;  88  N.  W. 
402;   Jamison  v.   Culligan,   151   Mo. 


410;  52  S.  W.  224;  Boggess  v.  Bog- 
gess,  127  Mo.  305;  29  S.  W.  1018; 
State  V.  Grand  Lodge,  78  Mo.  App. 
546;  Dennett  v.  Dennett,  44  N.  H. 
531;  84  Am.  Dec.  97;  Young  v. 
Stevens,  48  N.  H.  133;  97  Am.  Dec. 
592;  Kastell  v.  Hillman,  53  N.  J. 
Eq.  49;  30  Atl.  535;  Wilkinson  v. 
Shernian,  45  N.  J.  Eq.  413;  18  Atl. 
228;  Aldrich  v.  Bailey,  132  N.  Y. 
85;  30  N.  E.  264;  Valentine  v. 
Lunt,  115  N.  Y.  496;  22  N.  E.  209; 
Riggs  V.  Tract  Society,  95  N.  Y. 
503;  Whitaker  v.  Hamilton,  126  N. 
C.  465;  35  S.  E.  815;  Carnagie  v. 
Diven.  31  Or.  366;  49  Pac.  891; 
Miller  v.  Rutledge,  82  Va.  863;  1 
S.  E.  202 ;  Buckey  v.  Buckey.  38  W. 
Va.  168;  18  S.  E.  383;  Wright  v. 
.Jackson,  59  Wis.  569;  18  N.  W. 
486. 

12  Moffitt  V.  Witherspoon,  10  Ired. 
(N.  C.)   185. 

13  Wetter   v.    Habersham,    60   Ga, 


CONTKACTS    OF    INSANE. 


1401 


sane  delusion  must  be  the  "  moving  cause  "  of  a  deed  or  a  con- 
tract in  order  to  invalidate  it/*  and  one  may  be  sane  enough  to 
transact  simple  business  and  yet  too  insane  for  complicated  mat- 
ters.^^  Accordingly,  though  it  has  been  said  that  it  requires  a 
higher  degree  of  capacity  to  exchange  lands  than  to  make  a 
will,^"  the  better  view  is  that  capacity  to  contract  and  capacity 
to  make  a  will  are  so  different  in  many  points  that  they  should 
not  be  compared.  Since  the  condition  of  the  contracting  party 
at  the  time  of  making  the  contract  determines  its  validity,  the 
contract  of  one  ordinarily  insane  is  valid  if  made  during  a  lucid 
interval. ^^  The  earlier  authorities  do  not  always  recognize  the 
rules  just  given.  In  some  cases  apparently  any  degree  of  in- 
sanity was  held  to  destroy  contractual  capacity  ;^*  in  others, 
nothing  short  of  a  total  lack  of  reason  would  have  that  effect.^^ 
Weakness  of  mind  not  caused  by  technical  insanity  may  avoid 
a  contract.  A  judgment  note  given  by  one  dying  of  meningitis, 
who  is  in  such  physical  and  mental  condition  that  he  does  not 
understand  the  nature  of  the  act  is  invalid.-''  If  a  person  not 
technically  in  the  class  of  the  insane  or  imbecile,  but  below  the 
normal  type  of  mental  capacity  is  subjected  to  fraud  or  duress, 
and  he  is  thereby  misled  or  coerced,  relief  is  given  against  con- 
tracts into  which  he  is  induced  to  enter  by  such  means.     This 


184;    Emery   v.   Hoyt,   46    111.   258;  ig  Turner  v.  Haupt,  53  N.  J.  Eq. 

Burgess  v.  Pollock,   53   la.  273:    36  526;   33  Atl.  28. 

Am.  Rep.  218;   5  N.  W.  179;  Meiga  i7  Lilly  v.  Waggoner,  27  111.  395; 

V.  Dexter,  172  Mass.  217;   52  N.  E.  Jones  v.  Perkins,  5  B.  Mon.    (Ky.) 

75;    Holyoke    v.    Haskins,    5    Pick.  222;   Richardson  v.  Smart,  152  Mo. 

(Mass.)   20;  16  Am.  Dee.  372;  Ben-  623;    75   Am.   St.   Rep.   488;    54    S. 

oist  V.  Murrin,  58  Mo.  307 ;  Concord  W.  542 ;   Gangwere's  Estate.  14  Pa. 

V.    Rumney,    45   N.    H.    423;    Loder  St.  417;   53  Am.  Dec.  554;   Wright 

V.   Loder,    34   Neb.    824;    52   N.   W.  v.    Bank    (Tenn.    Ch.    App.),   60    S. 

814;    Wilkinson  v.   Sherman.  45   N.  W.   623. 

J.  Eq.  413;   18  Atl.  228;  Pidcock  V.  18  Owing's     Case,     1     Bland     Ch. 

Potter,  68  Pa.  St.  342;  8  Am.  Rep.  (Md.)  370;  17  Am.  Dec.  311. 

181 ;    Mays    v.    Prewett.    98    Tenn.  i9  Stewart      v.      Lispenhard,      26 

474;  40  S.  W.  483.  Wend.     (N.  .Y.)     255;    Jackson    v. 

14  Meigs  V.  Dexter.  172  Mass.  217;  King.  4  Cow.    (N.  Y.)    207;    15  Am. 

52   N.   E.   75.  Dec.  354. 

isSeerley   v.    Sater,    68    la.    375;  20  Kedward  v.  Campbell.    166  Pa. 

27  N.  W.  262.  St.  365;   31  Atl.  114. 


1402  PAGE    ON    CONTKACTS. 

topic  does  not  involve  any  technical  consideration  of  capacity 
and  is  discussed  elsewhere.^^ 

§895.     Validity  of  contracts  of  an  insane  person. —  Before  adjudi- 
cation. 

At  early  law  it  was  laid  down  that  a  party  should  not  "  dis- 
able himself  "^  by  alleging  his  insanity.  By  this  view  of  the 
law,  his  contracts  generally  were  absolutely  valid,  unless  a  guar- 
dian were  appointed  to  represent  him,  or  he  had  died  leaving 
his  heirs  and  personal  representatives  to  avoid  the  contract.  At 
Modern  Law  this  rule  has  been  repeatedly  rejected,"  and  under 
proper  circumstances  insanity  may  be  interposed  as  a  defense  by 
the  insane  person  himself.^  In  some  cases  the  conveyances  and 
contracts  of  an  insane  person  have  been  said  to  be  void  as  a 
class  f  but  in  most  of  the  cases  cited  below,  it  was  not  necessary 
to  hold  the  contract  void  ah  initio,  as  the  record  showed  that 
proper  steps  had  been  taken  to  avoid  it ;  and  accordingly  it  had 
become  void,  whether  originally  void  or  voidable.  Still  it  has 
recently  been  held  that  the  only  liability  of  an  insane  person  is 
for  the  consideration,  on  common  counts.^  At  Modern  Law 
the  contracts  of  an  insane  person  are  to  be  divided  into  two  gen- 
eral classes,  those  entered  into  before  the  insane  person  was 
adjudicated  insane  in  a  proceeding  instituted  for  that  purpose; 
and  those  entered  into  after  such  adjudication. 

21  See  Ch.  XI  and  XII.  purchaser  from  grantor)  ;    Sullivan 

iCo.  Litt.  247b;   Beverly's  Ease.,  v.    Flynn,    9    Mack.     (D.    C.)     396; 

4  Coke  123b.  Van    Patton    v.    Beals,    46    la.    62; 

2  Grant  v.  Thompson,  4  Conn.  Corbit  v.  Smith,  7  la.  60;  71  Am. 
203;  10  Am.  Dee.  119;  Mitchell  v.  Dec.  431;  Owing's  Case,  1  Bland. 
Kingman,  5  Pick.  (Mass.)  431;  Rice  Ch.  (Md.)  370;  17  Am.  Dec.  311; 
V.  Peet,  15  Johns.  (N.  Y.)  503;  Seaver  v.  Phelps,  11  Pick.  (Mass.) 
Bensell     v.     Chancellor,     5     Whart.  304;    22    Am.    Dec.    372;    Brown   v. 

(Pa.)    370.  "  Miles,  61  Hun   (N.  Y.)   453;  Lee  v. 

3  See  cases  cited  in  this  section.         Lee,  4  McCord   (S.  C.)   183;  17  Am. 

4  Parker  v.  Marco.   76    Fed.   510;      Dec.  722. 

German,   etc..    Society  v.   De   Lash-  s  Milligan    v.    Pollard,    112    Ala. 

mutt-  67  Fed.  399   (as  to  a  hona  fide      465;   20   So.  620. 


CONTRACTS    OF    INSANE.  1403 

§896.     Void  contracts. 

Of  the  contracts  entered  into  before  adjudication  some  are 
still  said  to  be  void.  A  power  of  attorney  is  the  best  example 
of  a  void  act  of  a  lunatic.^  While  in  some  of  these  cases  it  does 
not  appear  where  the  power  was  void  originally,  or  whether  it 
has  been  avoided,  in  others  it  clearly  appears  that  the  power  is 
void.  Thus  a  third  person  may  raise  the  question  of  the  valid- 
ity of  the  power.  ^  Appointment  of  agents  by  means  less  formal 
than  by  power  of  attorney  are  generally  held  to  be  merely  void- 
able.' 

§897.     Valid  contracts. 

The  valid  contracts  of  an  insane  person  are  those  whereby  he 
agrees  to  do  whatever  the  law  would  compel  him  to  do.  Thus 
the  release  of  a  ground  rent  inherited  from  an  ancestor,  upon 
the  happening  of  the  conditions  on  which  under  the  terms  of 
the  deed  accepted  by  such  ancestor,  it  should  be  released,^  is  not 
made  voidable  by  the  insanity  of  the  releasor.  So  a  sale  by  a 
trustee  is  not  affected  by  the  insanity  of  the  owner  of  the  equity 
of  redemption  who  bought  the  land  subject  to  the  mortgage.^  So 
where  the  vendor  was  sane  when  contract  was  made  for  the  sale 
of  realty,  but  was  insane  when  the  deed  was  delivered,  the  deed 
was  held  valid.'  The  renewal  by  an  insane  person  of  an  accom- 
modation note  given  by  him  when  sane  is  binding  when  the 
payee  takes  the  new  note  hona  fide  and  surrenders  the  old  ;*  and 
the  insanity  of  a  maker  of  notes  given  as  a  subscription  to  buy  a 

1  Dexter    v.    Hart,    15    Wall.     (U.  2  piaster   v.   Rigney,   97   Fed.    12; 

S.)    9;    Plaster  v.   Rigney,   97   Fed.  38  C.  C.  A.  25. 

12;  38  C.  C.  A.  25;  Rigney  v.  Plas-  3  Arthurs  v.  Gas  Co.,  171  Pa.  St. 

ter,  88  Fed.  686;  McClun  v.  McClun,  532;    33  Atl.  88. 

176  111.  376;  .52  N.  E.  928,  where  it  1  Hirst's  Estate,  147  Pa.  St.  319; 

is  said  to  be  "  wholly  void  " ;  Smith  23  Atl.  455. 

V.  Smith,  106  N.  C.  498;   11   S.  E.  2  Bensieck  v.  Cook,  110  Mo.  173; 

188;   In  re  Misselwitz,,   177  Pa.  St.  33  Am.  St.  Rep.  422;  19  S.  W.  642. 

359;    35  Atl.   722,  where   it  is  said  3  Brown  v.  Miles,  61  Hun   (N.  Y.) 

to  be  "of  no  avail";  Elias  v.  Loan  453. 

Association,  46  S.  C.  188;   24  S.  E.  *  Bank    v.    Sneed,    97    Tenn.    120; 

102,   where   it   is   said   to   be   "null  56  Am.   St.   Rep.   788;   34  L.  R.  A. 

and  void."  274;  36  S.  W.  716. 


1404 


PAGE    ON    COXTRACTS. 


site  for  a  school  library,  occurring  after  exi^enses  were  incurred 
in  reliance  on  the  subscription,  but  before  the  site  was  bought, 
does  not  revoke  the  subscrijition.^  So  an  insane  person  is  liable 
for  a  breach,  committed  during  insanity,  of  a  contract  made 
while  sane,*'  The  most  important  topic  under  this  head  is  neces- 
saries. An  insane  person  like  an  infant  is  liable  for  a  reason- 
able value  for  such  necessaries  as  are  furnished  to  him,^  or  to 
his  wife  and  family.^  This  liability  is  measured,  not  b}^  the 
terms  of  the  contract  but  by  the  pre-existing  legal  liability,  and 
does  not  need  any  express  promise.^  In  the  case  of  necessaries, 
the  question  of  adjudication  is  immaterial.  An  insane  person, 
after  adjudication,  may  bind  himself  by  a  contract  for  neces- 
saries if  his  guardian  fails  to  provide  them.^°  By  statute  in 
some  jurisdictions  the  estate  of  an  insane  person  is  liable  for 
his  support  in  an  asylum.^^  The  rules  determining  what  neces- 
saries are,  are  much  the  same  as  in  the  case  of  infants.  In 
most  of  the  cases  already  cited,  food  and  clothing  were  the 
necessaries    in    question.     The    services    of    a    physician,^^    or 


5  School  District  v.  Stocking  (also 
cited  as  School  District  v.  Scheid- 
ley),  138  Mo.  672;  60  Am.  St.  Rep. 
576;  37  L.  R.  A.  406;  40  S.  W.  656. 

eBaldrick  v.  Garvey,  66  la.  14; 
23  N.  \Y.  156;  Williams  v.  Hays, 
143  N.  Y.  442;  42  Am.  St.  Rep. 
743;  26  L.  R.  A.  153;  38  X.  E.  449: 
In  re  Strasburger,  132  N.  Y.  128; 
30  X.  E.  379. 

7/»  re  Rhodes,  L.  R.  44  Ch.  D. 
94;  Borum  v.  Bell,  132  Ala.  85;  31 
So.  454;  Ex  parte  Xorthington,  37 
Ala.  496;  79  Am.  Dec.  67;  Henry  v. 
Fine.  23  Ark.  417;  Miller  v.  Hart, 
135  Ind.  201;  34  X.  E.  1003;  Sawyer 
V.  Liifkin,  56  Me.  308;  Hallett  v. 
Oakes.  1  Cush.  (Mass.)  296;  Ken- 
dall V.  May,  10  All.  (Mass.)  59; 
Reando  v.  Misplay,  90  Mo.  251;  59 
Am.  Rep.  13;  2  S.  W.  405;  Young 
V.  Stevens.  48  X.  H.  133;  97  Am. 
Dec.  .592;  Van  Horn  v.  Hann,  39  X. 
J.  L.  207;  Richardson  v.  Strong.  13 
Ired.  (X.  C.)  106;  55  Am.  Dec.  430; 


Beals  V.  See,  10  Pa.  St.  56 ;  49  Am. 
Dec.  573;  La  Rue  v.  Gilkyson,  4  Pa. 
St.  375;  45  Am.  Dec.  700;  Stannard 
V.  Burn,  63  Vt.  244;  22  Atl.  460. 

8  Booth  V.  Cottingham,  126  Ind. 
431;  20  X.  E.  84;  Pearl  v.  McDow- 
ell, 3  J.  J.  Marsh.  (Ky.)  658;  20 
Am.  Dec.  199;  Shaw  v.  Thompson, 
16  Pick.  (Mass.)  198;  26  Am.  Dec. 
655. 

9  Palmer  v.  Hospital,  10  Kan. 
App.  98;  61  Pac.  506. 

lO'Creagh  v.  Tunstall,  98  Ala. 
249;  Seaver  v.  Phelps,  11  Pick. 
(Mass.)  304;  22  Am.  Dec.  372; 
Darby  v.  Cabanne,  1  Mo.  App.  126; 
Maughan  v.  Burns,  64  Vt.  316;  23 
Atl.  583;  Stannard  v.  Burns.  63 
Vt.  244;  22  Atl.  460. 

11  Board  of  Chosen  Freeholders  of 
Camden  County  v.  Ritson,  68  X.  J. 
L.  666;  54  Atl.  839. 

12  Booth  V.  Cottingham,  126  Ind. 
431;  20  X.  E.  84. 


CONTRACTS    OF    INSANE.  1405 

nurse/^  have  beeu  held  necessaries ;  as  have  the  services  of  an 
attorney  where  rendered  in  good  faith  to  obtain  the  removal  of 
a  guardian  and  an  adjudication  of  sanity.^*  Where  no  per- 
sonal liability  has  been  held  to  exist  in  such  cases,  as  on  a  con- 
tract for  attorney's  fees  and  expert  witnesses  in  a  hearing  on 
lunacy,  it  is  because  under  the  procedure  then  in  force  allow- 
ance out  of  the  estate  of  the  insane  person  should  be  awarded  as 
costs  by  the  court  before  which  the  hearing  is  had/^  One  who 
lends  money  to  an  insane  person  is  subrograted  to  claims  for 
necessaries  and  the  like  to  the  payment  of  which  such  money  is 
devoted/^ 

§898.     Voidable  contracts. 

The  remaining  contracts  of  an  insane  person  are  voidable  in. 
the  sense  that  by  taking  proper  steps  the  insane  person  or  his  rep- 
resentatives may  disaffirm  them.  This  includes  ordinary  execu- 
tory contracts,^  and  executed  conveyances  of  property,"  as  a  bill 
of  sale  by  an  insane  person  to  his  father  in  consideration  of  his 
paying  debts  of  the  son  which  were  not  incurred  for  neces- 

13  Richardson  v.  Strong,   13   Ired.  415;    39   Am.   Dec.    744;    Arnold  v. 

L.   (N.  C.)    106;  55  Am.  Dec.  430.  Iron  Works,   1   Gray    (Mass.)    434; 

14 Carter  v.  Beekwith,   128  N.  Y.  Carrier    v.    Sears,    4    All,     (Mass.) 

312;   28  N.  E.  582.  336;    81    Am.    Dec.    707;    Campbell 

15  Freeman's  Appeal  (Pa.),  13  v.  Kuhn,  45  Mich.  513;  40 
Atl.  552;  22  W.  N.  C.  173.  Am.     Rep.     479;     8     N.     W.     523; 

16  First  National  Bank  v.  McGin-  Bates  v.  Hyman  (Miss.),  28  So. 
ty,  29  Tex.  Civ.  App.  539 ;  69  S.  W.  567 ;  Nicholas,  etc.,  Co.  v.  Hard- 
495.  man,    62    Mo.   App.    153;    Eaton   v. 

iLuffboro  V.  Foster,  92  Ala.  477;  Eaton,    37    N.   J.   L.    108;    18   Am. 

9  So.  281;  Bunn  v.  Postell,  107  Ga.  Rep.  716;    Ingraham   v.   Baldwin,  9 

490;   33  S.  E.  707;   Schuff  v.  Ran-  N.  Y.  45;  Hanley  v.  Loan  Co.,  44  W. 

som,    79    Ind.    458;     Copenrath    v.  Va.  450;  29  S.  E.  1002. 
Kienby,  83  Ind.  18;  Boyer  v.  Berry-  2  Luhrs    v.    Hancock,    181    U.    S. 

man,   123   Ind.  451;   24  N.   E.   249;  567;     Woolley    v.    Gaines,    114    Ga. 

Louisville,  etc.,  Ry.  Co.  v.  Herr,  135  122 ;   88  Am.  St.  Rep.  22 ;   39  S.  E. 

Ind.  591;  35  N.  E.  556;  Aetna,  etc.,  892;   Burnham  v.  Kidwell,   113   111. 

Co.  V.  Sellers,  154  Ind.  370;  77  Am.  425;   Copenrath  v.  Kienby,   83   Ind. 

St.   Rep.   481;    56   N.   E.   97;    Allen  18;  Fay  v.  Burditt,  81  Ind.  433;  42 

V.   Berryhill,   27  la.   534;   Hovey  v.  Am.    Rep.    142;    Sedgwick   v.   Jack, 

Hobson,   53  Me.   451;    89   Am.   Dec.  Ill  la.  745;  82  N.  W.  1027;  Brown 

705;  Allis  V.  Billings,  6  Met.  (Mass.)  v.  Cory,  9  Kan.  App.  702;   59  Pac. 


1406 


PAGE    ON    CONTEACTS. 


saries/  mortgages,*  the  forfeiture  of  a  mortgage  for  non-pay- 
ment of  installments  due  before  the  mortgagor  was  adjudged 
insane/  a  sale  of  realty  after  insanity  under  a  power  of  sale  in 
a  mortgage  given  before  insanity,®  and  the  release  of  a  mort- 
gage/    So  the  lunacy  of  a  partner  makes  the  deed  of  the  firm 
voidable.^     Thus  a  conveyance  by  an  insane  person  is  "  void- 
able; that  is,  it  may  be  confirmed  or  set  aside."^     In  some 
states  a  conveyance  by  an  insane  person  is  said  to  be  invalid 
until  it  is  ratified,^"  but  the  better  view  is  that  such  deed  is  valid 
until  set  aside.^^     "  Until  disaffirmed  the  voidable  executed  con- 
tract in  respect  to  the  property  or  benefits  conveyed  passes  the 
right  or  title  as  fully  as  an  unimpeachable  contract.    By  ratifica- 
tion  it   becomes    impervious ;    by    disaffirmance,    a   nullity."^^ 
However,  in  some  cases  it  has  been  said  that  such  deeds  were 
void/^     The  fact  that  the  property  has  been  sold,^*  or  mort- 


1097;  Gribben  v.  Maxwell,  34  Kan. 
8;  55  Am.  Rep.  23.3;  7  Pae.  584; 
Breckenridge  v.  Ormsby,  1  J.  J. 
Marsh.  (Ky.)  236;  19  Am.  Dec.  71; 
Riley  v.  Carter,  76  Md.  581 ;  35  Am. 
St.  Rep.  443;  19  L.  R.  A.  489;  25 
Atl.  667;  Reason  v.  Jones,  119  Mich. 
672;  78  N.  W.  899;  Thorpe  v.  Hans- 
com,  64  Minn.  201;  66  N.  W.  1; 
McAnaw  v.  Tiffin,  143  Mo.  667;  45 
S.  W.  656;  Hay  v.  Miller,  48  Neb. 
156;  Riggan  v.  Green,  80  N.  C.  236; 
30  Am.  Rep.  77;  Crawford  v.  Sco- 
vell,  94  Pa.  St.  48;  39  Am.  Rep. 
766;  Wille  v.  Wille.  57  S.  C.  413; 
35  S.  E.  804;  Pearson  v.  Cox.  71 
Tex.  246;  10  Am.  St.  Rep.  740;  9 
S.  W.  124 ;  French  Lumbering  Co.  v. 
Theriaiilt,  107  Wis.  627;  51  L.  R.  A. 
910;  83  N.  W.  927. 

sWilkins  v.  Wilkins,  35  Neb. 
212;  52  N.  W.  1109. 

<Fay  V.  Burditt,  81  Ind.  433;  42 
Am.  Rep.  142;  Creekmore  v.  Baxter, 
121  N.  C.  31 ;  27  S.  E.  994. 

5  Helbreg  v.  Schumann,  150  111. 
12;  41  Am.  St.  Rep.  339;  37  N.  E. 
99. 


6  Encking  v.  Simmons,  28  Wis. 
272. 

7  Aetna,  etc.,  Co.  v.  Sellers,  154 
Ind.  370;  77  Am.  St.  Rep.  481;  56 
N.  E.  97. 

8  Riley  v.  Carter,  76  Md.  581;  35 
Am.  St.  Rep.  443;  19  L.  R.  A. 
489;  25  Atl.  667. 

9Luhrs  V.  Hancock,  181  U.  S. 
567,  574. 

10  Brigham  v.  Fayerweather,  144 
Mass.  48;  10  N.  E.  735;  Valpey  v. 
Rea,  130  Mass.  384. 

11  Downham  v.  Holloway,  158  Ind. 
626;  92  Am.  St.  Rep.  330;  64  N.  E. 
82. 

12  Aetna  Life  Ins.  Co.  v.  Sellers, 
154  Ind.  370.  372;  77  Am.  St.  Rep, 
481 ;  ,56  N.  E.  97. 

13  Dexter  v.  Hall.  15  Wall.  (U. 
S.)  9;  Galloway  v.  McLain.  131 
Ala.  280;  31  So.  603;  Van  Deusen 
V.  Sweet,  51  N.  Y.  378;  Farley  v. 
Parker.  6  Or.  105;  25  Am.  Rep.  504; 
In  re  Desilver,  5  Rawle  (Pa.)  Ill; 
28  Am.  Dec.  645. 

14  Elder  v.  Schumacher,  18  Colo. 
433;    33  Pac.   175;   Gray  v.  Turley, 


CONTEACTS    OF    INSANE. 


1407 


gaged^^  to  a  bona  fide  purchaser  or  mortgagee,  does  not  deprive 
the  insane  grantor  of  the  right  to  disaffirm/^  even  where  part 
of  the  money  raised  by  the  mortgage  was  applied  to  the  support 
of  the  insane  person.^^  The  contrary  view  is  held  by  a  few 
courts,  however/^  Insanity  avoids  a  contract  and  also  a  decree 
of  foreclosure  taken  in  pursuance  thereof/'*  So  a  judgment 
confessed  by  an  insane  person  and  sales  thereunder  are  void- 
able.'" Thus  if  an  insane  person  buys  chattels  on  credit,  giving 
a  note  for  the  purchase  price  secured  by  a  deed  of  trust  on  such 
chattels  and  on  certain  land,  and  containing  a  provision  for  the 
payment  of  attorney  fees,  no  relief  can  be  given  other  than  a 
decree  for  the  sale  of  the  chattels."^  A  waiver  of  rights  in  a 
legal  proceeding  is  always  voidable.^^  But  in  Louisiana  it 
seems  to  be  held  that  the  contract  of  an  insane  person  before 
adjudication  of  insanity  can  be  avoided  only  if  the  adversary 
party  knew  or  must  have  known  of  such  insanity."^  It  is  some- 
times said  that  negotiable  instruments,  executed  by  an  insane 
person,  are  void.^*  If  the  word  "  void  "  is  not  used  carelessly 
for  voidable,  this  holding  is  then  based  on  the  theory  that  these 
instruments  must  be  either  negotiable  in  the  technical  sense,  and 
therefore  valid  in  the  hands  of  hona  fide  holders,  or  else  void. 
The  true  rule  is  intermediate  between  these  extreme  positions. 
It  is  that  in  a  negotiable  contract  of  an  insane  person,  "  the 
quality  of  negotiability  does  not  attach  to  it,  though  made  nego- 

110  Ind.  254;   11  N.  E.  40;  McKen-  N.  C.  515;   17  Am.  St.  Rep.  686;   7 

zie  V.  Donnell,   151  Mo.  461;   52  S.  L.  R.  A.  118;  10  S.  E.  609. 

W.  222.  i9Lockwood   v.   Mitchell,   7   0,   S. 

15  German,     etc.,     Society     v.     De  387;  70  Am.  Dec.  78, 

Lashmiitt,    67    Fed.    399;    Hull    v.  20  Crawford  v.   Thomson,    161   111. 

Louth.   109  Ind.  315;   58  Am.   Rep.  161;  43  N.  E.  617. 

405;  10  N.  E.  270.  21  Bates    v.    Hyman     (Miss.),    28 

leHovey  v.  Hobson,  53  Me.  451;  So,  567, 

89  Am.  Dec,  705;  Chew  v.  Bank,  14  22  North  v.  Joslin,  59  Mich,  624; 

Md.    299;    Rogers   v.    Blackwell,   49  26  N.  W.  810. 

Mich.    192;    13   N,   W.    512;    Dewey  23  Martinez  v.  Moll,  46  Fed.  724; 

V.  Allgire,   37   Neb.  6;    40   Am.   St,  Wolf  v.  Edwards,   106  La,  477;    31 

Rep.  468;  55  N,  W,  276.  So.  58. 

17  German,     etc..     Society    v.     De  24  Van  Fatten  v.  Beals,  46  la.  62; 
Lashmutt,  67  Fed.  399.  Seaver  v,  Phelps,   11  Pick,    (Mass.) 

18  Myers  v,  Knabe,  51  Kan.  720;  304;  22  Am.  Dee,  372, 
33  Pac.  602;   Odom  v,  Riddick,   104 


1408  PAGE    ON    CONTEACTS. 

tiable  in  form/'"^  and  it  is  therefore  voidaLle,  not  only  in  the 
hands  of  the  payee,  but  in  those  even  of  an  indorsee  for  value, 
without  notice  and  before  maturity."®  This  is  especially  true 
as  to  a  holder  with  notice  of  insanity  but  not  of  guardianship.^'^ 
By  analogy,  the  indorsement  of  an  insane  person  should  be 
voidable  only,  and  valid  against  the  maker  unless  avoided,  and 
it  has  been  so  held.^^  The  decided  weight  of  authority,  it  must 
be  admitted,  however,  is  the  other  way.^^  Some  authorities 
have  even  held  that  a  contract  w'ith  one  knowm  to  be  insane  is 
absolutely  void.^"  In  Georgia  it  has  been  said  to  be  "  a  general 
rule  of  universal  law  that  the  contracts  of  a  lunatic,  idiot  or 
other  person  non  compos  mentis  from  age  or  other  infirmity  are 
utterly  void."^^  The  Georgia  case  is  affected  by  the  Georgia 
statute  and  by  the  fact  that  the  insane  person  had  been  adjudi- 
cated insane  in  a  state  where  he  was  domiciled.  The  cases 
cited  do  not  bear  out  the  general  proposition,  which  does  not 
seem  to  be  adhered  to  even  in  Georgia.^^  A  grantee  who  ac- 
cepts a  deed  from  a  grantor  whom  he  knows  to  be  insane  is 
"  guilty  of  meditated  fraud,"^^  but  while  such  deed  is  voidable 
it  was,  in  this  case,  not  necessary  to  decide  if  it  was  not  abso- 
lutely void.^*     Other  states  have  held  that  a  contract  cannot  be 

25  Hosier  v.  Beard,  54  0.  S.  398;,  91.     Contra,  Louisville,  etc.,  Ry.  v. 

56  Am.  St.  Rep.   720;   35  L.  R.  A.  Herr,  135  Iiid.  591;  35  X.  E.  556. 

161 ;  43  N.  E.  1040.  si  American,    etc.,    Co.    v.    Boone, 

26McClain  v.  Davis,  77  Ind.  419;  102  Ga.  202;   66  Am.  St.  Rep.  167; 

Hosier  v.   Beard,   54  O.   S.   398;    56  40  L,  R.  A.  250;  29  S.  E.  182;  quot- 

Am.  St.  Rep.  720;  35  L.  R.  A.  161;  ing  1   Daniel  on  Xegot.  Inst.  §  209 

43  jST.  E.   1040;   Wireback  v.  Bank,  (4tli  ed.),  and  citing  Dexter  v.  Hall, 

97  Pa.   St.  543;   39  Am.  Rep.  821;  15  Wall.    (U.  S.)    9;   Anglo-Califor- 

Moore  v.  Hershey,   90  Pa.   St.   196.  nian   Bank   v.   Ames,   27   Fed.   727; 

This  point  was  queried  in  Milligan  Seaver  v.  Phelps,  11  Pick.    (Mass.) 

v.    Pollard,    112    Ala.    465;    20    So.  304;    22   Am.   Dec.   372;    Rogers   v. 

620.  Blackwell,  49  Mich.  192;   13  N.  W. 

27  Bradbury   v.    Place    (Me.),    10  512. 

Atl.   461,  32Bunn   v.    Postle,    107    Ga.   490; 

28  Carrier  v.  Sears,  4  All.  (Mass.)  33  S.  E.  707;  Orr  v.  Mortgage  Co., 
336;  81  Am.  Dec.  707.  107  Ga.  499;  33  S.  E.  708. 

29  Jeneson  v.  Jeneson,  66  111.  259;  ss  Clay  v,  Hammond,  199  111.  370  j 
Hannahs  v.  Sheldon,  20  Mich,  278;  93  Am.  St.  Rep.  146;  65  N.  E.  35i. 
Burke  v.  Allen,  29  K  H,  106;  61  34  Clay  v,  Hammond,  199  111.  370; 
Am.  Dec.  642.  93  Am.  St.  Rep.  146;  65  X.  E.  352, 

30  Fecel  v.  Guinault,  32  La,  Ann. 


CONTRACTS    OF    INSANE.  1409 

avoided  where  the  contract  was  fair  and  the  adversary  neither 
know  nor  had  any  reason  to  know  of  the  insanity.^^  Thus  it  has 
been  held  that  a  partnership  contract  with  a  third  person  who 
does  not  know  that  one  of  the  j)artners  is  insane,  is  valid/"  but 
otherwise  if  such  person  knows  of  the  insanity.^^  Other  states 
have  insisted  that  good  faith,  fair  dealing  and  ignorance  of  the 
insanity  do  not  prevent  the  insane  person  from  disaffirming.^* 
"  The  fairness  of  defendant's  conduct  cannot  supply  the  plain- 
tiff's want  of  capacity."^'*  The  better  view  at  Modern  Law 
seems  to  be  that  the  knowledge  or  ignorance  of  the  insanity  pos- 
sessed by  the  adversary  i>arty  does  not  affect  the  validity  of  the 
contract,  but  does  determine  the  rule  as  to  the  return  of  the  con- 
sideration.*" 

§899.     Disaffirmance. 

The  insane  person,^  or  his  guardian,^  or  his  heirs,^  or  the  per- 
sonal representative  of  a  lunatic  may  avoid  his  contracts.*  But 
the  adversary  party  cannot  avoid  them  f  nor  can  a  third  person. 
Thus,  where  A,  who  was  insane,  telegraphed  to  B  to  send  money 
to  C,  A's  attorney,  to  whom  it  was  due  for  services,  and  B  sent 
it,  it  was  held  that  B  could  not  recover  from  C.^     Any  conduct 

35  Stockmejer  v.  Tobin,  139  U.  S.  iLuffboro  v.  Foster,  92  Ala.  477; 
176;    Ehoades    v.    Fuller,    139    Mo.      9  So.  281. 

179;  40  S.  W.  760.     So  of  a  convey-  2  Hull  v.  Louth,  109  Ind.  315;  58 

ance.     Gingrich  v.  Rogers,  —  Neb  Am.  Rep.  405;   10  N.  E.  270;   Rea- 

— ;   96  N.  W.   156.  son  v.  Jones,  119  Mich.  672;   78  N. 

36  Jurgens  v.  Ittman,  47  La,  Ann.  W.   899. 

367;    16   So.  952.  3  Downham  v.  Holloway,  158  Ind. 

37  Schmidt  V.  Ittman,  46  La.  Ann.  626;  92  Am.  St.  Rep.  330;  64  N.  E. 
888;  15  So.  310.  82;    (conveyance  of  realty). 

ssWooley  v.  Gaines,  114  Ga.  122;  *  Qrr  v.   Equitable  Mortgage   Co., 

88  Am.  St.  Rep.  22;   39  S.  E.  892;  107  Ga.  499;   33  S.  E.  708. 

Gibson    v.    Soper,    6    Gray    (Mass.)  5  Harmon    v.     Harmon,     51     Fed. 

279;    66    Am.    Dec.   414;    Hovey   v.  113;  Allen  v.  Berryhill,  27  la.  534; 

Hobson,   53  Me.  451;    89  Am.  Dec.  1  Am.  Rep.  309;  Atwell  v.  Jenkins, 

705.  163    Mass.    362;    47    Am.    St.    Rep. 

saSeaver     v.     Phelps,     11     Pick.  463;  28  L.  R.  A.  694;  40  N.  E.  178. 

(Mass.)   304,  300;  22  Am,  Dee.  372;  e  Atwell    v,    Jenkins,     163    Mass. 

quoted  in  Brigham  v.  Fayerweather,  362;  47  Am.  St.  Rep.  463;  28  L.  R. 

144  Mass.  48,  52;  10  N.  E.  735,  A.  694;  40  N.  E.  178. 

40  See   §    901. 
89 


1410  PAGE   ON    CONTEACTS. 

which  clearly  shows  an  intention  to  avoid  is  sufficient.  Thus 
an  ejectment  suit/  or  an  equity  suit  to  quiet  title/  or  to  relieve 
against  forfeiture/  or  a  conveyance  to  another  grantee,  made 
after  grantor  has  regained  his  sanity/"  are  sufficient  to  operate 
as  a  disaffirmance. 

§900.    Ratification. 

Since  the  contract  of  an  insane  person  is  voidable,  it  may  be 
ratified.  This  may  be  effected  by  an  express  promise  to  perform 
the  contract.  Thus  a  conveyance  may  be  ratified  by  reac- 
knowledging  the  deed  and  having  it  signed  by  another  attesting 
witness.^  Conduct  may  also  amount  to  a  ratification  if  un- 
equivocal.* Thus  knowingly  retaining  property  received  under 
the  contract,^  especially  if  it  has  meanwhile  depreciated 
greatly,*  or  receiving  the  benefit  of  the  contract,^  may  amount 
to  a  ratification.  However,  a  guardian's  entering  every  room 
in  the  house  or  bringing  a  suit,  which  abates  by  the  death  of  the 
ward  and  is  never  revived,  is  not  ratification.^  The  insane  per- 
son on  recovering  his  reason,'  or  his  personal  representatives  on 
his  death,^  may  ratify  his  contract.  However,  neither  the  in- 
sane person  while  insane,  nor  his  guardian,  nor  the  county  court, 
nor  all  of  them  together,  can  affirm  a  conveyance  made  by  him 

7  Jackson  v.  King,  4  Cowen    (N.  415;  39  Am.  Dec.  744;  Gibson  v.  R. 

Y.)   207;   15  Am.  Dec.  354.  R.  Co.^  164  Pa.  St.  142;  44  Am.  St. 

sowing's  Case,  1  Bland  Ch.  (Md.)  Rep.  586;  30  Atl.  308. 

370;   17  Am.  Dec.  311.  6  McAnaw  v.  Tiffin,  143  Mo.  667; 

9Helbreg   v.    Schumann,    150    111.  45  S.  W.  656. 

12;  41  Am.  St.  Rep.  339;   37  N.  E.  7  Barry    v.    Hospital     (Cal.),    48 

99.  Pac.  68;  Stroder  v.  Granite  Co.,  99 

10  Clay  V.  Hammond,  199  111.  370;  Ga.   595;   27   S.  E.    174;   Beasley  v. 

93  Am.  St.  Rep.  146;  65  N.  E.  352.  Beasley,  180  111.  163;  54  N.  E.  187; 

iDoran  v.   McConlogue,    150   Pa.  Louisville,  etc.,  Ry.  v.  Herr,  135  Ind. 

St.  98;  24  Atl.  357.  591;    35    N.   E.    556;    Whitcomb   v. 

2  Beasley  v.  Beasley,  180  111.  163;  Hardy,  73  Minn.  285;  76  N.  W.  29; 
54  K  E.  187.  Allis   v.    Billings,    6    Met.     (Mass.) 

3  Barry  v.  Hospital  (Cal.),  48  415;  39  Am.  Dec.  744;  Gibson  v.  R. 
Pac.  68 ;  Strodder  V.  Granite  Co.,  99  R.  Co.,  164  Pa.  St.  142;  44  Am. 
Ga.   595;    27    S.   E.    174.  St.   Rep.  586;   30  Atl.   308. 

4Bunn  V.  Postell,  107  Ga.  490;  33  «  Bunn  v.  Postell,  107  Ga.  .490;  33 

S.  E.  707.  S.    E.    707;    Bullard    v.    Moor,    158 

6  Allis  V.  Billings,  6  Met.  (Mass.)      Mass.  418;   33  N.  E.  928. 


CONTKACTS    OF    INSANE. 


1411 


while  insane.**     A  ratification  precludes  subsequent  disaffirm- 
ance.^*' 

§901.     Kestoration  of  consideration. 

The  widest  divergence  between  the  voidable  contracts  of  an 
infant  and  those  of  an  insane  person  consists  in  the  duty  to  re- 
store the  consideration  on  disaffirmance.  If  the  contract  is  a  fair 
and  reasonable  one  and  the  insane  person  has  received  the  con- 
sideration, and  the  adversary  party  did  not  know  of  the  insan- 
ity, the  insane  person  cannot  disaffirm  without  putting  the  ad- 
versary party  in  statu  quo  by  restoring  to  him  the  consideration 
which  he  has  received  or  its  equivalent.^  It  follows  that  in 
such  a  case  if  the  insane  person  does  not  or  cannot  place  the 
adversary  party  in  statu  quo  the  contract  is  binding  upon  the 
insane  person ;  since  though  it  was  originally  voidable  he  has 
not  taken  the  proper  steps  to  avoid  it.^     This  is  said  to  be  the 


9  Gingrich  v.  Rogers,  —  Neb.  — 
96  N.  W.  156. 

loBunn  v.   Postell,   107   Ga.  490 
33  S.  E.  707. 

1  Molton  V.  Camroux,  4  Exch.  17 
Imperial  Loan  Co.  v.  Stone  (C.  A.) 
(1892)  1  Q.  B.  599;  Cockrill  v 
Cockrill,  79  Fed.  143;  Parker  v 
Marco,  76  Fed.  510;  More  v.  Calkins 
85  Cal.  177;  24  Pac.  729;  Strodder 
V.  Granite  Co.,  99  Ga.  595;  27  S. 
E.  174;  Eldredge  v.  Palmer,  185 
111.  618;  76  Am.  St.  Rep.  59;  57 
N.  E.  770;  Ronan  v.  Bluhm,  173 
111.  277;  50  N.  E.  694;  Boyer  v. 
Berryman,  123  Ind.  451;  24  N.  E. 
249;  Thrash  v.  Starbuck,  145  Ind. 
673;  44  N.  E.  543;  Alexander  v. 
Haskins,  68  la.  73;  25  N.  W.  935; 
Harrison  v.  Otley,  101  la.  652;  70 
N.  W.  724;  Behrens  v.  McKenzie, 
23  la.  333;  92  Am.  Dec.  428;  Grib- 
ben  V.  Maxwell,  34  Kan.  8;  55  Am, 
Rep.  233;  7  Pac.  584;  Leavitt  v. 
Files,  38  Kan.  26;  15  Pac.  891; 
Brown  v.  Cory.  9  Kan.  App.  702; 
59  Pac.   1097;   Riley  v.   Carter,   76 


Md.  581;  35  Am.  St.  Rep.  443;  19 
L.  R.  A.  489;  25  Atl.  667;  Flach  v. 
Gottsehalk  Co.,  88  Md.  368;  71  Am. 
St.  Rep.  418;  42  L.  R.  A.  745;  41 
Atl.  908;  Gibson  v.  Soper,  6  Gray 
(Mass.)  279;  66  Am.  Dec.  414'; 
Morris  v.  Ry.  Co.,  67  Minn.  74;  69 
N.  W.  628;  Schaps  v.  Lehner,  54 
Minn.  208;  55  N.  W.  911;  McKen- 
zie V.  Donnell,  151  Mo.  431;  52  S. 
W.  214;  Dewey  v.  Allgire,  37  Neb. 
6;  40  Am.  St.  Rep.  468;  55  N.  W. 
276;  Young  v.  Stevens,  48  N.  H. 
133;  97  Am.  Dec.  592;  Matthiessen, 
etc.,  Co.  V.  McMahon,  38  N.  J.  L. 
536;  Memphis,  etc.,  Bank  v.  Sneed, 
97  Tenn.  120;  56  Am.  St.  Rep. 
788;  34  L.  R.  A.  274;  36  S.  W.  716; 
Lincoln  v.  Buckmaster,  32  Vt.  652. 
2Burnham  v.  Kidwell,  113  111. 
425;  Scanlon  v.  Cobb,  85  111.  296; 
Alexander  v.  Haskins,  68  la.  73;  25 
N.  W.  935;  Gribben  v.  Maxwell.  34 
Kan.  8;  55  Am.  Rep.  233;  7  Pac. 
584;  Young  v.  Stevens,  48  N.  H. 
133;  97  Am.  Dec.  592;  Matthiessen 
V.  McMahon,  38  N.  J.  L.  536;  Yau- 


1412  PAGE    ON    CONTRACTS. 

rule  "  not  so  much  upon  the  idea  that  (the  transaction)  pos- 
sesses the  legal  essential  of  consent,  but  rather  because,  by 
means  of  an  apparent  contract  he  has  secured  an  advantage  or 
benefit  Avliich  cannot  be  restored  to  the  other  party,  and  there- 
fore it  would  be  inequitable  to  permit  him  or  those  in  privity 
with  him  to  repudiate  it."^  Thus  a  compromise  with  an  insane 
person  before  adjudication  of  insanity  can  be  avoided  only  on 
his  placing  the  adversary  in  statu  quo^  It  has  even  been  held 
that  a  fair  deed  will  not  be  set  aside  where  the  grantee  cannot 
be  placed  in  statu  quo  and  had  no  knowledge  of  the  insanity  of 
the  grantor  except  that  he  had  once  been  sent  to  an  insane  asy- 
lum.^ But  if  the  vendor  has  a  mortgage  upon  the  property  con- 
veyed by  him  to  the  vendee  and  also  on  other  property,  the  ven- 
dee if  insane  may  avoid  without  offer  to  return  the  property 
sold  to  him  as  a  condition  precedent.^ 

But  where  the  prima  facie  rule  of  law  is  that  the  services  ren- 
dered or  property  furnished  are  rendered  gratuitously,  as  where 
a  daughter  renders  services  for  her  father,'^  or  a  husband  pays 
money  for  the  support  of  his  wife  and  step-daughter,^  and  the 
party  rendering  the  services  claims  that  it  was  done  under  a 
contract,  no  return  need  be  made  in  such  cases  for  the  consider- 
ation furnished  if  the  party  receiving  the  services  is  shown  to 
have  been  insane.  Where  the  consideration  was  furnished  not 
to  the  insane  person,  but  to  another,  as  where  money  was  loaned 
to  a  husband  secured  by  a  mortgage  on  his  insane  wife's  prop- 
erty, **  or  where  an  education  was  furnished  to  a  nephew  and 

ger  V.   Skinner,   14  N.  J.   Eq.   389;  5  Schaps  v.  Lehner,  54  Minn.  208; 

Insurance  Co.  v.  Hunt,  79  N.  Y.  541;  55  N.  W.  911. 

Riggan  v.  Green,  80  N.  C.  236;   30  6  Bates  v.  Hyman   (Miss.),  28  So. 

Am.    Rep.    77;    Lancaster    Bank    v.  567.      (The    vendor's    right    in    the 

Moore,  78  Pa.  St.  407;  21  Am.  Rep.  property  sold  being  fully  secured  by 

24;  Beals  v.  See,  10  Pa.  St.  56;  49  mortgage.) 

Am.   Dec.   573;    Sims  v.   McLure,   8  7  Kostuba  v.  Miller,  137  Mo.  161; 

Rich.  Eq.   (S.  C.)  286;  70  Am.  Dec.  38  S.  W.  946. 

196.  sNatcher  v.  Clark,   151  Ind.  368; 

3  Flach  V.  Gottschalk  Co.,  88  Md.  51   N.  E.  468. 

368,  375;  71  Am.  St.  Rep.  418;   42  »  Js^orth  Western,  etc.,  Co.  v.  Blan- 

L.  R.  A.  745;  41  Atl.  908.  kenship,  94  Ind.  535;   48  Am.  Rep. 

4  Morris  v.  Ry.  Co.,  67  Minn.  74;  185. 
69  N.  W.  628. 


CONTKACTS    OF    INSANE.  1413 

niece  of  an  insane  grantor,^"  the  insane  person  is  not  required  to 
place  the  adversary  party  in  statu  quo.^^  But  where  one  in- 
dorsed a  note  while  sane,  and  renewed  his  liability  after  becom- 
ing insane,  and  the  time  for  protesting  the  original  note  had 
passed,  he  was  held  bound  to  pay  the  note  even  though  he  was 
originally  an  accommodation  indorser/"  Where  the  parties 
are  in  personal  communication,  the  fact  that  the  adversary 
party  is  ignorant  of  the  insanity  implies  that  the  insane  person 
was  not  clearly  and  evidently  insane.  If  the  parties  are  not 

in  personal  communication  the  rather  peculiar  view  has  been 
expressed  that  the  adversary  party  had  no  reason  for  thinking 
that  the  other  was  sane,  and  hence  was  not  misled  though  he 
was  insane.^^  Conversely,  if  the  adversary  party  knew  of  the 
insanity  or  had  such  knowledge  and  information  as  would  arouse 
inquiry  in  the  mind  of  an  ordinarily  prudent  man  which  would 
result  in  his  learning  of  such  insanity,  the  contract  may  be 
avoided  without  replacing  such  adversary  party  in  statu  quo;^*" 
and  a  similar  rule  obtains  where  the  contract  is  harsh  and  op- 
pressive.^^ Thus  specific  performance  was  refused  where  the 
contract  was  oppressive,  and  the  defendant  was  given  to  an  ex- 
cessive use  of  intoxicating  liquors,  was  predisposed  to  insanity 
and  was  unable  to  understand  the  transaction  intelligently;^® 


10  Physio-Medical   College  v.  Wil-  tliiessen,  etc.,  Co.  v.  McMahon,  38  N. 

kinson,  108  Ind.  314;   9  N.  E.  167.  J.  L.  536;  Creekmore  v.  Baxter,  121 

iiMusselman  v.  Cravens,  47   Ind.  N.  C.  31;   27   S.  E.  994;   Hosier  v. 

1;  Van  Patton  v.  Beals,  46  la.  62.  Beard,   54   0.    S.    398;    56   Am.    St. 

12  Bank  v.  Sneed,  97  Tenn.  120;  Rep.  720;  35  L.  R.  A.  161;  43  N.  E. 
56  Am.  St.  Rep.  788;  34  L.  R.  A.  1040;  Crawford  v.  Scovell,  94  Pa. 
274;   36  S.  W.  716.  St.  48;   39  Am.  Rep.  766. 

13  Chew  V.  Bank,  14  Md.  299,  as  is  Hale  v.  Kobbert,  109  la.  128; 
explained  in  Flacli  v.  Gottschalk  80  N.  W.  308;  Halley  v.  Troester, 
Co.,  88  Md.  368;  71  Am.  St.  Rep.  72  Mo.  73;  Wager  v.  Wagoner,  53 
418;  42  L.  R.  A.  745;  41  Ail.  908.  Neb.  511;   73  N.  W.  937;   Crawford 

i4Allore  V.  Jewell,  94  U.  S.  506;  v.   Scovell,   94  Pa.   St.   48;    39   Am. 

Harding  v.   Wheaton,  2  Mason    (U.  Rep.  766;  Garrow  v.  Brown.  Winst. 

S.)     278;    Henry   v.    Fine,    23    Ark.  Eq.    (N.  C.)    46;   86  Am.  Dec.  450; 

417;    Thrash  v.   Starbuck,   145   Ind.  Sims   v.    McLure,    8    Rich.    Eq.    (S. 

673;  44  N.  E.  543;  Hale  v.  Kobbert,  C.)   286;  70  Am.  Dec.  196. 

109  la.  128;  80  N.  W.  308;  Clark  v.  le  Mulligan   v.   Albertz,    103   Wis. 

Lopez,  75  Miss.  932;  23  So.  648;  re-  140;  78  N.  W.  1093. 
hearing    denied,    23    So.    957;    Mat- 


1414  PAGE    ON    CONTRACTS. 

and  if  false  representations  were  made,  it  is  no  defense  that  the 
party  to  whom  they  were  made  was  in  such  mental  condition 
that  he  could  not  understand  them.^'^  So  if  A  conveyed  realty 
situated  on  a  river  bank  to  B  in  exchange  for  other  realty,  the 
exchange  being  greatly  in  A's  favor,  and  A  knowing  of  B's  in- 
sanity, B's  heirs  can  rescind  although  a  change  in  the  bed  of 
the  river  has  washed  away  the  greater  part  of  the  land  so  con- 
veyed to  B/^  A  contract  is  not,  however,  unfair  merely  be- 
cause there  is  some  advantage  in  it  to  the  adversary  party/* 
Wliat  the  insane  person  should  return  in  the  two  classes  of  cases 
last  given  is  not  clear  from  the  authorities,  while  it  has  been 
said  that  he  need  not  make  restitution,""  this  probably  means 
that  restitution  is  not  a  condition  precedent."^  The  best  view 
seems  to  be  that  as  in  the  case  of  infants,  so  much  of  the  consid- 
eration as  remains  must  be  restored  f^  though  a  fair  rule  not 
necessarily  inconsistent  is  that  one  who  makes  advances  on  a 
mortgage  given  by  one  whom  he  knows  to  be  insane  can  hold 
him  only  for  benefits  actually  received  by  him.^^  In  any  case 
if  the  benefit  received  from  the  rents  and  profits  equals  the  value 
of  the  consideration  parted  with,  no  further  restitution  is  neces- 
sary.^* Wliere  the  proceeds  of  the  sale  have  been  used  to  pay 
valid  debts,  and  the  purchaser  has  made  valuable  improve- 
ments on  the  realty,  he  has  been  held  to  be  subrogated  to  the 
rights  of  the  creditors  and  entitled  to  retain  possession  until 
paid.^^  So  if  money  lent  to  an  insane  person  and  secured  by  a 
mortgage  given  by  him  is,  imder  the  contract  of  loan,  used  in 

17  Kramer  V.  Williamson,  135  Ind.  22Helbreg  v.  Schumann,  150  111. 
655;  35  N.  E.  388.  12;  41  Am.  St.  Rep.  339;   37  K  E. 

18  Hale  V.  Kobbert,  109  la.  128;  99;  Encking  v.  Simmons,  28  Wis. 
80  X.  W.  308.  272. 

isEldredge    v.    Palmer,    185    111.  23  Creekmore    v.    Baxter,    121    N. 

618;   76  Am.  St.  Rep.  59;  57  N.  E.  C.  31;  27  S.  E.  994. 
770,    where    there   was    a   profit    of  24  Physio-Medical   College  v.  Wil- 

about  $500  in  an  exchange  of  valua-  kinson.  108  Ind.  314;  9  N.  E.  167; 

ble  real  estate.  Alexander  v.  Haskins,  68  la,  73;  25 

20  Crawford  v.  Scovell,  94  Pa.  St.  N.  W.  935. 

48;  39  Am.  Rep.  766.  25  Cathoart  v.  Sugenheimer,  18  S. 

21  Thrash  v.  Starbuck,  145  Ind.  C.  123.  (In  this  case  the  sale 
673;  44  N.  E.  543;  Wager  v.  Wag-  was  made  by  the  committee,  not  by 
oner,  53  Neb.  511;  73  N.  W,  937.  the  insane  person. )     But  in  German, 


CONTRACTS    OF    INSANE.  1415 

part  to  pay  off  a  prior  mortgage  on  the  same  property,  the  second 
mortgagee  is  subrogated  to  the  riglits  of  the  first  mortgagee.^* 
In  some  states  the  right  to  rescind  seems  to  be  recognized  even 
where  the  adversary  party  cannot  be  placed  in  statu  quo.^^ 

§902.     Contracts  made  after  adjudication. 

In  many,  if  not  all,  jurisdictions,  the  statutes  provide  for  a 
proceeding  to  determine  directly  the  question  of  the  sanity  or  in- 
sanity of  the  person  against  whom  such  proceeding  is  instituted, 
and  for  appointing  a  guardian  for  him  in  case  it  is  decided  that 
he  is  insane.  While  the  test  of  insanity  for  the  appointment  of 
a  guardian  on  adjudication  is  in  some  respects  different  from  the 
test  for  contractual  capacity,  such  an  adjudication  binds  the 
world,^  though  the  party  instituting  the  proceedings  is  not 
bound  more  than  others."  The  effect  of  such  an  adjudication, 
where  a  guardian  has  been  appointed  and  has  taken  control  of 
the  estate  of  his  ward,  is  to  render  all  contracts  and  convey- 
ances of  the  ward  during  such  guardianship  void.^  So  after 
such  adjudication  a  check  given  by  the  lunatic  is  void  and  the 

etc.,  Society  v.  De  Lashmutt,  G7  3  American,  etc.,  Co.  v.  Boone,  102 
[Fed.  399,  a  grantee  was  not  allowed  Ga.  202;  66  Am.  St.  Rep.  167;  40 
subrogation  as  to  the  amount  of  the  L.  R.  A.  250;  29  S.  E.  182;  Burn- 
purchase  money  spent  on  neces-  ham  v.  Kidwell,  113  111.  425;  New 
saries  for  the  insane  person.  England,    etc.,    Co.    v.     Spitler,    54 

26  McCracken  v.  Levi,  24  Ohio  C.  Kan.  560;  38  Pac.  799;  Pearl  v. 
C.  584.  McDowell,    3    J.    J.    Marsh.     (Ky.) 

27  0rr  V.  Equitable,  etc.,  Co.,  107  658;  20  Am.  Dec.  199;  Bradbury  v. 
Ga.  499;  33  S.  E.  708;  Hovey  v.  Place  (Me.),  10  Atl.  461;  Lynch 
Hobson,  53  Me.  451;  89  Am.  Dec.  v.  Dodge,  130  Mass.  458;  Leonard 
705.  To  the  same  effect  is  Seaver  v.  Leonard,  14  Pick.  (Mass.)  280; 
V.  Phelps,  11  Pick.  (Mass.)  304;  22  Wait  v.  Maxwell,  5  Pick.  (Mass.) 
Am.  Dec.  372.  Where  a  pledge  of  217;  16  Am.  Dec.  391;  White  v. 
a  note  was  rescinded  without  placing  Palmer,  4  Mass.  147;  Payne  v.  Bur- 
the  adversary  party  in  statu  quo.  dette,   84  Mo.  App.   332;    Carter  v. 

1  American,  etc.,  Co.  v.  Boone,  102  Beckwith,  128  N.  Y.  312;  28  N.  E. 
Ga.  202;  66  Am.  St.  Rep.  167;  40  582;  Wadsworth  v.  Sherman.  14 
L.  R.  A.  250;  29  S.  E.  182.  Barb.     (N.    Y.)     169;     Fitzhugh    v. 

2  Hughes  V.  Jones,  116  N.  Y.  67;  Wilcox,  12  Barb.  (N.  Y.)  235;  Mc- 
15  Am.  St.  Rep.  386;  5  L.  R.  A.  Creight  v.  Aiken,  Rice  (S.  C.)  56; 
632;  22  N  E.  446;  Gangwere's  Es-  Elston  v.  Jasper,  45  Tex.  409;  Han- 
tate,  14  Pa.  St.  417;  53  Am.  Dec.  ley  v.  Loan  Co.,  44  W.  Va.  450;  29 
554.  S.  E.   1002. 


1416  PAGE    ON    CONTRACTS. 

bank  on  which  it  is  drawn  is  not  protected  in  paying  it,  even  if 
in  ignorance  of  such  adjudication.*  The  rule  itself  is  an  old 
Common  Law  rule.  The  reason  for  the  rule  is  that  the  adjudi- 
cation is  intended  to  determine  the  question  of  status  once  and 
for  all ;  that  it  is  notice  to  the  world ;  and  that  the  guardian 
should  not  be  driven  to  the  perpetual  litigation  that  would  be 
necessary  if  the  sanity  of  the  ward  could  be  retried  whenever 
he  made  a  contract  or  a  conveyance.  Accordingly  where  there 
has  been  an  adjudication  of  insanity  but  no  guardian  has  been 
appointed,^  or  where  the  guardianship  has  been  in  fact  aban- 
doned,*' the  contract  or  conveyance  cannot  be  treated  as  void ; 
and  whether  no  guardian  was  appointed,'^  or  one  was  appointed 
but  never  took  charge  of  the  estate,^  if  the  insane  person  recov- 
ers, his  subsequent  contracts  are  valid.  So  where  the  guardian 
who  was  appointed  to  enable  the  insane  person  to  draw  his 
pension,  refused  to  take  charge  of  a  valuable  mill  on  which 
repairs  were  needed,  it  was  held  that  the  insane  person  might 
bind  himself  by  a  fair  contract,  at  least  to  the  extent  of  paying 
a  reasonable  compensation  for  the  repairs  needed,  though  they 
were  not  technical  necessaries.^  Where  the  guardian  was  re- 
moved by  an  appellate  court  as  an  unsuitable  person,  the  cause 
remanded  to  the  court  of  probate  powers,  and  a  petition  for  the 
appointment  of  another  guardian  dismissed,  it  was  held  that 
after  this  the  former  adjudication  ceased  to  be  conclusive,  as 
it  was  not  intended  to  fix  "  permanently  the  status  of  the  party 
affected  by  it."^°  So  where  an  adjudication  of  insanity  was  set 
aside,  a  sale  made  thereafter  by  such  alleged  insane  person 
.was  held  not  to  be  void,  even  though  the  adjudication  of  insanity 
was   subsequently   reinstated."     IsTormal   status  may   in    some 

4  American,  etc.,  Co.  v,  Boone.  102  ^  Water,  etc.^  Co.  v.  Root,  53  Kan, 

Ga.  202;   66  Am.  St.  Rep.   167;   40  187;  42  Pac.  715. 
L.  R.  A.  250;   29  S.  E.  182.  8  Lower   v.    Schumacher,   61    Kan. 

sMcCormick    v.    Littler,    85    111.  625;  60  Pac.  538, 
62;   28  Am.  Rep.  610;    Water,   etc.,  o  Kimball      v.      Bumgardner,      16 

Co.  V.  Root,   56  Kan.   187;   42  Pac.  Ohio  C  C.  587;  9  Ohio  C.  D.  409. 
715.     Contra,  Kiehne  v.  Wessell,  53  loWillwerth      v.      Leonard,      156 

Mo.  App.  667.  Mass.  277;  31  N.  E.  299. 

8  Thorpe    v.    Hanscom,    64    Minn.  n  In   this   case,   however,   the   de- 

201;   66  X.  W.  1.  cree     reinstating     the     adjudication 


CONTEACTS    OF    INSANE. 


1417 


jurisdictions  be  restored  by  a  discharge  from  an  asylum  as 
cured,  without  formal  adjudication  of  restoration  of  sanity.^^ 
Thus  a  physician's  discharge  from  an  asylum  restores  capacity 
to  sue  ;^^,  and  a  similar  view  of  the  effect  of  a  discharge  from 
an  asylum  as  cured  was  taken  in  a  divorce  suit,"  and  in  a  suit  on 
an  insurance  policy  involving  the  question  of  the  sanity  of  the 
insured  when  he  met  his  death/^  The  adjudication  has  been 
held  binding  though  made  in  another  state,  and  one  in  which 
the  person  adjudged  insane  was  not  domiciled,  but  in  which  he 
had  been  appointed  the  administrator  of  an  estate/®  There  is 
some  authority  for  holding  in  opposition  to  the  majority  view 
that  adjudication  and  guardianship  make  only  a  prima  facie 
case  of  incapacity  to  make  subsequent  contracts  and  convey- 
ances/^ But  in  most  of  the  cases  cited  in  support  of  this  propo- 
sition, the  contract  or  conveyance  was  made  before  the  adjudi- 
cation but  within  the  time  during  which  insanity  has  been 
found  to  exist/^  In  such  case  the  effect  of  the  adjudication  is 
"  no  more  than  prima  facie  evidence  as  to  the  past  condition  of 


was  held  to  be  erroneous,  and  fur- 
ther the  trial  court  was  held  never 
to  have  acquired  jurisdiction. 
Mitchell  V.  Spaulding,  206  Pa.  St. 
220;   55  Atl.  968. 

12  Clay  V.  Hammond,  199  111.  370; 
93  Am.  St.  Rep.  146;  65  X.  E.  352; 
Topeka,  etc.,  Co.  v.  Root,  56  Kan. 
187;    42   Pac.   715. 

13  Kellogg  V.  Cochran,  87  Cal. 
192;  12  L.  R.  A.  104;  25  Pac.  677. 

14  Rodgers  v.  Rodgers,  56  Kan. 
483;  43  Pac.  779. 

15  Mutual,  etc.,  Co.  v.  Wisvell,  56 
Kan.  765;  35  L.  R.  A.  258;  44 
Pac.  996. 

16  American,  etc.,  Co.  v.  Boone, 
102  Ga.  202;  66  Am.  St.  Rep.  167; 
40  L.  R.  A.  250;  29  S.  E.  182.  In 
this  case  A,  after  becoming  insane, 
and  being  adjudged  insane  by  the 
Florida  courts,  where  he  was  act- 
ing as  administrator,  drew  a  check 
on  a  Georgia  bank,  which  paid  the 


check  without  any  notice  of  his 
condition  or  of  the  adjudication. 
The  check  was  on  a  fund  held  by 
A  as  administrator,  but  deposited 
by  him  to  his  personal  account  with 
knowledge  of  the  bank.  Suit  was 
brought  by  A's  successor  as  admin- 
istrator against  the  bank,  for  the 
amount  of  the  original  deposit.  He 
recovered  the  amount  of  the  check 
drawn  by  A  while  insane,  on  the 
theory  that  the  check  was  void  and 
the  bank  paid  at  its  peril;  but  he 
also  recovered  checks  drawn  before 
insanity,  on  the  theory  that  the 
deposit  was  a  trust  fund  to  the 
knowledge  of  the  bank. 

1-  Field  V,  Lucas,  21  Ga.  447 ;  68 
Am.  Dec.  465;  Armstrong  v.  Short, 
1  Hawks.    (X.  C.)    11. 

18  Hopson  V.  Boyd,  6  B.  Mon. 
(Ky. )  296  (where  the  sale  was  16 
years  before  the  inquisition)  ;  Kern 
V.  Kern.  51  X.  J.  Eq.  574;   26  Atl, 


1418 


PAGE    ON    CONTEACTS. 


the  person/'^®  a  proposition  supported  by  ample  authority.^"  A 
note  given  by  a  person  as  surety,  pending  an  inquisition  of 
lunacy  is  said  to  be  prima^  facie  made  while  insane.'^  In  the 
suit  for  an  adjudication  as  to  sanity,  the  court  has  no  power  to 
pass  upon  the  validity  of  past  transfers  of  property.^^  Possibly 
contracts  for  necessaries  are  an  exception  to  the  general  rule 
concerning  contracts  after  adjudication.  If,  however,  the  guar- 
dian of  the  insane  person  has  contracted  with  one  person  for 
the  support  of  the  insane  ward,  and  such  support  is  furnished 
a  third  person  who  renders  services  as  nurse,  not  vinder  contract 
with  the  guardian,  cannot  recover  therefor  on  the  theory  that 
such  services  were  necessaries.^^ 


837;  Mott  v.  Mott,  49  N.  J,  Eq. 
192;  22  Atl.  997;  Eeeves  v.  Mor- 
gan, 48  N.  J.  Eq.  415;  21  Atl. 
1040;  Hart  v.  Deamer,  6  Wend.  (N. 
Y.)  497  (two  months  before)  ;  Eip- 
py  V.  Gant,  4  Ired.  Eq.  (N.  C.) 
443  (thirteen  months  before)  ; 
Noel  V.  Kerper,  53  Pa.  St.  97 ;  Gang- 
were's  Estate,  14  Pa.  St.  417;  53 
Am.  Dec.  554  (about  six  months  be- 
fore ) . 

i9Hopson  V.  Boyd,  6  B,  Mon. 
(Ky.)  296,  297. 

aoSergeson  v.  Sealy,  2  Atk.  412; 


Titcomb  v.  Vantyle,  84  111.  317; 
Wall  V.  Hill,  1  B.  Mon.  (Ky.)  290; 
36  Am.  Dee.  578. 

21  Moore  v.  Hershey,  90  Pa.  St. 
196. 

22  Hughes  V.  Jones,  116  N.  Y.  67; 
15  Am.  St.  Eep.  386;  5  L.  R.  A. 
632;   22  N.  E.  446. 

23  Further  the  services  were  ren- 
dered by  a  nephew  of  the  insane 
person,  apparently  without  intent 
at  the  time  to  charge  therefor. 
Schramek  v.  Shepeck,  —  Wis.  — ; 
98  N.  W.  213. 


CONTEACTS    OF    UBUNKAKDS. 


1419 


CHAPTER  XL. 


CONTRACTS  OF  DRUNKARDS. 
§903.    Nature  of  drunkenness  in  contract  law. 

Drunkenness  in  contract  law  is  treated  in  almost  the  same 
way  as  insanity.  Before  adjudication  as  an  habitual  drunkard, 
a  person  cannot  escape  his  liability  on  a  contract  on  the  mere 
ground  that  he  was  intoxicated  when  he  executed  it,  unless  he 
can  show  that  at  the  very  moment  of  execution  he  was  so  in- 
toxicated that  he  was  unable  to  understand  the  nature  and  con- 
sequences of  the  transaction.^  Where  this  degree  of  intoxication 
exists,  the  contract  is  voidable,  even  if  the  intoxication  is  vol- 
untary and  not  produced  by  the  adversary  party.^    A  less  degree 


1  Matthews  v.  Baxter, '  L.  E.  8 
Ex.  132;  Taylor  v.  Purcell,  60  Ark. 
606;  31  S.  W.  567;  Hale  v.  Stery, 
7  Colo.  App.  165;  42  Pac.  598; 
Watson  V.  Doyle,  130  111.  415;  22 
N,  E.  613;  Schramm  v.  O'Connor, 
98  111.  539;  Bates  v.  Ball,  72  111. 
108;  Davidge  v.  Crandall,  23  111. 
App.  360;  Harbison  v.  Lemon,  3 
Blackf.  (Ind.)  51;  23  Am.  Dec. 
376;  Willeox  v.  Jackson,  51  la. 
208;  1  N.  W,  513;  Byrne  v.  Long 
(Ky.),  15  S.  W.  778;  Carpenter  v. 
Rodgers,  61  Mich.  384;  1  Am.  St. 
Rep.  595;  28  N.  W.  156;  Newell 
V.  Fisher,  11  Sm.  &  M.  (Miss.) 
431;  49  Am.  Dec.  66;  Rogers  v. 
Warren,  75  Mo.  App.  271;  French 
V.  French,  8  Ohio  214;  31  Am.  Dec. 
441;  Bush  v.  Breinig,  113  Pa.  St. 
310;  57  Am.  Rep.  469;  6  Atl.  86; 
Birdsong  v.  Birdsong,  2  Head. 
(Tenn.)    289;    Morris   v.    Nixon,    7 


Humph,  (Tenn.)  579;  Belcher  v. 
Belcher,  10  Yerg.  (Tenn.)  121 ;  Rey- 
nolds V.  Dechaums,  24  Tex.  174;  76 
Am.  Dee.  101;  Wells  v.  Houston, 
23  Tex.  Civ.  App.  629;  57  S.  W.  584; 
Barrett  v.  Buxton,  2  Aikens  (Vt.) 
167;  16  Am.  Dec.  691;  Wiggles- 
worth  V.  Steers,  1  H.  &  M.  (Va.) 
70;  3  Am.  Dec.  602;  Loftus  v.  Ma- 
loney,  89  Va.  576;  16  S.  E.  749. 
The  degree  of  intoxication  has  been 
especially  insisted  on  in  Johns  v. 
Fritchey,  39  Md.  258,  where  the 
proof  was  required  to  be  clear  and 
convincing;  and  in  Caulkins  v.  Fry, 
35  Conn.  170,  where  it  was  held 
that  one  who  could  remember  on 
the  next  day  that  he  had  made  a 
contract  was  not  drunk  enough-  to 
escape    liability. 

2  Bush  V.  Breinig,  113  Pa.  St. 
310;  57  Am.  Rop.  469;  6  Atl.  80; 
Barrett  v.  Buxton,  2  Aikens    (Vt.) 


1420 


PAGE    ON    CONTRACTS. 


of  intoxication,''  even  though  causing  exhilaration  and  excite* 
ment,*  or  preventing  him  from  acting  as  carefully  as  if  he  were 
sober,^  does  not  affect  his  contractual  capacity.  So  where  one 
is  often  intoxicated,  but  makes  a  contract  while  sober  he  is 
bound  as  absolutely  as  though  he  were  never  drunk." 

§904.    Legal  effect  of  intoxication. 

At  early  Common  Law  it  was  held,  or  at  least  asserted,  that 
a  contract  entered  into  by  one  who  was  then  intoxicated  was 
absolutely  binding.^  A  reaction  from  this  early  strictness  re- 
sulted in  holding  such  contracts  void."  At  Modern  Law,  how- 
ever, the  weight  of  authority  is  clearly  to  hold  such  contracts 
voidable.^     The  note  of  one  voluntarily  intoxicated  is  not  ab- 


167;  16  Am.  Dec.  691;  Wiggles- 
worth  V.  Steers,  1  H.  &  M.  (Va.) 
70;  3  Am.  Dec.  602. 

3  Davidge  v.  Crandall,  23  111.  App. 
360;  Armstrong  v.  Breen,  101  la. 
9;  69  N.  W.  1125;  Belcher  v. 
Belcher,  10  Yerg.   (Tenn.)   121. 

4  Byrne  v.  Long  (Ky.),  15  S.  W. 
778;  Johnson  v.  Phifer,  6  Neb.  401. 

5  Wright  V.  Waller,  127  Ala.  557; 
54  L.  R.  A.  440;  29  So.  57;  Taylor 
V.  Purcell,  60  Ark.  606;  31  S.  W. 
567.  "  One  may  sufficiently  under- 
stand a  contract  and  the  nature  and 
effect  of  his  entering  into  it  to  be 
fully  bound  by  it  although  he  be 
capable  of  a  very  much  less  con- 
sideration of  it  than  would  be  be- 
stowed by  a  man  of  ordinary  pru- 
dence." Wright  V.  Waller,  127 
Ala.  557,  562;  54  L.  R.  A.  440; 
29  So.  57. 

6  Ralston  v.  Turpin,  129  U.  S. 
663;  Watson  v.  Doyle,  130  111.  415; 
22  N.  E.  613;  Coonibe  v.  Carthew, 
59  N.  J.  Eq.  638;  43  Atl.  1057. 

1  Yates  V.  Boen,  2  Stra.  1104.  "  As 
for  a  drunkard,  who  is  voluntarius 
Daemon,  he  hath  (as  hath  been 
said)     no     privilege     thereby;     but 


what  hurt  or  ill  soever  he  doeth,  his 
drunkenness  doth  aggravate  it."  Co. 
Litt.  247a;  a  remark  which  should 
be  limited  to  certain  branches  of  the 
law  of  torts  and  crimes. 

2  Wade  v.  Colvert,  2  Mill.  ( S.  C. ) 
27;  12  Am.  Dec.  652,  where  a  bill 
of  sale  was  avoided  by  the  assignee 
for   creditors. 

3  Pickett  V.  Sutter,  5  Cal.  412; 
Bates  V.  Ball,  72  111.  109;  Joest  v. 
Williams,  42  Ind.  565;  13  Am.  Rep. 
377;  Hawley  v.  Howell,  60  la.  79; 
Franks  v.  Jones,  39  Kan.  236;  17 
Pac.  663;  Carpenter  v.  Rodgers,  61 
Mich.  384;  1  Am.  St.  Rep.  595;  28 
N.  W.  156;  Wright  v.  Fisher,  65 
Mich.  275;  8  Am.  St.  Rep.  886;  32 
N.  W.  605;  Van  Wyck  v.  Brasher, 
81  X.  Y.  260;  French  v.  French,  8 
Ohio  214;  Baird  v.  Howard,  51  O. 
S.  57;  22  L.  R.  A.  846;  36  N.  E. 
732;  Bush  v.  Breinig,  113  Pa.  St. 
310;  57  Am.  Rep.  469;  6  Atl.  86; 
Birdsong  v.  Birdsong,  2  Head. 
(Tenn.)  289;  Barrett  v.  Buxton, 
2  Aikens  (Vt.)  167;  16  Am.  Dec. 
691;  Wigglesworth  v.  Steers,  1  H. 
&  M.  (Va.)  70:  3  Am.  Dec.  602. 
But   in   Hunter   v.   Tolbard,   47   W. 


CONTRACTS  OF  DEUNKAKDS.  1421 

solutely  void.*  It  is  therefore  error  to  charge  so  as  to  eliminate 
the  question  whether  there  had  been  a  rescission  or  ratification 
by  charging  that  the  former  was  unnecessary  and  the  latter  im- 
possible.^ In  some  jurisdictions  it  seems  to  be  held  that  intoxi- 
cation is  of  no  legal  effect  unless  the  adversary  party  either  pro- 
cured it,  or  took  an  unfair  advantage  of  it."  Whether  it  is 
necessary,  in  order  to  make  the  contract  voidable,  that  the  ad- 
versary party  should  know  of  the  intoxication  is  in  some  dis- 
pute on  the  authorities.  It  has  been  said  not  to  be  necessary,' 
but  in  a  recent  case  it  was  assumed  apparently  that  drunkenness 
unknown  to  the  adversary  party  would  be  ineffectual.  In  that 
case  a  written  guaranty  was  obtained  from  an  illiterate  man 
who  was  drunk,  and  sent  to  one  who  did  not  know  how  it  was 
obtained,  and  who  extended  credit  thereon.  The  Court  of 
Appeals  decided  the  case  solely  on  the  question  of  the  negligence 
of  the  maker.*  Drunkenness  is  ordinarily  apparent  to  those  in 
personal  communication  with  the  drunken  man,  long  before  it 
reaches  that  stage  where  it  affects  contractual  capacity.  Prob- 
ably for  this  reason  the  effect  of  the  knowledge  of  the  adver- 
sary has  rarely  been  decided.  Analagous  to  this  is  the  question 
of  the  right  of  the  drunken  person  to  avoid  where  the  contract 
has  passed  into  the  hands  of  a  bona  fide  purchaser  for  value. 
If  the  instrument  is  negotiable  it  has  been  held  that  in  such  case 
the  right  to  avoid  the  contract  is  lost.''  In  principle  it  is  dis- 
tinguished from  the  case  of  the  infant  or  the  insane  person  by 
the  fact  that  the  disqualification  of  drunkenness  is  one  voluntar- 
ily assumed.^**     In  Michigan  a  somewhat  different  view  seems 

Va.  258;    34  S.  E.  737,  a  contract  7  Hawkins    v.    Bone,    4    F.    &    F. 

of  a  person  is  held  void  if  executed  311. 

■when  lie  is  so  drunk  as  not  to  know  s  Page  v.  Krekey,  137  N.  Y.  307; 

its  true   intent  or  meaning.  33   Am.  St.  Eep.   731;   21   L.  R.  A. 

4  Wright  V.  Waller,  127  Ala.  557;  409;   33  N.  E.  311. 

54  L.  R.  A.  440 ;  29  So.  57.  »  State   Bank   v.    McCoy,    69    Pa. 

5  Carpenter  v.  Rodgers,  61  Mich.  St.  204;  8  Am.  Rep.  246;  McSpar- 
384;  1  Am.  St.  Rep.  595;  28  N.  ran  v.  Neeley,  91  Pa.  St.  17;  Smith 
W.    156.  V.  Williamson,  8  Utah  219;  30  Pac. 

eRottenburgh     v.     Fowl     (N.     J.  753. 

Eq.),    26    Atl.    338;    Burroughs    v.  io"If     a     man     voluntarily     de- 

Richman,  13  N.  J.  L.  233;   23  Am.  prives    himself    of    the    use    of    his 

Dec.  717.  reason  by  strong  drink,  why  should 


1422  PAGE    ON    CONTKACTS. 

to  have  been  taken,  holding  that  drunkenness  must  either  ex- 
tend to  such  total  incapacity  that  no  assent  at  all  could  be  given 
or  else  be  complicated  with  fraud  in  order  to  amount  to  a  de- 
fense against  a  bona  fide  holder.  But  these  remarks  are  in  the 
nature  of  an  obiter  as  the  record  did  not  disclose  any  such  evi- 
dence and  a  judgment  in  favor  of  the  makers  of  the  note  was 
reversed  for  want  of  evidence  to  support  it/^ 

§905.     Intoxication  as  affected  by  unfair  conduct  of  adversary. 

'A  less  degree  of  intoxication  than  that  described  may  serve 
as  a  basis  for  avoiding  contracts  if  the  drunkenness  was  caused 
by  the  adversary  party,^  or  if  without  causing  the  intoxication 
he  took  an  unfair  advantage  of  it.^  In  such  cases,  it  is  sufficient 
ground  for  avoiding  the  contract  if  the  intoxication  was  the 
means  by  which  the  drunken  person  was  deceived  or  misled  to 
his  prejudice.  These  cases  do  not  involve  questions  of  capacity 
but  of  fraud  and  imdue  influence.^ 

§906.     Contracts  for  necessaries. 

A  drunkard  even  after  adjudication  is  liable  for  the  reason- 
able value  of  necessaries  furnished  to  himself  or  his  family.^ 

he   not   be   responsible   to   an   inno-  67;      Woodson     v.      Gordon,     Peck 

cent    party   for    the   acts    which    he  (Tenn. )     196;     14    Am.    Dec.    743 

performs    when    in    that    condition?  Dunn  v.  Amos,  14  Wis.   106. 
It   seems   to   me  that  he  ought,   on  2  Holland  v.  Barnes,  53  Ala.   83 

the  principle  that  where  a  loss  must  25  Am.  Rep.   595;    Crane  v.   Conk 

be    borne    by    one    of   two    innocent  lin,   1  N.  J.  Eq.   346;   22  Am.  Dec 

persons    it   shall   be   borne   by   him  519;  Baird  v.  Howard,  51  0.  S.  57 

who  occasioned  it."     State  Bank  v.  46  Am.   St.  Eep.  550;   22  L.  R.   A 

McCoy,  69  Pa.  St.  204,  208;   8  Am.  846;    36   N.   E.    732;    Jones   v.   Mc 

Rep.  246.  Cruder,  87  Va.  360;    12   S.   E.   792 

11  Miller  v.  Finley,  26  Mich.  249 ;  And  see  eases  cited  in  last  note. 
12  Am.  Rep.  306.  3  See  Chs.  XI.,  XII. 

1  Newell  V.  Fisher,   11   Sm.  &  M.  i  Kandall  v.  May,  10  All.  (Mass.) 

(Miss.)   431;  49  Am.  Dec.  66;  War-  59;     Hallett     v.     Oakes,     1     Cush. 

nock  V.  Campbell,  25  N.  J.  Eq.  485;  (Mass.)    296;  McCrillis  v.  Bartlett, 

O'Connor   v.   Rempt,    29   N.    J.    Eq.  8  N.  H.  569 ;  Van  Horn  v.  Hann.  39 

156;    Burroughs  v.  Richman,   13   N.  N.   J.   L.   207;    Parker   v.   Davis,   8 

J.  L.  233;  23  Am.  Dec.  717;  Hotch-  Jones    (N.   C.)    460. 
kiss    V.    Fortson,    7    Yerg.     (Tenn.) 


CONTEACTS    OF    DRUNKARDS.  1423 

The  term  necessaries  mchides  not  only  food  and  clothing,^  but 
also  nursing^  and  the  services  of  an  attorney  in  resisting  the  ad- 
judication.* Where  an  oral  contract  is  made  for  the  purchase 
of  realty,  which  can  not  be  proved  under  the  statute  of  frauds, 
it  is  held  that  a  subsequent  written  agreement  entered  into 
when  one  of  the  parties  is  drunk  may  be  avoided  by  him  when 
he  becomes  sober,  and  he  may  recover  whatever  he  has  paid 
thereon  while  drunk.^ 

§907.    Ratification  and  disaffirmance. 

Since  the  contract  is  voidable  it  may  be  ratified  by  the  drunken 
person  on  becoming  sober.^  Ratification  may  be  affected  either 
by  express  agreement  or  by  conduct  which  necessarily  shows  an 
intention  consistent  only  with  the  validity  of  the  contract.  Thus 
exchanging  the  property  received  under  the  contract,^  or  selling 
it,^  operates  as  a  ratification.  But  where  A,  who  owned  property 
worth  one  thousand  six  hundred  dollars,  was  induced  by  B,  who 
knew  of  his  intoxication,  to  transfer  it  while  in  such  condition 
for  one  thousand  dollars  it  was  held  that  A's  condition  in  keep- 
ing the  one  thousand  dollars,  treating  B's  conduct  as  a  wrongful 
conversion  and  suing  for  the  difference  of  six  hundred  dollars 
was  not  a  ratification  but  a  disafiirmance.*  The  drunken  person 
may  disaffirm  the  contract  if  he  acts  within  a  reasonable  time  af- 
ter he  becomes  sober.^  What  constitutes  disaffirmance  is  not  al- 
ways clear  from  the  authorities.  It  seems  to  be  held  that  some 
act  of  disaffirmance,^  such  as  a  return  of  the  consideration,'^  is 

2  Parker    v.    Davis,    8    Jones     (N,  2  Smith    v.    Williamson,    8    Utah. 

C.)    460.  219;   30  Pae.  753. 

sBrockway    v,    Jewell,    52    0.    S.  3  Oakley  v.  Shelley,  129  Ala,  467 

187;    39   N.   E.   470,  29   So.  385. 

4  Hallett  V.  Oakes,  1  Cush.  (Mass.)  4Baird  v,  Howard,   51   0,   S,  57 
296.  46   Am,   St,  Rep.   550;   22  L,  R.  A 

5  Bush    V.    Breinig,    113    Pa,    St.  846;  36  N.  E.  732. 

310;  57  Am.  Rep.  469;  6  Atl.  86.  5  Cummings    v.    Heniy,     10    Ind 

1  Strickland  v.  Orendorf  Co.,   118  109, 

Ga,   213;    44  S.  j:.   997;    Taylor  v,  6  Carpenter  v,  Rodgers,  61  Mich 

Patrick,  1  Bibb,  (Ky,)   168;  Carpen-  384;   1  Am,  St,  Rep,  595;  28  N.  W, 

ter  V,  Rodgers,  61  Mich.  384;   1  Am.  156. 

St.  Rep.  595 ;  28  N.  W,  156.  7  Williams  v,  Inabnet,  1  Bailey  L. 

(S.  C.)   343. 


1424  PAGE    ON    CONTKACTS. 

necessary  before  bringing  suit  based  on  such  disaffirmance. 
"Wbile  this  is  a  proper  rule  where  the  return  of  the  consideration 
is  a  condition  precedent  to  rescission,  yet  if  the  circumstances 
dispense  with  such  return,  no  formal  rescission  before  bringing 
suit  would  be  necessary.* 

§908.     Restoration  of  consideration. 

In  the  absence  of  fraud,  the  drunken  person  must  restore  as  a 
condition  precedent  to  disaffirmance  whatever  he  has  received 
tinder  the  contract.^  This  rule,  however,  must  undoubtedly  be 
tjualified  by  providing  that  the  drunken  person  need  not  account 
for  whatever  he  may  have  lost  or  wasted  during  the  same  period 
*f  intoxication  in  which  he  made  the  contract.  If  fraud  co-exists 
with  intoxication,  the  return  of  the  consideration  is  not  a  con- 
dition precedent,  at  least  in  equity,  but  provision  will  be  made 
in  the  decree  for  a  fair  compensation.^  In  any  event,  on  dis- 
affirmance the  consideration  may  be  recovered  in  assumpsit  from 
the  drunken  person.^ 

§909.     Effect  of  adjudication  as  habitual  drunkard. 

Many  jurisdictions  provide  for  a  proceeding  resembling  an  in- 
quisition in^  lunacy,  by  which  one  who  is  given  over  to  con- 
stant indulgence  in  alcoholic  stimulants  whereby  intoxication  is 
produced,  may  be  adjudged  an  habitual  drunkard  and  placed 
under  guardianship.^  The  effect  of  such  adjudication  upon 
contractual  capacity  depends  upon  the  provisions  of  the  statutes 
controlling.  In  general  all  contracts,  conveyances  and  the  like 
made  after  such  adjudication  are  void.^  Under  the  Alabama 
statute  this  adjudication  is  solely  for  the  preservation  of  the 

sBaird  v.  Howard,  51   O.   S.   57;  i  Menkins     v.     Lightner,     18     111. 

46  Am.   St.  Rep.   550;   22  L.   R.  A.  282;   Brockway  v.  Jewell,   52  0.   S. 

846;   36  N.  E.  732.  187;    39   N.   E.   470. 

1  Joest  V.  Williams,  42  Ind.  565 ;  2  Pinkston  v.  Semple,  92  Ala.  564 ; 

13  Am.  Rep.  377.  9  So.  329 ;  Redden  v,.  Baker,  86  Ind. 

sThackrah    v.    Haas,    119    U.    S.  191;    Devin   v.    Scott,    34    Ind.    67; 

499.  Pearl  v.  McDowell,   3  J.  J.   Marsh. 

sHaneklau    v.    Felchlin,    57    Mo.  (Ky.)   658;  20  Am.  Dec.  199;  Leon- 

App.  602.  ard   v,    Leonard,    14   Pick.    (Mass.) 


CONTRACTS  OF  DRUNKARDS.  1425 

estate  described  in  the  Lill  filed  for  the  adjudication.  Over 
property  not  therein  described,  the  drunkard  has  full  power;' 
over  property  described,  he  has  no  power  even  with  the  consent 
of  his  trustee.*  But  in  a  case  Avhere  A  was  found  on  inquisition 
to  be  an  habitual  drunkard  and  subsequently  carried  on  his 
business  in  the  ordinary  manner,  and  B  paid  a  debt  to  A,  taking 
A's  receipt  therefor,  such  receipt  was  held  to  discharge  B's  debt.^ 
Upon  the  discharge  of  the  guardian  and  termination  of  the  guar- 
dianship, contractual  capacity  is  restored  so  that  a  conveyance 
the  next  day  is  valid ;  and  is  not  invalidated  by  a  subsequent 
re-adjudication." 

§910.     Effect  of  drugs. 

The  same  principles  apply  to  the  mental  effects  of  morphine/ 
or  of  anaesthetics,"  as  to  the  use  of  alcohol  though  such  effect 
is  not  technically  drunkenness.  Thus  a  release  given  by  one 
who  was  so  under  the  influence  of  opiates  that  he  did  not  know 
what  he  was  doing  is  voidable.^  He  may  thereafter  avoid*  or 
ratify^  such  release.  Thus  one  who  agreed  to  release  a  rail- 
road from  liability  for  accidents  for  two  hundred  forty  dollars 
and  his  hospital  bills  has  affirmed  such  contract  even  if  he  was 
under  the  influence  of  opiates  when  he  entered  into  it,  by  keeping 
the  money  after  recovering  his  senses,  and  remaining  at  the 

283;     Wait    v.    Maxwell,     5    Pick.  s  Union  Pacific  Ey.  v.  Harris,  158 

(Mass.)     217;     16    Am.    Dec.    391;  U.   S.   326    (effect  of  morphine   and 

Wadsworth  v.   Sharpsteen,   8   N.  Y.  whiskey    given    for    medicinal    pur- 

388;    59    Am.    Dec.    499;    Clark    v.  poses)  ;  Chicago,  etc.,  R.  R.  v.  Doyle, 

Caldwell,  6  Watts    (Pa.)    139.  18    Kan.    58;    Buford   v.    R.   R.,   82 

3  Jones  V.  Semple,  91  Ala.  182;   8  Ky.     286;     Alabama,     etc.,     Ry.     v. 

So.  557.  Jones,    73    Miss.    110;    55    Am.    St. 

4Pinkston  V.  Semple,  92  Ala.  564;  Rep.    488;     19    So.    105;    Gibson    v. 

9   So.   329.  R.  R.,  164  Pa.  St.  142;  44  Am.  St. 

5  Black's  Appeal,  132  Pa.  St.  134;  Rep.    586;    30    Atl.    308     (effect    of 

19  Atl.  31.  chloroform  and  ether). 

G  Cockrill     V.     Cockrill,     92     Fed.  *  Alabama,   etc.,   Ry.  v.  Jones,   73 

811;  79  Fed.  143.  Miss.  110;   55  Am.  St.  Rep.  488;   19 

1  Swank  v.  Swank,  37  Or.  439;  61  So.   105. 

Pac.   846.  5  Gibson  v.  R.  R.,  164  Pa.  St.  142; 

2  Gibson  v.  R.  R.  Co.,  164  Pa.  St.      44  Am.  St.  Rep.  586;  30  Atl.  308. 
142;    44  Am.   St.  Rep.  586;    30  Atl. 

308. 

90 


1426  PAGE    ON    CONTRACTS. 

hospital  for  several  weeks  at  the  company's  expense.*'  It  Lus 
been  held  in  some  courts  that  ratification  by  one  who  does  not 
know  that  he  has  the  right  in  law  to  avoid  is  not  binding.''  But 
one  who  understands  the  nature  of  the  transaction  cannot  avoid 
a  contract  though  "  not  in  possession  of  full  mental  powers."® 
If  the  adversary  party  does  not  know  of  the  condition  of  the 
party  seeking  relief,  no  rescission  can  be  had  unless  such  adver- 
sary party  can  be  placed  in  statu  quo.^ 

6  Gibson  v.  R.  R.,  164  Pa.  St.  142;  8  Cooney  v.  Lincoln,  21  tt.  I.  246; 
44  Am.  St.  Rep.  586;  30  Atl.  308.  79  Am.  St.  Rep.  799;  42  Atl.  867. 

7  Alabama,  etc.,  Ry.  v.  Jones,  73  »  Cooney  v.  Lincoln,  2\  R.  I.  246; 
Miss.  110;  55  Am.  St.  Rep.  488;  19  79  Am.  St.  Rep.  799;  42  A.tl.  867. 
So.  105. 


CONTBACTS    OF    MARRIED    WOMEN. 


1427 


CHAPTER   XLI. 

CONTRACTS  OF  MARRIED  WOMEN. 
§911.     Contracts  of  married  women  at  common  law. 

At  Common  Law,  subject  to  certain  exceptions,  it  was  well 
settled  that  an  executory  contract  entered  into  by  a  married 
woman  was  void,  and  even  now  no  contract  is  enforceable  against 
her  at  law  unless  under  the  provisions  of  some  statute/     Thus  a 


1  Johnson  v.  Gallagher,  3  De  G. 
F.  &  J.  515;  Smith  v.  Plorner,  15 
East.  607;  Threefoot  v.  Hillman, 
130  Ala.  244;  89  Am.  St.  Rep.  39; 
30  So.  513;  Dobbin  v.  Hubbard,  17 
Ark.  189;  65  Am.  Dec.  425;  Butler 
V.  Buckingham,  5  Day  (Conn.)  492; 
5  Am.  Dec.   174;  Ross  v.  Singleton, 

I  Del.  Ch.  149;  12  Am.  Dec.  86; 
Snell  V.  Snell,  123  111.  403;  5  Am. 
St.  Rep.  526;  14  N.  E.  684;  Stevens 
V.  Parish,  29  Ind.  260;  95  Am.  Dec. 
636;  Graham  v.  Graham  (Ky.)  ,  56 
S.  W.  708;  Brown  v.  Dalton,  105 
Ky.  669;  88  Am.  St.  Rep.  325;  49 
S.   W.   443;    Robinson   v.   Robinson, 

II  Bush.  (Ky.)  174;  Breckenridge 
V.  Ormsby,  1  J.  J.  Marsh.  (Ky.) 
236;  19  Am.  Dec.  71;  Burton  v. 
Marshall,  4  Gill  (Md.)  487;  45 
Am.  Dec.  171;  Shaw  v.  Thompson, 
16  Pick.  (Mass.)  198;  26  Am.  Dec. 
655 ;  Palmer  v.  Oakley,  2  Doug. 
(Mich.)  433;  47  Am.  Dec.  41;  Por- 
terfield  v.  Butler,  47  Miss.  165;  12 
Am,  Rep.  329;  Stephenson  v.  Os 
borne,  41  Miss.  119;  90  Am.  Dec 
358;  Maefarland  v.  Heim,  127  Mo 
327 ;  48  Am.  St.  Rep.  629 ;  29  S.  W 
1030;  Musick  v.  Dodson,  76  Mo 
624;    43    Am.    Rep.    780;    Citizens 


State  Bank  y.  Smout,  62  Neb.  223; 
86  N.  W.  1068;  Wadleigh  v.  Glines, 
6  N.  H.  17;  23  Am.  Dec.  705;  Brick 
V.  Campbell,  122  N.  Y.  337;  10  L. 
R.  A.  259;  25  N.  E.  493;  Jackson 
V.  Vanderheyden,  17  Johns.  (N.  Y.) 
167;  8  Am.  Dec.  378;  Martin  v. 
Dwelly,  6  Wend.  (N.  Y.)  9;  21  Am. 
Dec.  245;  Terry  v.  Bobbins,  128  N. 
C.  140;  83  Am.  St.  Rep.  663;  38 
S.  E.  470;  Dorrance  v.  Scott,  3 
Whart.  (Pa.)  309;  31  Am.  Dec. 
509;  Mackinley  v.  McGregor,  3 
Whart.  (Pa.)  369;  31  Am.  Dec. 
522;  First  National  Bank  v.  Shaw, 
109  Tenn.  237;  59  L.  R.  A.  498; 
70  S.  W.  807;  Harris  v.  Taylor,  3 
Sneed  (Tenn.)  536;  67  Am.  Dec. 
576;  Hollis  v.  Francois,  5  Tex.  195; 
51  Am.  Dec.  760;  Sherwin  v.  San- 
ders, 59  Vt.  499;  59  Am.  Rep.  750; 
9  Atl.  239;  Stewart  v.  Conrad,  100 
Va.  128;  40  S.  E.  624;  Pickens  v. 
Kniseley,  36  W.  Va.  794;  15  S.  E. 
997;  Weisbrod  v.  Ry.,  18  Wis.  35; 
86  Am.  Dec.  743.  See  Haggett  v. 
Hurley,  91  Me.  542;  41  L.  R.  A, 
362;  40  Atl.  561,  for  a  discussion 
of  the  Teutonic  theory  of  the  fam- 


1428 


PAGE    ON    CONTExVCTS. 


contract  by  a  married  woman  to  surrender  her  child  is  void,^  and 
cannot  be  ratified.^  So  her  assignments,*  covenants  of  war- 
rantj,^  agreements  to  assume  debts/  and  notes"  are  void.  So 
a  bond  given  by  her  is  not  jDayment  of  a  pre-existing  debt  of  her 
husband's.®  To  such  an  extreme  is  this  view  carried  that  a  note 
purporting  on  its  face  to  be  executed  by  a  married  woman  can- 
not be  the  subject  of  forgery.^  A  married  woman's  lack  of 
capacity  is  not  affected  by  the  fact  that  the  adversary  party  did 
not  know  that  she  was  married.^'* 

§912.     Exceptions  to  Common  Law  rule. 

By  certain  local  customs,  as  in  the  city  of  London,  a  married 
woman  might  contract  as  a  sole  trader  if  her  business  was  in 
fact  free  from  her  husband's  control.^  These  customs  w'ere  not 
generally  adopted  in  this  country  except  possibly  to  a  modiHed 
extent  in  South  Carolina."  The  remaining  classes  of  cases 
were  said  to  arise  out  of  necessity,  though  it  will  be  seen  that 
there  is  not  absolute  uniformity  as  to  when  it  is  necessary  to  al- 
low a  married  woman  to  make  contracts  as  if  siilgle.  If  the 
husband  was  an  alien  and  had  never  been  in  the  jurisdiction  of 
the  wife's  residence,^  or  if  whether  an  alien  or  not  he  had  left 
such  jurisdiction  under  such  circumstances  as  would  preclude 


2Stapleton  v.  Poynter  (Ky.),  53 
L.  R.  A.  784;  62  S.  W.  730. 

3  Austin  V.  Davis,  128  Ind.  472; 
25  Am.  St.  Rep.  456;  12  L.  R.  A. 
120;    26  N  E.  890. 

4  As  of  notes  owned  by  her. 
Brewer  v.  Hobbs  (Ky.),  30  S.  W. 
605. 

sThreefoot  v.  Hillman,  130  Ala. 
244;  89  Am.  St.  Rep.  39;  30  So. 
513. 

6  Brown  v.  Dalton.  105  Ky.  669; 
88  Am.  St.  Rep.  325;  49  S.  W. 
443. 

'^  Bougliner  v.  Laughlin  (Ky.),  64 
^.  W.  856. 

8  Terry  v.  Bobbins,  128  N.  C.  140; 
83  Am.  St.  Rep.  663;  38  S.  E.  470. 

9  King  V.  State,  42  Tex.  Cr.  App. 


108;  96  Am.  St.  Rep.  792;  57  S.  W. 
840. 

10  Collins  V.  Hall,  55  S.  C.  336; 
33  S.  E.  466;  Stewart  v.  Conrad, 
100  Va.   128;   40  S.  E.  624. 

1  Lavie  v.  Phillips,  3  Burr.  1776; 
Xewbiggin  v.  Pillans^  2  Bay  (S.  C.) 
162. 

2  Jacobs  V.  Featherstone,  6  W.  & 
S.    (Pa.)    346. 

3  Derry  v.  Mazarine,  1  Ld.  Raym. 
147;  Walford  v.  Pienne,  2  Esp. 
554;  Gaillon  v.  L'Aigle,  1  Bos.  & 
P.  357;  Gregory  v.  Paul,  15  Mass. 
31 ;  Gregory  V.  Pierce,  4  Met.  (Mass.) 
478;  Troughton  v.  Hill,  3  N.  C. 
406;  Levi  v.  Marsha,  122  N.  C. 
565;  29  S.  E.  832;  Wagg  v.  Gib- 
bons, 5  O.  S.  580;   Bean  v.  Morgan, 


CONTRACTS    OF    MARRIED    WOMEN.  1429 

his  return,  as  where  he  al)jured  the  realm/  or  was  banished," 
she  miglit  contract  as  a  feme  sole.     A  similar  hoWing  has  been 
made  where  the  husband  has  left  the  state  as  a  fugitive  from 
justice.*'     If  the  husband  abandons  his  wife,  leaves  the  state 
in  which  they  were  residing  and  takes  up  his  residence  elsewhere 
permanently,   the  English   authorities  hold  that  the   married 
woman  has  not  the  power  to  make  contracts,^  even  if  he  is  an 
alien.^     American  authorities  hold  that  such  facts  confer  ca- 
pacity to  contract.^     Indeed  if  the  abandonment  is  absolute  and 
the  husband  leaves  the  state  without  the  intention  of  return- 
ing, it  seems  immaterial  whether  he  is  permanently  domiciled 
in  any  specific  foreign  jurisdiction.^**     If  the  husband  abandons 
the  wife  and  is  absent  and  unheard  of  for  so  long  a  time  that  the 
presumption  of  death  arises  (a  length  of  time  often  held  to  be 
seven  years,)  the  wife  has  power  to  contract.^^     But  where  the 
husband  has  abandoned  the  wife,  but  has  neither  left  tlie  state 
permanently  nor  has  been  absent  and  unheard  of,  the  weight 
of  authority  seems  to  be  that  such  facts  do  not  remove  the  dis- 
ability of  the  married  woman,  even  though  the  contract  is  for 


4  McCord   (S.  C.)   148;  Robinson  v.  sKay    v,    De    Pienne,    3    Campb. 

Reynolds,    1    Aiken    (Vt.)     174;    15  123. 

Am.  Dee.  673.  » Rhea  v.  Renner,   1  Pet.    (U.  S.) 

4  Carrol  v.  Bleneow,  4  Esp.  27.  105;  Krebs  v.  O'Grady,  23  Ala. 
"  An  Abjuration,  that  is,  a  Deporta-  726;  58  Am.  Dee.  312;  Mead  v. 
tion  forever  into  a  foreign  Land  Hughes,  15  Ala.  141;  50  Am.  Dee. 
like  to  a  Profession  ...  is  a  123;  Roland  v.  Logan,  18  Ala.  307; 
Civil  Death;  and  that  is  the  reason  Arthur  v.  Broadnax,  3  Ala.  557;  37 
that  the  wife  may  bring  an  Action  Am.  Dee.  707;  Cornwall  v.  Hoyt,  7 
or  be  impleaded  during  the  natural  Conn.  420;  Love  v.  Moynehan,  16 
life  of  her  Husband."  Co.  Litt.  111.  277;  63  Am.  Dee.  306;  Gregory 
133a.  V.  Pierce,  4  Met.    (Mass.)    478;  Ab- 

5  Co.  Litt.  132b,  133a;  Ex  parte  bott  v.  Bayley.  6  Pick.  (Mass.)  89; 
Franks,  7  Bing.  762.  Gallagher   v.   Delargy,   57    Mo.    29; 

6  Cheek  v.  Bellows,  17  Tex.  613;  Rose  v.  Bates,  12  Mo.  30;  Starrett 
67  Am.  Dee.  686.  But  in  Texas,  v.  Wynn,  17  Serg.  &  R.  130;  17  Am. 
permanent  separation  gives  the  wife  Dec.  654 ;  Buford  v.  Adair,  43  W. 
the  powers  of  a  feme  sole.  Va.  211;   64  Am.   St.   Rep.  854;   27 

7  Marsh  v.  Hutchinson,  2   Bos.  &  S.  E.  260. 

P.    226;     Williamson    v.    Dawes,    9  lo  See  cases  cited  in  last  note. 

Bing.  292.  ii  Rosenthal    v.    Mayhugh,    33    0. 

S.    155. 


1430  PAGE    ON    CONTRACTS. 

necessaries/^  Still  less  of  course  does  capacity  to  contract  arise 
Avliere  the  husband  is  often  away  for  long  periods  of  time,  but 
does  not  abandon  his  wife/^ 

§913.     Contracts  of  married  women  in  equity. 

By  a  species  of  judicial  legislation,  the  Courts  of  Equity 
had  by  the  end  of  the  seventeenth  century,^  established  the  doc- 
trine that  with  reference  to  property  held  to  the  separate  use  of 
a  married  woman,  free  from  her  husband's  control,  she  had  in 
many  ways  the  power  of  a  feme  sole.^  Legislation  in  the  nine- 
teenth century  created  separate  estates  of  married  women  in 
property  which  before  such  statutes  was  her  general  estate,  sub- 
ject to  the  Common  Law  rights  of  her  husband.  Where  such 
statutory  estates  were  created  witliout  adding  statutory  provis- 
ions conferring  upon  the  owner  the  power  to  contract  at  law, 
the  rules  of  equity  determined  the  married  woman's  power  to 
contract  with  reference  thereto.  It  is  not  the  province  of  this 
work  to  discuss  what  property  was  included  in  equitable  or 
statutory  separate  estates,  or  the  rights  of  a  married  woman 
or  her  husband  in  such  estates  except  in  so  far  as  the  contracts 
of  a  married  woman  with  reference  thereto  are  concerned.  In 
equity  a  married  woman  could  not  bind  herself  personally  any 
more  than  she  could  at  law.^  But  her  promises  upon  valuable 
consideration  were  enforced  rather  as  obligations  resembling 
contracts  than  as  contracts,  by  compelling  performance  out  of 
the  separate  estate  owned  by  her  at  the  time  of  making  the 

12  Marshall  v.  Rutton,  8  T.  R.  3  Johnson  v.  Gallagher,  3  De  G. 
545 ;  Musick  v.  Dodson,  76  Mo.  624 ;  F.  &  J.  494 ;  Aylett  v.  Ashton,  1 
43  Am.  Rep.  780;  Hayward  v.  Bar-  Myl.  &  C.  105;  Ankeney  v.  Hannon, 
ker,  52  Vt.  429;  36  Am.  Rep.  762.  147  U.  S.  118;  Canal  Bank  v.  Par- 
Conira,  Rariden  V.  Mason,  30  Ind.  tee,  99  U.  S.  325;  Prentiss  v.  Pais- 
App.  425;   65  N.  E.  554.                        ■  ley,  25  Fla.  927;  7  L.  R.  A.  640;  7 

13  Rogers  v.  Phillips,  8  Ark.  366;  So.  56;  Rodemeyer  v.  Rodman,  5  la. 
47  Am.  Dec.  727.  426;    Bell    v.    Kellar,    13    B.    Mon. 

1  Drake  V.  Storr,  2  Freem.  205.  (Ky.)    381;    Kocher  v.   Cornell,   59 

2Kloke  V.  Martin,   55  N"eb.   554;  Neb.  315;  80  N.  W.  911;  Pierson  v. 

76  iST.  W.  168;   Elliott  v.  Lawhead,  Limi,  25   N.   J.   Eq.   390;    Fallis   v. 

43  O.  S.  171;   1  N.  E.  577;   Elliott  Keys,  35  O.  S.  265;  Pilcher  v.  Smith, 

V.  Gower,  12  R.  I.  79;  34  Am.  Rep.  2  Head.    (Tenn.)    208. 

600. 


CONTRACTS    OF    MARRIED    WOMEN.  1431 

promise.*  Property  acquired  Lj  her  afterward  could  not  be 
held  for  her  contracts  to  use  the  customary  and  convenient  but 
rather  inaccurate  term,^  nor  her  projierty  which  was  her  general 
estate  when  the  contract  was  made,  but  which  was  afterwards 
by  statute  made  her  separate  estate.'^  The  claim  against  the 
separate  estate  of  the  married  woman  is  therefor  somewhat 
in  the  nature  of  a  lien.  It  is  not  a  specific  lien  however. 
Property  sold  or  disposed  of  by  the  married  woman  before  judg- 
ment is  not  subject  to  her  debts  contracted  while  she  owned  it.'' 
So  adding  to  a  note  "  for  the  payment  of  which  I  bind  my 
separate  estate,"  is  not  a  mortgage  in  equity,  giving  the  holder 
of  such  notes  priority  over  the  holders  of  notes  enforceable  only 
at  law  by  statute.^  Where  there  is  a  restraint  on  auticipation, 
the  income  cannot  be  made  liable  to  a  judgment  rendered  before 
it  came  due.°  While  the  liability  of  a  married  woman's  estate 
in  equity  for  her  contracts  is  sul  generis,  it  is  an  instructive 
analogy  to  regard  her  separate  estate  as  a  legal  entity,  liable  it- 
self for  her  contracts.  "  It  is  not  the  woman,  as  a  woman,  who 
becomes  a  debtor  but  her  engagement  has  made  that  particular 
part  of  her  property  which  is  settled  to  her  separate  use  a 
debtor,  and  liable  to  satisfy  the  engagement."^'' 

§914.     Extent  of  power  over  separate  estate. 

The  questions  that  generally  arose  in  determining  the. liability 
of  a  married  woman's  separate  estate,  may  be  grouped  under  two 

4  Deering   v.    Boyle,   8   Kan.   525 ;       46  Mo.  App,  28 ;   Flanagan  v.  Gro« 
12  Am.  Rep.  480.  ceiy   Co.,   98   Tenn.   599;    40   S.   W. 

5  Pike  V.  Fitzgibbon,  L.  R.  17  Ch.      1079. 

Div.  454;    Sykes's  Trusts,  2   Johns.  s  Western,    etc..    Bank    v.    Bank, 

&  H.  415;  Ankeney  v.  Hannon,  147  91  Md.  613;  46  Atl.  960. 

U.  S.  118;  Mendenhall  v.  Leivy,  45  9  Hood  Barrs  v.  Cathcart   (C.  A.) 

Mo.  App.  20;  Kocher  v.  Cornell,  59  (1894),  2  Q.  B.  559. 

Neb,   315;    80   N.   W.   911;    Sticken  ^o  Ex  parte  Jones,   L.   R.    12    Ch. 

V.  Schmidt,  64  O.  S.  354;  60  N.  E.  Div.  484,  490.     To   the   same  eflfect 

561;   Manahan  v.  Hart,  24  Ohio  C.  are   Shattoc-k  v.   Shattock,   L.   R.    2 

C.  527;  Flanagan  v.  Grocery  Co.,  98  Eq.  182;  London,  etc.,  Bank  v.  Lem- 

Tenn.  599;  40  S.  W.  1079;  Filler  v.  priere,  L.  R.  4  P.  C.  572;  Warren  V. 

Tyler,  91  Va.  458;  22  S.  E.  235.  Freeman,    85    Tenn.   5l3j    3    S.    W, 

cFallis  V.   Keys,  35  O.   S.  265.  513. 

7  D.  M.  Osborne  &  Co.  v.  Graham, 


1432  PAGE    ON    CONTRACTS. 

general  classes :  first,  to  what  extent  a  married  woman  had  the 
j)ower  to  hind  her  separate  estate  by  contract ;  and  second,  what 
contracts  within  the  scope  of  her  power  had  the  effect  of  bind- 
ing her  separate  estate.  The  weight  of  authority  on  the  first 
question  is  that  a  married  woman  is  empowered  to  bind  her 
separate  estate  by  contract  except  in  so  far  as  she  is  restrained 
by  the  instrument  creating  the  estate,  or  by  the  statute  which 
made  the  estate  a  separate  statutory  estate.^  In  other  jurisdic- 
tions, however,  a  married  woman  has  only  such  power  to  charge 
her  separate  estate  as  is  specifically  conferred  on  her  by  the  in- 
strument creating  it.^ 

§915.    Presumptive  intent  to  charge  separate  estate. 

Upon  the  question  of  what  contracts  within  the  scope  of  a  mar- 
ried woman's  power  do  in  fact  bind  her  separate  estate  there  is 
even  less  harmony  of  judicial  decision.  Undoubtedly  the  gen- 
eral rule  is  that  the  intention  of  the  parties,  to  be  ascertained 
according  to  the  rules  of  equity  determines  whether  the  contract 
binds  the  separate  estate.  The  divergence  of  decisions  arises  in 
applying  this  rule  to  specific  states  of  fact. 

1  Taylor  v.  Meads,  4  De  G.  J.  &  8    Am.    Dec.    447;    Methodist,    etc., 

S.  597;  Pride  v.  Bubb,  L.  R.  7  Ch.  Church    v.    Jacques,    3    Johns.    Ch. 

64;    Cooper   v.   McDonald,   L.   R.    7  (N.   Y.)    77;    Edwards  v,   Edwards, 

Ch,  Div.  288;  Steed  v.  Knowles,  79  24  0.  S.  402;  Phillips  v.  Graves,  20 

Ala.  446;  Bradford  v.  Greenway,  17  O.  S.  371;  Machir  v.  Burroughs,  14 

Ala.  797;  52  Am.  Dec.  203;  Dobbin  O.   S.  519;   Warren  v.  Freeman,  85 

V.   Hubbard,   17   Ark.    189;    65   Am.  Tenn.  513;   3   S.  W.  513;   Young  v. 

Dec.    425;    Smith    v.    Thompson,    2  Young,  7  Cald.   (Tenn.)   461;  Hollis 

McArt.    (D.   C.)    291;   29  Am.   Rep.  v.    Francois,    5    Tex.    195;    51    Am. 

621;  Zeust  v.  Staffan,  14  App.  D.  C.  Dec.   760;    Finch  v.   Marks,   76   Va. 

200;  Miner  v.  Pearson,  16  Kan.  27;  207;    Justis   v.    English,    30    Gratt. 

Cardwell    v.    Perry,    82    Ky.     129;  (Va.)     565;    Dages   v.    Lee,    20    W. 

Burch  V.  Breckenridge,  16  B.  Mon.  Va.    584;    Hughes  v.   Hamilton,    19 

(Ky.)  482;  63  Am.  Dec.  553;  Cooke  W.   Va.    366. 

V.  Husbands,  11  Md.  492;  Musson  2  Thomas  v.  Tolwell  2  Whart. 
V.  Trigg,  51  Miss.  172;  Ryland  v.  (Pa.)  11;  30  Am.  Dec.  230;  Coch- 
Banks,  151  Mo.  1;  51  S.  W.  720;  ran  v.  O'Hern,  4  Watts  &  S.  (Pa.) 
Kim  V.  Weippert,  46  Mo.  532;  2  95;  39  Am.  Dec.  60;  Cater  v.  Eve- 
Am.  Rep.  541;  Batchelder  v.  Sar-  leigh,  4  DeSaus  Eq.  (S.  C.)  19:  6 
gent,  47  N.  H.  262;  Jacques  v.  N.  Am.  Dec.  596;  Creighton  v.  Clif- 
E.  Church,  17  Johns.    (N.  Y.)    549;  ford,  6  S.  C.  188. 


CONTRACTS    OF    MAKEIED    WOMEX. 


1433 


If  the  intent  to  bind  the  separate  estate  is  expressed,  no 
question  of  presumptive  intent  can  arise.  If  the  debt  is  spe- 
cifically charged  upon  the  separate  estate,  as  by  note  and  mort- 
gage/ or  if  it  is  made  expressly  on  the  credit  of  the  separate 
estate,^  it  is  of  course  a  charge  thereon.  Indorsing  on  the  con- 
tract "  I  hereby  bind  my  separate  estate,"  is  sufficiently  specific.^ 
On  the  other  hand  the  contract  may  show  affirmatively  that 
the  married  woman  did  not  intend  to  bind  her  separate  estate, 
as  by  her  giving  a  purchase  money  note  specifying  on  what 
property  it  is  a  lien.*  In  such  cases  there  is  of  course,  no  charge 
on  her  separate  realty. 

It  may  not  appear  affirmatively  from  the  contract  itself 
whether  it  was  or  was  not  intended  that  the  contract  should 
be  a  charge  on  the  married  woman's  separate  estate.  In  such 
cases  the  first  question  to  determine  is  whether  the  contract  is 
on  the  one  hand  intended  for  the  benefit  of  the  married  woman 
or  her  separate  estate ;  or  on  the  other,  is  not.  If  the  contract 
is  for  the  benefit  of  the  married  woman  or  her  separate  estate,^ 
the  courts  are  practically  unanimous  in  holding  that  such  estate 
is  bound.  Even  under  a  statute  providing  that  a  contract  shall 
charge  a  separate  estate  if  such   intention  appear  therein,   it 


1  Hester  v.  Barker,  42  S.  C.  128; 
20  S.  E.  52. 

2  Baker  v.  Gregory,  28  Ala.  544 ; 
65  Am.  Dee.  366;  Rogers  v.  Wood, 
8  All.  (Mass.)  387;  85  Am.  Dec. 
710;  Jones  v.  Craigmiles,  114  N.  C. 
613;  19  S.  E.  638;  Singluff  v.  Tin- 
dal,  40  S.  C.  504;  19  S.  E.  137; 
Martin  v.  Suber,  39  S.  C.  525;  18 
S.  E.  125;  National,  etc.,  Bank  v. 
Lumber  Co.,  100  Tenn.  479;  47  S. 
W.  85;  Priest  v.  Cone,  51  Vt.  495; 
31    Am.   Rep.    695. 

3  National,  etc..  Bank  v.  Lumber 
Co.,  100  Tenn.  479;  47  S.  W.  85. 

4  Harvey  v.  Curry,  47  W.  Va. 
800;   35  S.  E".  838. 

5  Halle  V.  Einstein,  34  Fla.  589; 
16  So.  554;  Smith  v.  Poythress,  2 
Fla.  92;  48  Am.  Dec.  176;  Johnson 


V.    Cummins,    16   N.   J.    Eq.   97;    84 
Am.  Dec.   142;   Armstrong  v.   Ross, 
20  N.  J.   Eq.   109;    Noel  v.  Kinney, 
106  N.  Y.  74;  60  Am.  Rep.  423;   12 
N.   E.    351;    Dyett  v.   Coal    Co.,   20 
\Yend.    (N.   Y.)    570;    32  Am.   Dec. 
598;  Patrick  v.  Littell,  36  O.  S.  79; 
38    Am.    Rep.    552;    Avery   v.   Van- 
sickle,  35  O.  S.  270;   Winternitz  v. 
Porter,  86  Pa.  St.  35;  Scottish,  etc., 
Co.  v.  Deas,   35  S.  C.  42;   28  Am. 
St.  Rep.  832;    14  S.  E.  486;    Cater 
v.  Eveleigh,  4  DeSaus.  Eq.    (S.  C.) 
19;  6  Am.  Dec.  596;  James  v.  May- 
rant,   4   DeSaus.   Eq.    (S.   C.)    591; 
6  Am.  Dec.  630;  Hubbard  v.  Bugbee, 
55  Vt.  506;  45  Am.  Rep.  637;  Dale 
V.  Robinson,  51  Vt.  20;  31  Am.  Rep. 
669. 


1434  PAGE    ON    CONTKACTS. 

need  not  appear  if  the  contract  is  for  the  benefit  of  the  separate 
estate."  The  only  serious  conflict  of  authority  in  cases  of  this 
class  exists  where  the  contract  is  in  writing  and  it  is  sought  to 
show  by  extrinsic  evidence  that  it  was  intended  to  charge  the 
separate  estate. 

If  the  contract  is  not  one  for  the  benefit  of  the  married  woman 
or  her  estate,  and  no  express  charge  on  her  separate  estate  is 
made,  the  divergence  of  authority  is  complete.  Some  courts  hold 
that  in  such  case  there  is  no  presumption  that  the  married 
woman  intends  to  charge  her  separate  estate  by  her  contracts,  but 
that  such  intent  must  be  shown  either  from  the  form  of  the  con- 
tract or  from  the  surrounding  circumstances.^  Under  this  rule 
a  note  does  not  bind  the  separate  estate  if  the  intent  appears 
only  in  a  trust  deed  which  is  void  for  usury.^  So  a  note  signed 
by  a  married  woman  does  not  raise  a  presumption  of  a  consid- 
eration moving  to  her  and  hence  to  charge  her  separate  estate ; 
her  intent  to  do  so  must  be  shown  specifically.^  In  other  juris- 
dictions the  more  reasonable  rule  prevails  that  if  no  other  source 
of  payment  appears  to  have  been  contemplated  by  the  contract, 
the  married  woman  will  be  presumed  to  have  intended  that  her 
contract  should  have  some  effect  and  not  be  merely  a  means  of 
defrauding  the  adversary  party ;  and  that  effect  can  only  be  to 
bind  her  separate  estate.^"     It  is  perhaps  in  contracts  of  surety- 

6  Gibson  V.  Hutelnns,  43  S.  C.  287;  (Tenn.)  209;  Chatterton  v.  Young, 
21   S.  E.  250.  2  Tenn.  Ch.  768 ;  Dismukes  v.  Shafer 

7  Goldsmith    v.    Ladson,    9    Mack  (Tenn.  Ch.  App.),  54  S.  W.  671. 
(D.  C.)  220;  Kantrowitz  V.  Prather,  s  Wallace    v.     Goodlet,    93    Tenn. 
31  Ind.  92;  99  Am.  Dec.  587;   Ben-  598;  30  S.  W.  27. 

son    V.    Simmers     (Ky.),    53    S.    W.  9  Grand,    etc.,    Co.   v.    Wright,   53 

1035;     Burch    v.    Breekenridge,     16  Neb.    574;    74    X.    W.    82;    Wester- 

B.   Mon.    (Ky.)    482;    63   Am.   Dec.  velt  v.  Baker,  56  Xeb.  63;  76  N.  W. 

553;    Westervelt   v.   Baker,   56   Xeb.  440;    Farmers'    Bank    v.    Boyd,    — 

63;   76   X.   W.  440;    citing  and  fol-  Xeb.  — ;   93  X.  W.  676. 

lowing  Grand,   etc.,   Co.  v.   Wright,  loCardwell  v.  Perry,  82  Ky.  129; 

53  Xeb.  574;   74  X.  W.  82;   Jordan  Hershizer  v.  Florence,  39  O.  S.  516; 

V.   Keeble,   85   Tenn.   412;    3   S.   W.  Williams  v.  Urmston,  35  O.  S.  296; 

511;    Ragsdale    v.    Gossett,    2    Lea  35   Am.   Rep.   611    (overruling  Levi 

(Tenn.)    729;    Shacklett  v.   Polk,   4  v.  Earl,  30  O.  S.  147;   and  Rice  v. 

Ileisk.      (Tenn.)      104;      Cherry     v.  R.   R.,   32   0.   S.   380;   30   Am.  Rep. 

Clements.  10  Humph.    (Tenn.)    552;  610);   Phillips  v.   Graves,   20  O.   S. 

Litton      V.      Baldwin,      8      Humph.  371;  5  Am.  Rep.  675;  Price  v.  Bank, 


CONTBACTS    OF    MAEKIED    WOMEN.  1435 

ship  that  the  application  of  these  divergent  rules  is  best  seen. 
Where  a  married  woman  has  no  power  to  bind  her  estate  except 
that  conferred  bj  the  instrument  creating  such  estate,  she  can- 
not ordinarily  bind  her  estate  as  suretj.^^  Where  her  contract 
does  in  fact  bind  her  estate  only  when  it  is  for  her  benefit  or 
that  of  the  estate  or  is  expressly  charged  upon  the  estate,  her 
signing  a  note  as  surety  does  not  bind  her  separate  estate/^ 

§916.    Contracts  of  married  women  under  modem  statutes. 

The  rules  of  equity  and  Common  Law  upon  the  subject  of  a 
married  woman's  contracts  are  modified  by  statute  in  almost 
every  jurisdiction.  Within  the  scope  of  the  powers  conferred 
upon  her  by  statute  her  liability  is  governed  by  the  rules  that 
apply  to  persons  of  full  capacity.^  Thus  within  her  statutory 
powers  she  may  make  a  contract  which  will  result  in  a  lien  on 
her  separate  property  in  the  same  way  as  anyone  of  full  capac- 
ity." Without  the  scope  of  statutory  power  her  contracts  and 
conveyances  are  void,  no  matter  what  other  powers  may  have 
been  given  to  her  by  statute.^  Thus  since  in  Pennsylvania  the 
statutes  removing  disabilities  of  married  women  in  general  does 
not  apply  to  their  capacity  with  reference  to  their  separate  use 
trusts,  they  have  under  such  statutes  no  more  power  over  such 
trusts  than  they  had  before.*  So  an  agreement  concerning  a 
note  given  by  a  married  woman  cannot  change  the  character  of 
the  liability  of  her  separate  realty  from  that  shown  by  the  deed 

92  Va.  468;  32  L.  R.  A.  214;  23  S.  2  Tarr  v.  Muir,   107  Ky.  283;   53 

E.  887.  S.  W.  663. 

iiHartman.v.  Ogborn,  54  Pa,  St.  s  Haas  v.  Shaw,  91   Ind.   384;   46 

120;   93  Am.  Dec.  679.  Am.  Rep.  607.     A  statute  conferring 

12  Yale  V.  Dederer,  22  N.  Y.  450;  power  to  act  with  reference  to  her 

78  Am.  Dee.  216;   Willard  v.  East-  separate  estate  "does  not,  expressly 

ham,     15    Gray     (Mass.)     328;     77  or  by  implication,  enlarge   a  wife's 

Am.   Dec.    366;    Wilcox   v.    Arnold,  capacity     to      contract     generally." 

116  N.  C.  708;  21  S.  E.  434.  Grand      Island      Banking      Co.      v. 

iTarr  v.  Muir,   107  Ky.  283;    53  Wright,  53  Neb.  574,  578;  74  N.  W. 

S.    W.    663;    McKell    v.    Bank,    62  82;    quoted    in   Kitchen   v.    Chapin, 

Neb.  608;  87  N.  W.  317;  Hacketts-  64  Neb.  144,  146;  57  L.  R.  A.  914; 

town  National  Bank  v,  Ming,  52  N.  89  N.  W.  632. 

J.  Eq.  156;  27  Atl.  920.  ^Holliday  v.  Hively,  198  Pa.  St. 

335;  47  Atl.  988. 


1436  PAGE    OlSr    COXTKACTS. 

executed  as  required  by  statute.^  The  power  of  a  married 
woman  to  make  contracts  at  Modern  Law  dejiends  therefor  upon 
the  phraseology  of  the  statute  in  the  j)articular  jurisdiction 
whose  law  is  in  question,  and  the  construction  placed  upon  it 
by  the  courts.  Xo  attempt  can  be  made  here  to  give  the  de- 
tails of  the  statutes  in  the  different  states  or  to  discuss  their 
effect,  state  by  state.  The  different  statutes  can,  however,  for 
purposes  of  convenience  be  grouj)ed  into  general  classes  which 
can  be  discussed. 

§917.     Power  to  contract  for  benefit  of  separate  estate. 

(1)  Some  statutes  create  a  separate  estate  and  give  a  mar- 
ried woman  power  to  make  contracts  for  the  benefit  of  such 
estate.^  Under  such  statute  a  married  woman  is  liable  on  her 
contracts  which  fairly  tend  to  benefit  her  separate  estate.  Thus 
a  married  woman  is  liable  for  the  wages  of  a  laborer  working  on 
her  farm,  though  originally  employed  by  her  husband,"  or  on 
a  contract  that  the  report  of  the  appraisers  as  to  the  amount 
of  loss  to  her  insured  property  shall  be  final  f  or  on  a  loan  made 
to  her  ;*  or  on  a  debt  incurred  by  her  in  her  business.^  She  is 
not  liable  on  her  contracts  not  for  the  benefit  of  her  separate  es- 
tate under  these  statutes.  Thus  she  is  not  liable  on  a  covenant 
of  general  warranty  in  a  deed  conveying  her  husband's  realty 
which  she  executes  to  release  her  dower,®  nor  on  a  judgment 

5McCollum  V.  Boughton,  132  Mo.  129;    Doane   v.   Feather,    119   Mich. 

601;    35   L.    R.   A.   480;    30   S.   W.  691;  78  N.  W.  884. 
1028;    33    S.   W.   476;    denying   re-  sMosher     v.     Kittle,     101     Mich, 

hearing,   130  Mo.  617;  35  L.  R.  A.  345;  59  N.  W.  497. 
487;   34  S.  W.  480.  s  Montgomery    v.     Ins.     Co.,     108 

1  Robertson   v.    Robertson     (Ky.),  Wis,  146;  84  N.  W,  175    (under  the 
72    S.    W.    813;    Ring    V,    Burt,    17   ■  Michigan   statute). 
Mich,  465;   97  Am,  Dec.  200;   Rus-  4  Fletcher  v,  Brainerd,  75  Vt.  300; 

sel  V,  Bank,  39  Mich,  671;   33  Am.  55  Atl.  608. 

Rep.    444;    Mosher    v.    Kittle,    101  5  First  National  Bank  v.  Hirsch- 

Mich.  345;    59  N.   W.  497;   Detroit  kowitz,  —  Fla.  — ;   35  So.  22. 
Chamber  of  Commerce  v,  Goodman,  6  Pyle  v.   Gross,  92   Md.    132;    48 

110  Mich.  498;   35  L.  R.  A.  96;   68  Atl.    713;    Augusta   National    Bank 

K   W,   295;    Edison  v.   Babka,    111  v.   Beard's   Executor,   100  Va.   687; 

Mich.  235;  69  N.  W.  499;  Caldwell  42  S.  E.  694. 
V,  Jones,  115  Mich.   129;   73  N.  W.  ' 


CONTEACTS    OF    MARRIED    WOMEX.  1437 

note  not  given  for  the  benefit  of  licr  separate  estate/  nor  for  a 
note  given  for  realty^  or  personalty''  transferred  to  herself  and 
her  husband  together ;  nor  for  a  contract  concerning  land  leased 
to  her  husband  though  afterwards  sold  to  her  ;^"  nor  on  a  contract 
between  herself  and  her  husband  on  one  side  and  a  third  person 
on  the  other  for  repairing  property  owned  by  the  husband  and 
wife  jointly,^^  nor  for  a  contract  of  suretyship/"  nor  for  a  sub- 
scription toward  the  erecting  of  a  chamber  of  commerce  build- 
ing, though  her  realty  might  possibly  be  advanced  in  price  there- 
by/^ nor  on  a  mortgage  to  secure  payment  of  agricultural  sup- 
plies furnished  to  other  persons  joining  in  the  mortgage,  to  be 
used  in  cultivating  land  which  is  hers  in  part/*  nor  on  a  con- 
tract to  pay  her  sister's  board/^  Outside  of  her  separate  estate 
these  statutes  confer  no  power  to  contract.^^ 

§918.    Power  to  contract  as  feme  sole  with  reference  to  separate 
estate. 

(2)  Other  statutes,  not  only  create  separate  statutory  estates, 
but  give  a  married  woman  power  to  contract  with  reference 
thereto  as  if  she  were  single/    Under  most  of  these  statutes  a 


7  Investment  Co.  v.  Eoop,  132  Pa.  i*  Simon  v.  Sabb,  56  S.  C.  38;  33 
St.  496;  sub  nomine,  Eoop  v.  Invest-  S,  E.  799. 

ment  Co.,  7  L.  R.  A.  211;  sub  nom-  is  June  v.  Labadie,  —  Mich.  — ; 

ine,  Appeal  of  Roop,  19  Atl.  278.  92  N.  W.  937. 

8  Doane  V.  Feather,  119  Mich.  691;  is  American,  etc.,  Co.  v.  Owens, 
78  N.  W.  884.  72  Fed.  219;  18  C.  C.  A.  513;  Shaf- 

9  Caldwell  v.  Jones,  115  Mich.  fer  v.  Kugler,  107  Mo.  58;  17  S. 
129 ;  73  N.  W.  129 ;  Chamberlain  v.  W.  698 ;  Stenger,  etc..  Association 
Murrin,  92  Mich.  361;  52  N.  W.  v.  Stenger,  54  Neb.  427;  74  N.  W. 
640.  846;   Godfrey  v.  Megahan;   38  Neb. 

10  Edison  v.  Babka,  111  Mich.  748;  57  N.  W.  284;  Hirth  v.  Hirth, 
235;   69  N.  W.  499.  98  Va.  121;  34  S.  E.  964. 

11  Speier  v.  Opfer,  73  Mich.  35 ;  i  American,  etc.,  Co.  v.  Owens,  72 
16  Am.  St.  Rep.  556;  2  L.  R.  A.  Fed.  219;  18  C.  C.  A.  513;  Liebes  v. 
345;  40  N.  W.  909.  Steffy,   —   Ariz.   — ;    32   Pac.   261; 

i2Russel  V.  Bank,  39  Mich.  671;  Warner  v.  Hess,  66  Ark.  113;  49  S. 

33  Am.  Rep.  444.  W.  489;  Kirkley  v.  Lacey.  7  Hoiist. 

13  Detroit   Chamber    of   Commerce  (Del.)    213;   Tarr  v.  Muir,   107  Ky. 

v.   Goodman,   110  Mich.  498;   35  L.  283;  53  S.  W.  663;  First,  etc.,  Bank 

R.  A.  96;  68  N.  W.  295  (two  judges  v.  Moss,  52  La.  Ann.   1524;   28   So. 

dissenting).  133;  Citizens'  State  Bank  v.  Smout, 


1438 


PAGE    ON    CONTRACTS. 


married  "woman  has  as  much  power  to  contract  with  reference  to 
her  separate  property  as  her  husband  has  with  reference  to  his.* 
Thus  she  may  be  a  surety^  or  sole  trader/  or  may  be  a  member 
of  a  partnership  of  which  her  husband  is  not  a  member,^  and 
it  is  everywhere  held  that  she  may  buy  property®  or  sell  it,  and 
this  rule  applies  to  lands  owned  at  the  passage  of  the  statute 
as  well  as  those  afterwards  acquired.^  She  may  authorize  an  at- 
torney in  fact  to  mortgage  her  realty.^  She  may  assign  her  in- 
terest in  a  life  insurance  policy  without  the  intervention  pf  a 
trustee/  or  may  release  a  cause  of  action  in  tort  for  personal 
injuries.^"  She  may  assume  a  mortgage  debt  on  realty  bought 
by  her/^  and  may  borrow  money  to  pay  off  a  lien  and  confess 
judgment  therefor/^  or  confess  judgment  for  debt  for  the  im- 
provement of  her  separate  real  estate."  So  her  note  given  for 
money  borrowed  to  buy  realty/*   or  for  any  other  loan^^  is 


62  Neb.  223;  86  N.  W.  1068;  Sten- 
ger,  etc.,  Association  v.  Stenger,  54 
Neb.  427 ;  74  N.  W.  846 ;  Melick  v. 
Varney,  41  Neb.  105;  59  N.  W. 
521;  Farwell  v.  Cramer,  38  Neb. 
61;  56  N.  W.  716;  Godfrey  v.  Mega- 
han,  38  Neb.  748;  57  N.  W.  284; 
Society,  etc.,  v.  Haines,  47  0.  S. 
423;  25  N.  E.  119;  Steffen  v.  Smith, 
159  Pa.  St.  207;  28  Atl.  295;  Dar- 
win V.  Moore,  58  S.  C  164 ;  36  S.  E. 
539;  Hirth  v.  Hirth,  98  Va.  121;  34 
S.  E.  964;  Tufts  v.  Copen,  37  W. 
Va.  623;   16  S.  E.  793. 

2  Farwell  v.  Cramer,  38  Neb.  61; 
56  N.  W.  716. 

3  Westervelt  v.  Baker,  56  Neb.  63 ; 
76  N.  W.  440  (though  in  Nebraska 
such  contract  does  not  prima  facie 
bind   her  separate  estate). 

4Kirkley  v.  Lacy,  7  Houst.  (Del.) 
213. 

5  Vail  V.  Winterstein,  94  Mich. 
230;  34  Am.  St.  Rep.  334;  18  L.  R. 
A.  515;  53  N.  W.  932. 

6  Liebes  v.  Steffy,  —  Ariz.  — ;  32 
Pae.  261;  Hays  v.  Jordan,  85  Ga. 
741;  9  L.  R.  A,  373;  11  S.  E.  833; 


Melick  V.  Varney,  41  Neb.  105;   59 
N.  W.  521. 

7  Jackson  v.  Everett  (Tenn.),  58 
S.  W.  340. 

8  Linton  v,  Ins.  Co.,  104  Fed.  584; 
44  C.  C.  A.  54. 

9  (Supreme  Assembly)  Good  Fel- 
lows V.  Campbell,  17  R.  I.  402;  13 
L.  R.  A.  601;  22  Atl.  307. 

10  Cooney  v.  Lincoln,  20  R.  1. 183; 
37  Atl.  1031  (citing  Chicago,  etc., 
R.  R.  Co.  V.  Dunn,  52  111.  260;  4 
Am.  Rep.  606;  Berger  v.  Jacobs,  21 
Mich.  215;  Leonard  v.  Pope,  27 
Mich.  145). 

11  Society,  etc.,  v.  Haines,  47  O. 
S.  423;  25  N.  E.  119;  Brewer  v. 
Maurer,  38  0.  S.  543;  43  Am.  Rep. 
436. 

i2Abell  V.  Chaffee,  154  Pa.  St. 
254 ;  26  Atl.  364. 

13  Latrobe,  etc.,  Association  v. 
Fritz.  152  Pa.  St.  224;   25  Atl.  558. 

"Steffen  v.  Smith,  159  Pa.  St. 
207;  28  Atl.  295. 

15  Crampton  v.  Newton's  Estate, 
—  Mich.  — ;  93  N.  W.  250. 


CONTRACTS    OF    MARRIED    WOMEN.  1439 

valid.  So  a  married  woman  separated  in  property  from  her 
husband  may  become  a  stockholder/^  She  may  employ  an  at- 
torney at  least  if  for  her  own  interests,  as  to  institute  divorce 
proceedings,^'  even  if  the  suit  is  afterwards  dismissed  ;^^  or  to 
discharge  an  attachment  levied  on  her  goods  as  the  property  of 
her  husband.^^  She  may  incur  liability  for  necessaries,  such 
as  the  attendance  of  a  doctor,  even  if  she  is  living  with  her 
husband,^"  or  for  the  services  of  a  nurse.^^  To  hold  her  estate,  it 
is  not  necessary  to  trace  proceeds  of  a  note  into  her  separate 
estate  if  her  intent  to  bind  it  appears  from  the  transaction."^ 
Under  such  statutes  her  after-acquired  property  is  liable  for  her 
contracts.^^ 

§919.    Statutes  conferring  limited  capacity. 

(3)  The  remaining  statutes  which  confer  partial  capacity 
may  be  grouped  under  this  head.  By  the  express  provisions  of 
some  a  woman  who  is  deserted  by  her  husband  may  contract  as 
if  she  were  unmarried,^  at  least  to  the  extent  of  binding  herself 
for  such  necessaries  as  medical  attendance.^  Under  other 
statutes,  the  court  under  certain  circumstances  may  by  decree 
confer  upon  a  married  woman  the  power  of  acting  as  a  feme  sole. 
Under  some  of  these  statutes,   desertion   or   its   equivalent   is 

16  First,  etc.,  Bank  v.  Moss,  52  27  Atl.  132;  Darwin  v.  Moore,  58 
La.  Ann.  1524;  28  So.  133.  So  Kerr  S.  C.  164;  36  S.  E.  539  (note  given 
V.  Urie,  86  Md.  72;  63  Am.  St.  Eep.      in   1890). 

493;  37  Atl.  789.  23/^  re  Ann    (1894),   1   Ch.  549 

17  Wells  V.  Gilpin,  19  Colo.  305;  Williamson  v.  Cline,  40  W.  Va.  194 
35  Pac.  545.  20  S.  E.  917. 

18  Wolcott  V.  Patterson,  100  Mich.  i  Arthur  v.  Broadnax,  3  Ala.  557 
227;  43  Am.  St.  Rep.  456;  24  L.  R.  37  Am.  Dec.  707;  Love  v.  Moyne 
A.  629;  58  N.  W.  1006.  han,  16  III.  277;    63    Am.   Dec.    306 

19  Thresher  v.  Barry,  69  Conn.  Carstens  v.  Hanselman,  61  Mich 
470;  37  Atl.  1064.  426;  1  Am.  St.  Rep.  606;  28  N.  W 

20  Goodman  v.  Shipley,  105  Mich.  159;  Wright  v.  Hays.  10  Tex.  130 
439;  63  N.  W.  412;  following  Meads  60  Am.  Dec.  200;  Golden  v.  Galves 
V.  Martin,  84  Mich.  306;  47  N.  W.  ton,  20  Tex.  Civ.  App.  584;  50  S.  W 
583;  Hirshfield  v.  Waldron,  83  Mich.  416. 

116;  47  N.  W.  239.  2  Carstens  v.  Hanselman.  61  Micli. 

2iBonebrake    v.    Tauer,    67    Kan.  426;   1  Am.  St.  Rep.  606;  28  N.  W. 

827;  72  Pac.  521.  159. 

22Spott's  Estate,  156  Pa.  St.  281; 


1440  PAGE    ON    CONTEACTS. 

necessary  for  sucli  decree;^  as  wliere  tlie  wife  is  living  apart 
from  her  liiisband  and  supports  herself.*  But  the  mere  insol- 
vency of  husband  is  not  ground  for  a  decree  authorizing  the  wife 
to  act  as  a  sole  trader;  nor  is  evidence  that  her  father-in-law 
will  assist  her  evidence  of  a  separate  estate.^  As  the  decree  is 
notice  of  her  status  to  the  world,  a  defect  in  the  application  of 
such  nature  that  the  court  obtain?  no  jurisdiction  to  make  such 
decree  is  also  notice  to  the  world  that  the  decree  is  in  law  a 
nullity.^ 

§920.     Husband  required  to  join  in  contract. 

Some  statutes  require  the  husband  to  join  in  his  wife's  con- 
tract. Under  such  statutes  a  sej)arate  pledge  of  property  by  the 
wife  is  invalid  f-  as  is  a  note  signed  by  the  wife,  payable  to  the 
husband  and  indorsed  by  him,"  or  a  judgment  by  confession 
where  the  husband  did  not  join  in  the  note  or  sign  the  order  for 
confession.^  A  purchase  of  land  at  public  sale  by  an  agent  ap- 
pointed with  the  consent  of  her  husband  is  valid.*  Under  such 
statutes  the  contract  or  conveyance  is  valid  only  if  the  hus- 
band joins  therein.^  A  deed  executed  by  a  married  woman 
alone  to  defraud  her  creditors  and  subsequently  ratified  by  a 
second  deed  in  which  her  husband  joins  is  invalid  as  to  such 
creditors.®  A  deed  in  which  the  husband  did  not  join,  convey- 
ing her  interest  in  land  previously  her  husband's,  to  her  chil- 

37n  re  Hughes  (1898),  1  Ch.  529;  sHoflfman  v.  Shupp,  80  Md.  611; 

67    L.    J.    Ch.    N.    S.    279;    Hill    v.  31  Atl.  505. 

Cooper    (189.3),  2  Q.  B.  85;   Azbill  4  Moore   v.    Taylor,    81    Md.   644; 

V.    Azbill,    92    Ky.    154;    17    S.    W.  32  Atl.  320;  33  Atl.  886. 
284.  ^De    Roux    v.    Girard,    112    Fed. 

4  Azbill  V.  Azbill,  92  Ky.  154;   17  89;  50  C.  C.  A.  136    (decided  under 

S.  W.  284.  the    Pennsylvania   statute)  ;    Weber 

sKohn   V.    Steinau    (Ky.),   29    S.  v.    Tanner     (Ky.),    64    S.    W.    741; 

W.  885.  Harvard,   etc.,   Co.  v.  Benjamin,   84 

6  New  England,  etc.,  Co.  v.  Pow-  Md.    333;    57    Am.    St.    Rep.    402; 

ell,  94  Ala.  423;  10  So.  324.  35  Atl.  930;  Westlake  v.    (City  of) 

1  Taylor  v.  Jackson  (R.  I.),  25  Youngstown,  62  O.  S.  249;  56  N. 
Atl.  348.  E.  873;  Bingler  v.  Bowman,  194  Pa. 

2  Harvard,   etc.,  Co.  v.  Benjamin,  St.  210;  45  Atl.  80. 

84  Md.  333;   57  Am.  St.  Rep.  402;  «  IMurphy  v.  Green,  128  Ala.  486; 

35  Atl.  930.  30  So.  643. 


CONTEACTS    OF    MAEKIED    WOMEX.  1441 

dren  in  consideration  of  love  is  void  \'  and  a  written  contract  by 
a  married  woman  to  sell  land  is  unenforceable  unless  her  hus- 
band joins,  or  she  is  living  apart  from  him.^  So  a  mortgage  in 
which  the  husband  does  not  join  is  a  nullity.^  So  a  mortgage 
may  be  void  as  not  executed  by  husband  and  wife  jointly  and 
the  note  secured  thereby  may  be  valid  j^"  but  if  she  could  incur 
the  debt  for  which  the  mortgage  was  given,  it  may  be  held  in 
equity  as  an  appointment  of  her  property  for  payment/^  Under 
such  statute  it  has  been  held  that  a  note  given  by  a  wife  to  her 
husband  and  indorsed  by  him  is  invalid  as  he  did  not  join  in 
the  execution/"  Such  statute  is  held  not  to  apply  where  the 
husband  has  deserted  his  wife.^^  Under  a  statute  requiring  hus- 
band and  wife  to  join  in  conveying  the  wife's  property,  but 
excepting  women  whose  husbands  are  non-resident,  a  woman 
who  is  a  non-resident  may  execute  a  valid  deed  without  hei 
husband's  joining,  though  he  is  also  a  non-resident/*  A  resi* 
dent  married  woman  cannot  avail  herself  of  a  statute  confer^ 
ring  power  on  non-resident  married  women/^  If  the  husband 
sigTis  the  deed  but  does  not  join  in  acknowledging  it,  the  deed 
is  invalid  in  some  jurisdictions,^^  and  in  others  good  in  equity 
as  a  contract."     A  married  woman  who  bought  land  is  estopped 

7  Ellis  V.  Pearson,  104  Tenn.  591;  84  Md,  333;   57  Am.  St.  Rep.  402; 

58  S.  W.  318.  35  Atl.  930. 

sBartlett    v.    Williams,    27    Ind.  is  Bieler  v.  Dreher,  129  Ala.  384; 

App.    637;    60  N.   E.   715;    and  the  30  So.  22    (by  special  statutory  ex. 

doctrine  of  part  performance  has  no  ception ) . 

application.     Rosenour      v.      Rosen-  i4  High    v.     Whitfield,    130    Ala. 

our,  47  W.  Va.  554;   35  S.  E.  918,  444;  30  So.  449. 

under   a   special   statute   of   a   com-  i5  Swafford  v.  Herd    (Ky.)-  65  S. 

bination  type.  W.    803     (a    statute    authorizing    a 

9  Sipley    V.    Wass,    49    X.    J.    Eq.  non-resident  married  woman  to  ap- 
463;  24  Atl.  233.  point  an   attorney   in   fact  to  con- 

10  Hart  V.  Church,   126  Cal.  471;      vey). 

77  Am.  St.  Rep.   195;   58  Pac.  910.  is  Weber  v.   Tanner    (Ky.),  64   S. 

A    mortgage    by   a    feme   covert    on  W.    741 ;    Morgan   v.   Snodgrass,   A9 

part  of  her  separate  estate  with  the  W.  Va.  387 ;  38  S.  E.  695.     So  of  a 

joinder   of  her  husband  is  good   in  mortgage.     Dietrich    v.    Hutchinson, 

equity.     Lynch   v.   Moser,   72    Conn.  73  Vt.  134;  87  Am.  St.  Rep.  098;  50 

^■14;   46  Atl.  153.  Atl.  810. 

iiPerrine  v.  Newell,  49  N.  J.  Eq.  i7  Rushton  v.  Davis,  127  Ala.  279; 

Sf;   23   Atl.   492.  28  So.  476. 

12  Harvard,  etc.,  Co.  v.  Benjamin, 
91 


1442  PAGE    ON    CONTEACTS. 

to  deny  the  lien  of  the  vendor  thereon,  though  the  notes  given 
therefor  were  void  as  not  signed  by  her  husband.^*  So  under 
some  statutes  her  trustee  must  join.  Under  such  statute  a  con- 
veyance by  husband  and  wife  is  void.^^  Under  a  statute  author- 
izing a  married  woman  to  act  as  if  she  were  single  in  dealing 
with  her  sej^arate  estate,  her  power  of  attorney  is  valid,  though 
not  signed  by  her  husband.^* 

§921.     Consent  of  husband  necessary. 

Some  statutes  require  the  consent  of  the  husband,  and  in  some 
cases  his  written  consent,  to  the  wife's  contracts.^  Under  such 
statutes  a  married  woman  is  not  bound  by  an  oral  contract 
for  the  care  of  an  insane  husband,  though  by  statute  she  could 
act  as  sole  trader  if  her  husband  was  insane.^  So  as  attorney's 
fees  are  a  matter  of  negotiation,  not  merely  a  liability  created 
and  fixed  by  law,  like  costs,  a  married  woman  though  empowered 
to  sue  alone  on  all  her  contracts,  cannot  bind  herself  by  con- 
tract therefor  without  her  husband's  consent.^  Some  statutes 
require  the  written  assent  of  her  husband  to  any  conveyance  of 
her  property.  Under  such  statute  her  endorsement  and  delivery 
of  her  note  without  her  husband's  consent  is  a  nullity.*  A 
transfer  by  a  married  woman  of  a  note  assigned  to  her,  without 
the  written  consent  of  her  husband  is  invalid,  even  in  the  hands 
of  a  hona  fide  holder.^  But  the  indorsement  of  the  note  by  the 
husband  as  well  as  by  the  wife,  has  been  held  to  be  a  sufficient 

isWeller  v.  Monroe   (Ky.),  55  S.  sMcAnally    v.     Insane    Hospital, 

W.   1078    (citing  Faught  v.  Henry,  109  Ala.  109;  55  Am.  St.  Rep.  923; 

13   Bush.  471;    Bybee  v.  Smith,   88  34  L.  R.  A.  223;  19  So.  492. 

Ky.  648;  11  S.  W,  722;  McClure  v.  3  Cowan  v.  Motley,  125  Ala.  369; 

Bigstaff     (Ky.),     37     S.    W.    294;  28  So.  70. 

Adam  v.   Feeder    (Ky.),  41    S.  W.  4Vann    v.    Edwards,    128    N.    C. 

275.  425;    39    S.    E.    66    (hence    on    her 

19  Johnson  v.   Sanger,  49  W.  Va.  death  the  title  thereto  vests  in  her 

405;  38  S.  E.  645.  husband,  in  North  Carolina,  subject 

2«  Farmers',  etc.,  Bank  v.  Loftus,  to  her  debts). 

133  Pa.  St.  97;  7  L.  R.  A.  313;  19  5  Walton    v.    Bristol,    125    N.    C. 

Atl.  347.  419;    34    S.    E.    544;    Whelpley    v. 

iBazemore   v.  Mountain,    126   N.  Stoughton,  119  Mich.  314;  78  N.  tV. 

C.    313;    35    S.    E.    542;    CoflFey    v.  137. 
Shuler,    112   N.    C.    622;    16    S.    E. 
Sll. 


CONTRACTS    OF    MARRIED    WOMEN.  1443 

"Written  assent.®  A  contract  of  sale  of  goods  without  consent 
of  the  husband  is  not  void,  but  voidable,  whether  treated  as 
a  Georgia  or  as  an  Alabama  contract/  A  letter  written  bj  a 
husband  as  the  wife's  agent  is  sufficient  to  show  consent,  where 
it  orders  the  goods  to  be  shipped  because  of  the  writer's  good 
standing,  and  where  it  states  what  the  wife's  property  is,  it 
charges  it  sufficiently.*  So  is  his  joining  in  the  execution  of 
the  instrument,"  or  signing  as  a  witness.^"  This  consent  must 
be,  however,  to  the  same  contract  that  the  wife  assents  to.^* 
An  exception  to  these  statutes  is  generally  made  in  case  of 
necessaries,  repairs  and  the  like.^^ 

§922.     Contract  required  to  be  in  writing. 

Some  statutes  require  a  married  woman's  contracts  to  be  in 
writing  except  in  certain  cases ;  as  in  Alabama,  where  she  is  a 
sole  trader  under  the  statute.^  Under  such  statutes  an  agent 
cannot  be  appointed  orally,"  nor  can  an  oral  contract  for  a  build- 
ing be  enforced  by  taking  a  lien,^  nor  can  it  be  ratified,*  nor  can 
the  consent  of  the  husband  give  it  validity.^  Indorsement  of 
a  promissory  note  in  blank  is  not  written  consent  within  the 
provision  of  the  statute,  so  as  to  enable  her  husband  to  pass 
title  thereto.*'     Contracts  for  necessaries  are  excepted  from  the 

c  Coffin  V.  Smith,   128  N.  C.  252;  19  So.  25;  Strauss,  etc.,  Co.  v.  Glass, 

38  S.  E.  864.  108  Ala.  546;    18   So.   526  (qualify- 

7Clewis  V.  Malon,   119  Ala.   312;  ing    Strauss    v.    Schwab,    104    Ala. 

24    So.    767;    overruling    Strauss   v.  669;    16  So.   692;    Strouse  v.  Leipf, 

Schwab,  104  Ala.  669;  16  So.  692.  101  Ala.  433;  46  Am.  St.  Rep.  122; 

sBrinkley  v.  Ballance,   126  N.  C.  23  L.  R.  A.  622;  14  So.  667;  Mitch- 

393;  35  S.  E.  631.  elf  v.  Mitchell,  101  Ala.  183;  13  So. 

sRushton  V.  Davis,  127  Ala.  279;  147). 

28  So.  476;  Wachovia,  etc..  Bank  v.  2  Scott  v.  Cotten,  91  Ala.  623;   8 

Ireland,    122   N.    C.    571;    29    S.    E.  So.  783. 

835;  In  re  Freeman,  116  N.  C.  199;  3  Weathers  v.  Borders,   121  N.  C. 

21  S.  E.  110.  387;  28  S.  E.  524. 

10  Sender    v.    Bank,    156    Pa.    St.  4  Weathers  v.  Borders,  121   K.  C. 

374;  27  Atl.  293.  387;  28  S.  E.  524. 

U  Walton    V.    Bristol,    125    N.    C.  s  Strauss,   etc.,   Co.   v.   Glass,    108 

419;  34  S.  E.  544.  Ala.  546;   18  So.  526. 

12  McAnally   v.    Lumber    Co.,    109  « Case    v.    Espenschied,     169    Mo. 

Ala.  397;   19  So.  417.  215;   69  S.  W.  276. 

1  Clement  v.  Draper,  108  Ala.  211 ; 


1444  PAGE    ON    CONTEACTS. 

provisions  of  some  of  the  statutes  already  referred.  The  term 
necessaries  has  a  different  meaning  in  this  connection  from  its 
meaning  in  the  law  of  infancy.  It  includes  a  mule  used  to 
cultivate  a  farm  from  which  the  married  woman  is  supported/ 
and  goods  sold  to  renters  on  shares  f  but  not  the  wages 
of  an  overseer,  his  services  not  being  shown  to  be  necessary;* 
nor  the  rent  of  a  hotel.^°  Contracts  for  necessaries  are  not 
enforceable  without  due  process  of  law.  Thus  a  creditor  who 
has  sold  a  married  woman  merchandise  necessary  for  the  sup- 
port of  her  family  cannot  take  possession  of  crops  raised  by  her 
on  her  own  land,  but  he  must  take  judgement  and  issue  execution 
subject  to  her  right  to  exemptions.^^ 

§923.     Power  as  sole  trader. 

Under  other  statutes  a  married  woman  is  empowered  to  act 
as  a  sole  trader,  and  as  such  to  bind  herself  by  contract.^  Such 
statutes  are  constitutionak"  Under  such  a  statute  a  married 
woman  may  carry  on  business  in  the  nam-e  of  an  agent. ^  Unless 
her  note  is  given  in  connection  with  her  sole  business,  such 
statutes  do  not  make  it  valid.*  A  feme  covert  trading  as  a  sole 
trader  is  not  subject  to  the  act  concerning  involuntary  insolv- 
ency.^ Her  ownership  of  a  farm  which  her  husband  manages 
is  not  a  separate  business.^  If  by  statute  a  decree  of  court 
is  necessary  to  empower  a  married  woman  to  act  as  sole  trader, 

7  Allen  V.  Long    (Ky.),  41   S.  W.  len,  29  Cal.  564;  Wallace  v.  Rowley, 

17.  91    Ind.    586;     Eskridge    v.    Carter 

sBazemore   v.   Mountain,    121  iST.  (Ky.),    29    S.    W.    748;     Clark    v. 

C.  59;  28  S.  E.  17.  Manko.  80  Md.  78;  30  Atl.  621. 

sSanderlin   v.    Sanderlin,    122   N.  2  Eskridge  v.  Carter   (Ky.),  29  S. 

C.  1;  29  S.  E.  55    (in  this  case  tlie  W.  748. 

contract  was   invalid,  as  neither   in  3  Reed  v.  Xewcomb,  64  Vt.  49;  23 

writing  nor   for  necessaries).  Atl.  589. 

10  Crow    V.    Shacklett     (Ky.),    38  4  First  National  Bank  v.  Hirsch. 

S.  W.  692.  kowitz,  —  Fla.  — ;  35  So.  22. 

iiRawlings    v.    Neal,    126    N.    C.  5  Clarke    v.    Manko,    80    Md.    78; 

271;  35  S.  E.  597.  30  Atl.  621. 

1  Hickey    v.    Thompson,    52    Ark.  c  Union,    etc..    Bank    v.    Coffman, 

234;  12  S.  W.  475;  Camden  v.  Mul-  101  la.  594;   70  N.  W.  693. 


CONTRACTS    OF    MARRIED    WOMEN.  1445 

she  lias  not  such  power  without  such  decree,  even  if  she  has 
invested  her  separate  property  in  her  business.^ 

§924.     Capacity  under  contract  with  husband. 

Under  some  statutes  a  married  woman  is  given   power  to 

contract  by  contract  with  her  husband  for  the  application  to  her 

property  of  the  provisions  of  the  separate  property  acts.     In 

,  the  absence  of  such  contract  she  cannot  bind  herself  even  as 

his  surety.^ 

§925.    Power  to  contract  as  feme  sole  generally. 

(4)  Other  statutes  confer  upon  a  married  woman  the  power 
of  contracting  as  if  she  were  unmarried/  subject  in  some  cases 
to  limitations  which  will  be  hereafter  discussed.  Under  some 
statutes  her  power  to  contract  is  said  to  be  the  same  as  that  of 
her  husband.^  Unless  the  case  falls  within  one  of  the  exceptions 
her  power  to  contract  is  the  same  as  if  she  were  unmarried.^ 
Under  such  statutes  a  married  woman  is  liable  personally  on 
her  contracts.*  So  she  may  be  estopped  by  a  covenant  of  war- 
ranty from  denying  that  the  deed  was  given  on  valuable  con- 

7  McDonald  v.  Rozen,  —  Ida.  — ;  Minn.   538;    71   N.   W.   699;    Wyatt 

69  Pac,   125.  v.  \Yyatt,  81  Miss.  219;  32  So.  317; 

1  Barlow  Brothers  Co.  v.  Parsons,  McHenry   v.    Batavia,   etc.,    Co.,    17 

73  Conn.  696;  49  Atl.  205.  Ohio  C.  C.  206;  Hackman  v.  Cedar, 

1  Village    of   Western    Springs    v.  5  Ohio  C.  D.  293 ;  Cooney  v.  Lincoln, 

Collins,  98  Fed.   (111.)   933;40C.C.  20    R.  .1.    183;    37    Atl.    1031;    Ex 

A.    33;    Stacy   v.    Walter,    125   Ala.  porfe  Xurnberger,  40  S.  C.  334;  sh6 

291;    28    So.   89;    Rose   v.   Otis,    18  nomine,  Nurnberger  v.  Ludekins,  18 

Colo.  59;   31  Pac.  493;   Goodrich  v.  S.  E.  935;  Valentine  v.  Bell,  66  Vt. 

Association,   96   Ga.   803;    22    S.   E.  280;   29  Atl.  251;   Brookman  v.  In- 

585;  Pease  v.  Furniture  Co.,  176  111.  surance  Co.,  18  Wash.  308;   51  Pac. 

220;    52    N.    E.    932;    affirming    70  395. 

111.     App.     138;      Snell     v.     Snell,  2  First,  etc.,  Bank  v.  Leonard.  36 

123  111.  403;  5  Am.  St.  Rep.  526;  14  Or.  390;  59  Pac.  873. 

N.    E.    684;    Crum   v.    Sawyer,    132  3  Hackettstown,      etc.,      Bank     v. 

111.  443;   24  N.  E.  956;   Koh-i-noor  Ming,  52  N.  J.  Eq.  1.56;  27  Atl.  920. 

Laundry  Co.  v.  Lockwood,   141  Ind.  *  McHenry    v.    Batavia,    etc.,    Co., 

140;   40  N.  E.  677;    Young  v.  Mc-  17  Ohio  C.  C.  206;  First,  etc..  Bank 

Fadden,    125    Ind.    254;    25    N.    E.  v.  Leonard,  36  Or.  390;  59  Pac.  873. 
284;    Security  Bank  v.  Holmes,  68 


1446  PAGE    ON    CONTKACTS. 

sideration.^  Under  such  statutes  a  married  woman  may  con- 
vey her  legal  title  to  land  acquired  since  the  statute  was  passed 
without  her  husband's  joining  in  the  deed.*'  She  is  personally 
liable  on  her  covenants  of  warranty.^  But  in  Iowa  her  joining 
in  a  covenant  in  a  deed  conveying  her  husband's  realty  does 
not  bind  her  unless  she  expressly  so  states.®  Pier  liability  is 
not  to  be  extended  beyond  her  contract,  however.  Thus  she 
is  not  liable  on  the  covenants  of  her  husband's  deed  in  which 
she  joins  to  release  dower  or  homestead  rights,^  nor  does  such 
deed  convey  an  undivided  interest  in  the  property  therein  de- 
scribed, owned  by  her.^*^  As  the  progress  of  legislation  is 
toward  states  of  this  class,  a  detailed  discussion  of  the  other 
classes  of  statutes  is  of  less  importance. 

§926.     Contracts  of  suretyship. 

At  Common  Law  a  contract  of  suretyship  by  a  married  wom- 
an was  void,  like  her  other  contracts.  Where  she  has  a  separate 
estate ,  either  at  equity  or  by  statute  her  contracts  of  suretyship 
are  valid  except  in  jurisdictions  in  which  her  power  over  her 
separate  estate  is  limited  to  that  expressly  conferred  upon  her 
or  necessarily  implied  from  the  nature  of  her  estate.^  So  where 
the  statute  authorizing  her  to  contract  with  reference  to  her 
separate  estate  is  construed  to  apply  only  to  contracts  beneficial 
to  her  estate,  she  cannot  act  as  surety."     Under  such  view  of 

5  Stacey  v.  Walter,  125  Ala.  291;  »  Village  of  Western  Springs  v. 
82  Am.  St.  Jtep.  235;   28   So.  89.          Collins,   98    Fed.   933;   40   C.   C.   A. 

6  Farmers'      Exchange      Bank     v.      33. 

Hageluken,  165  Mo.  443;   65  S.  W.  lo  Penny    v.    Mortgage    Co.,     132 

728;      or     her     eqviitable      interest,  Ala.  357;   31  So.  96. 
Cadematori  V.  Ganger,  160  Mo.  352 ;  i  See   §   911.    Fredericktown   Sav- 

61  S.  W.  195.  ings  Institution  v.  Michael,  81  Md. 

7  Security  Bank  v.  Holmes,  68  487;  33  L.  E.  A.  628;  32  Atl.  189, 
Minn.  538;  71  N.  W.  699.  340;    Binney    v.    Bank,    150    Mass. 

8  Moore  v.  Graves,  97  la.  4;  65  574;  6  L.  R.  A.  379;  23  N.  E.  380; 
K  W.  1008.  This  is  by  force  of  a  Major  v.  Holmes,  124  Mass.  108; 
special  statute  that  a  spouse  join-  Metropolitan  Bank  v.  Taylor,  62 
ing  in  a  covenant  of  warranty  in  a  Mo.  338;  Lincoln  v.  Eowe,  51  Mo. 
deed    conveying    the    realty    of    the  571. 

other  is  not  bound  personally  unless  2  Kohn  v.  Collison,  1  Marv.  (Del.) 

the  deed  so  states  expressly.  109;  27  Atl.  834;  Wright  v.  Parvis, 


CONTRACTS    OF    MARKIED    WOMEN". 


1447 


the  statute  a  contract  of  suretyship  for  her  husband  is  void, 
though  given  for  property  which  will  make  his  estate  more 
valuable  and  thereby  increase  her  share  in  his  estate  if  she 
survives  him.  The  consideration  moving  to  her  is  too  remote.^ 
As  with  other  contracts,  in  some  jurisdictions  her  contract  of 
suretyship  prima  facie  binds  her  separate  estate/  in  others  it 
binds  her  separate  estate  if  specifically  charged  thereon  f  but 
otherwise  not.*'  Under  statutes  conferring  general  power  to 
contract,  a  contract  of  suretyship  is  valid.^  Thus  a  statute 
authorizing  a  married  woman  to  give  a  bond  with  or  without  a 
warrant  of  attorney,  as  if  she  were  a  feme  sole,  includes  a 
bond  to  secure  the  debt  of  her  husband  or  another.^  Under  a 
decree  allowing  a  married  woman  to  contract  as  a  feme  sole 
she  can  act  as  surety  f  but  apparently  not  under  a  decree  of  less 


etc.,  Co.,  1  Marv.  (Del.)  325;  40 
Atl.  1123;  Jaeckel  v.  Pease,  6 
(Ida.)  131;  53  Pac.  399;  Guy  v. 
Liberenz,  160  Ind.  524;  65  N.  E. 
186;  Magoffin  v.  Bank  (Ky.),  69  S. 
W.  702;  De  Vries  v.  Conklin,  22 
Mich.  255 ;  Ott  v.  Hentall,  70  N.  H. 
231;  51  L.  R.  A.  226;  47  Atl.  80; 
Mueller  v.  Wiese,  95  Wis.  381;  70 
N.  W.  485. 

3  Bishop  V.  Bourgeois,  58  N.  J. 
Eq.  417;  43  Atl.  655. 

4  Miller  v.  Brown,  47  Mo.  504; 
Kimm  v.  Weippert,  46  Mo.  532; 
Moeckel  v.  Heim,  46  Mo.  App.  340; 
Williams  v.  Urmston,  35  0.  S.  296; 
35  Am.  Rep.  611;  Williamson  v. 
Cline,  40  W.  Va.  194;  20  S.  E.  917. 

5  Kershaw  v.  Barrett  (Neb.),  90 
N.  W.  764;  Briggs  v.  Bank,  41 
Neb.  17;  59  N.  W.  351;  Smith  v. 
Spalding,  40  Neb.  339;  58  N.  W. 
952;  Spatz  v.  Martin,  46  Neb.  917; 
65  N.  W.  1063;  First  National  Bank 
V.  Stoll,  57  Neb.  758 ;  78  N.  W.  254 ; 
Webster  v.  Helm,  93  Tenn.  322;  24 
S.  W.  488. 

6  Union,  etc..  Bank  v.  Coffman, 
101  la.  594;  70  N.  W.  693;  Smith 
V.    Bond,    56    Neb.    529;    76    N.    W. 


1062;  Eckman  v.  Scott,  34  Neb. 
817;   52  N.  W.  822. 

7  Binney  v.  Bank,  150  Mass.  574; 
6  L.  R.  A.  379;  23  N.  E.  380; 
State  Bank  v.  Maxson,  123  Mich. 
250;  81  Am.  St.  Rep.  196;  82  N. 
W.  31  (under  Kansas  statute)  ; 
King  V.  Hansing,  88  Minn.  401 ;  93 
N.  W.  307;  Grandy  v.  Campbell, 
78  Mo.  App.   502;   Cooper  v.   Bank, 

4  Okla.  632;  46  Pac.  475;  Colonial 
Etc.,  Co.  V.  Stevens,  3  N.  D.  265; 
55  N,  W.  578;   Miller  v.  Purchase, 

5  S.  D.  232;  58  N.  W.  556;  Colo- 
nial, etc.,  Co.  V.  Bradley,  4  S.  D. 
158;  55  N.  W.  1108;  First,  etc.. 
Bank  v.  Leonard,  36  Ore.  390;  59 
Pac.  873;  distinguishing  Knoll  v. 
Kiessling,  23  Ore.  8;  35  Pac.  248, 
and  Campbell  v.  Snyder,  27  Ore. 
249;  41  Pac.  659,  as  cases  where 
the  wife  could,  under  the  law  then 
in  force,  bind  only  her  separate  es- 
tate and  not  herself  personally.  Bit- 
ter V.  Bruss,  116  Wis.  55;  92  N.  W. 
361. 

8  Warder,   etc.,   Co.   v.   Stewart,   2 
Marv.    (Del.)   275;   36  Atl.  88. 

9  Sypert  v.  Harrison,  88  Ky.  461 ; 
11     S.    W.    435;     Skinner    v.    Carr 


1448 


PAGE    ON    CONTRACTS. 


extensive  scope/"  Statutes  specifically  forbid  a  married  wom- 
an to  act  as  surety  in  some  jurisdictions  for  any  person ;  and  in 
some  others,  for  her  husband/^  and  it  is  really  because  of  these 
statutes  that  contracts  of  suretyship  must  be  considered  apart 
from  other  contracts.  Where  she  cannot  be  surety  for  her 
husband,  she  is  not  liable  on  a  note  of  a  firm  of  which  her  hus- 
band is  a  member.^"  Under  such  statutes  the  test  of  surety- 
ship seems  to  be  whether  the  married  woman  received  anything 
of  value  for  incurring  the  obligation.^^  Her  obligation  is  valid 
if  she  receives  anything  of  value,^*  as  where  it  is  for  her  own 
debt  as  a  separate  trader,^^  or  for  her  ante-nuptial  debt,^^  or 
for  the  discharge  of  liens  on  her  proj)erty;^'  even  where  the 


(Ky.),  51  S.  W.  799.  By  this  rule 
is  possibly  modified  by  the  Act  of 
1894,  under  which  she  can  only  se- 
cure the  debt  of  another  by  setting 
aside  specific  property  for  such 
debt,  not  incurring  any  personal 
liability  therein.  Skinner  v.  Lynn 
(Ky.),  51  S.  W.  167.  The  statement 
in  Lane  v.  Bank  (Ky.),  43  S.  W. 
442,  that  she  cannot  be  a  surety  un- 
der such  a  decree  is  an  obiter.  In 
Mundo  V.  Anderson,  109  Ky.  147; 
58  S.  W.  520,  it  is  held  that  after 
such  decree  she  may  be  surety  even 
under  the  Act  of  1894. 

10  Bidwell  v.  Robinson,  79  Ky.  29. 

11  Pvichardson  v.  Stephens,  122 
Ala.  301;  25  So.  39;  Schenig  v. 
Cofer,  97  Ala.  726;  12  So.  414; 
Finch  V.  Barclay,  87  Ga.  393;  13 
S.  E.  566;  Strickland  v.  Vance,  99 
Ga.  531;  59  Am.  St.  Eep.  241;  27 
S.  E.  152;  Smith  v.  Hardman,  99 
Ga.  381;  27  S.  E.  731;  Munroe  v. 
Haas,  105  Ga.  468;  30  S.  E.  654; 
Coffee  V.  Ramey,  111  Ga.  817;  35 
S.  E.  641;  Cook  v.  Buhrlage,  159 
Ind.  162;  64  N.  E.  603;  Andrysiak 
V.  Satkoski,  159  Ind.  428;  63  N.  E. 
854;  65  N.  E,  286;  International, 
«tc..  Association  v.  Watson,  158  Ind. 
508;     64    N.    E.    23;     Seigman    v. 


Streeter,  64  N.  J.  L.  169;  44  Atl. 
888;  Pittman  v.  Eaysor,  49  S.  C. 
469;   27  S.  E.  475. 

12  Storrs,  etc.,  Co.  v.  Wingate,  67 
N.  H.   190;   29  Atl.  413. 

13  Cook  V.  Buhrlage,  159  Ind.  162; 
64  N.  E.  603;  Field  v.  Noblett,  154 
Ind.  357;  56  N.  E.  841;  Bowles  v. 
Trapp,  139  Ind.  55;  38  N.  E.  406; 
Goff  V.  Hankins,  11  Ind.  App.  456; 
39  X.  E.  294;  Eead  v.  Brewer 
(Miss.),  16  So.  350;  Simon  v.  Sabb, 
56  S.  C.  38 ;  33  S.  E.  799 ;  Griffin  v. 
Earle,   34  S.  C.  246;    13   S.  E.  473. 

iiSidway  v.  Nichol,  62  Ark.  146; 
34  S.  W,  529;  Morningstar  v.  Hard- 
wick,  3  Ind.  App.  431 ;  29  N.  E.  929; 
Shaw  V.  Fortine,  98  Mich,  254;  57 
N".  W.  128;  Schmidt  v.  Spencer,  87 
Mich.  121 ;  49  N.  W.  479. 

15  Witkowski  v.  Maxwell,  69  Miss. 
56;   10  So.  453, 

16  Harrisburg,  etc..  Bank  v.  Brad- 
shaw,  178  Pa.  St.  180;  34  L.  R.  A. 
597;  35  Atl.  629;  even  if  she  was 
originally  liable  only  as  accommoda- 
tion indorser,  and  she  was  released 
by  failure  to  protest  in  time. 

!■  Jones  V.  Rice,  92  Ga.  236:  18 
S.  E.  348;  Waldrop  v.  Beal,  a«  Ga. 
306;  15  S.  E.  310. 


CONTRACTS  OF  :markied  wo:mex.  1449 

debt  was  primarily  her  busband'Sj  as  wbere  witbout  any  intent 
of  evading  tbe  statute  tbe  busband  borrowed  money,  giving  as 
security  a  mortgage  on  certain  real  estate  wbicb  be  afterwards 
transferred  to  bis  wife/®  So  a  covenant  not  to  engage  in  a 
certain  business  in  a  certain  city,  in  wbicb  a  married  woman 
joins  witb  ber  busband  on  tbeir  selling  tbeir  business  and  good 
will  is  valid  ;^^  as  is  ber  note  given  to  take  up  ber  busband's 
note  and  prevent  jDayee  from  attacking  a  transfer  of  property 
to  ber  as  in  fraud  of  ber  busband's  creditors  ;"'^  or  ber  note 
given  to  settle  an  action  brought  against  ber  busband  and  ber- 
self,  tbougb  tbe  debt  on  wbicb  tbe  action  was  brougbt  was  ber 
husband's,"^  or  on  a  promise  as  principal  jointly  witb  ber  bus- 
band  to  reimburse  a  tbird  person  for  paying  ber  busband's 
debt,^^  or  a  note  given  by  a  married  woman  as  premium  on 
an  insurance  policy  taken  out  by  ber  on  ber  busband's  life  in  bis 
absence,^^  or  a  note  given  by  herself  and  ber  busband  for 
money  ad'vranced  by  a  third  person  to  pay  premiums  on  a  policy 
on  ber  husband's  life  in  ber  favor.^*  So  she  is  liable  on  a 
promise  to  pay  a  debt  incurred  by  him  as  ber  agent  for  her 
separate  estate,^^  or  to  pay  his  debt  in  consideration  of  a  trans- 
fer of  realty  to  her.^*'  It  is  even  held  that  her  promise  to  pay 
his  debt  secured  by  a  mortgage  is  valid  by  reason  of  the  benefit 
to  ber  dower  in  tbe  mortgaged  lands."^  Her  possible  interest 
in  her  husband's  personalty  is  too  remote  to  constitute  a  benefit 
to  ber  under  this  rule.  Hence  her  promissory  note  given  to  pay 
bis  debt  incurred  in  buying  personalty  is  invalid."^  A  note 
given  by  a  married  woman  to  secure  a  debt  which  is  partly 
hers  and  partly  her  husband's  is  valid  as  to  ber  own  debt,  though 

18  Taylor    v.    Mortgage    Co.,    lOG  23  Mitchell  v.   Richmond,   164   Pa. 
Ga.   238;    32    S.   E.   153;    Daniel   v.      St.   566;    30   Atl.   486. 

Royce,  96  Ga.  566;  23  S.  E.  493,  24  Crenshaw  v.  Collier,  70  Ark.  5; 

19  Koh-i-noor      Laundry      Co.      v.      65  S.  W.  709. 

Lockwood,   141   Ind.   140;    40  N.  E.  25  Christensen  v.   ^^■ells,   52   S.   C. 

677.  497;   30  S.  E.  611. 

zoWhelpley     v.     Stoughton,      112  26  Strickland  v.  Gray,  98  Ga.  667; 

Mich.  594;  70  N,  W.  1098.  27  S.  E.   155. 

21  Thornton    v.    Lemon,    1 14    Ga.  27  Beberdick   v.   Crevier.   60  N.   J. 
155;  39  S.  E.  943.  L.  389;   37  AtL  959. 

22  Hill  V.  Cooley,  112  G*,.  115;  37  2s  Bishop  v.   Bourgeois.   58   N.   J. 
S.  E.  109.  Eq.  417;  43  Atl.  655. 


1450  PAGE    ON    CONTEACTS. 

invalid  as  to  her  husband's.^'*  If  under  the  contract  she  receives 
a  thing  of  value  she  is  liable  though  she  incurs  a  liability 
greatly  in  excess  thereof.^''  The  form  of  the  contract  is  there- 
fore immaterial.  If  the  debt  is  the  married  woman's  she  is 
liable  even  if  she  appears  on  the  contract  as  a  surety.^^  If  the 
contract  is  made  directly  with  the  married  woman  and  she 
acquires  a  thing  of  value  thereby  she  cannot  evade  liability  on 
the  ground  that  she  was  really  acquiring  such  property  in 
order  that  her  husband  might  have  the  use  thereof,  even  if 
such  purpose  was  known  to  the  adversary  party.^'  If  a  loan 
is  actually  made  to  the  wife  she  is  liable  even  though  she  intends 
to  and  does  apply  the  money  to  her  husband's  debts,  or  allows 
him  to  use  it/^  So  she  is  liable  on  a  note  to  obtain  a  loan 
made  to  her,  though  with  the  knowledge  of  the  lender  she  means 
to  use  the  loan  in  paying  a  debt  of  her  husband's.^*  So  a  sale  of 
her  separate  estate  is  valid,  though  the  purchaser  knows  that  she 
means  to  use  the  proceeds  to  pay  her  husband's  debt,  he  not 
being  a  creditor  of  the  husband.^^  A  married  woman  is  liable 
on  a  contract  of  guaranty  made  as  part  of  a  contract  of  sale  of 
a  note  owned  by  her,  irrespective  of  the  disposition  of  the  pro- 
ceeds.^^  But  a  device  to  evade  the  statute  meets  with  no  sup- 
port from  the  courts.  Thus  a  wife  who  gives  her  note  for 
money  borrowed  to  pay  her  husband's  debt  is  not  liable  where 
part  of  the  agreement  of  the  contract  of  lending  was  such  use  ;^'^ 

29  Lanier  v.   OUiff,    117   Ga.   397;  92  Ga.  319;  18  S.  W.  65;  McCoy  v. 

43  S.  E.  711.  Barns,  136  Ind.  378;  36  N.  E.  134; 

3oVliet  V.  Eastburn,  64  N.  J.  L.  State  ex  rel.  Morris  v,  Frazier,  134 

627;  sub  nomine  Eastburn  v.  Vliet,  Ind.  648;   34  N.  E.  636;  Zona,  etc., 

46    Atl.    735,    1061.     She   was    held  Bank  v.  Boynton,  69  K  H.  77;   39 

liable  on   a  note  of  $2,080  because  Atl.  522;   Todd  v.  Bailey,  58  N.  J. 

she  received  a  note  of  $80.    So  Wool-  L.  10;   32  Atl.  696. 

verton  v.  Van   Syckel,   57  N.  J.   L.  34  Chastain  v.  Peak,  111  Ga.  889; 

393;   31  Atl.  603.  36   S.   E.   967;    First,  etc.,   Bank  v. 

siMaddox  v.  Wilson,  91  Ga.  39;  Hunton,  69  N.  H.  509;  45  Atl.  351. 

16  S.  E.  213;  Arthur  v.  Caverly,  98  35  Xelms   v.  Keller,   103  Ga.  745; 

Mich,  82;   56  N.  W.  1102.  30  S.  E.  572. 

32  McDonald  v.  Bluthenthal,  117  36  Kitchen  v.  Chapin,  64  Neb. 
Ga.  120;  43  S.  E.  422;  Kriz  v.  144;  97  Am.  St.  Rep.  637;  57  L.  R. 
Peege,  119  Wis.  105;  95  N.  W.  108.  A.  914;  89  N.  W.  632. 

33  Hamil  v.  Mortgage  Co.,  127  Ala.  37  First,  etc.,  Bank  v.  Hunton,  6!> 
90;  28  So.  558;  McCrory  v.  Grandy,  N.  H.  509;   45  Atl.  351. 


CONTRACTS    OF    MAKRIED    WOMEN.  1451 

nor  is  she  liable  on  a  guaranty  of  a  note  assigned  to  her  by  her 
husband  and  re-delivered  by  her  to  him,  where  the  lender  knows 
that  the  husband  is  to  use  the  money,  in  part,  to  pay  a  loan 
due  the  same  lender.^^  So  one  lending  money  to  a  husband  on 
his  wife's  note,  knowing  that  the  husband  is  going  to  use  the 
money  to  pay  his  debt,  cannot  recover/''  On  the  same  prin- 
ciple business  by  a  husband  and  wife  jointly,  as  a  means  of 
making  her  liable  as  surety  for  his  debts  is  not  her  separate 
business  under  the  statute  authorizing  her  to  contract  for  her 
separate  business/'^  So  if  the  money  is  paid  to  the  husband 
and  there  is  nothing  to  show  what  disposition  was  made  of  it, 
the  wife  is  not  liable,*^  while  if  the  husband  takes  it  as  her  agent 
she  is  liable.*^  The  Avife's  liability  as  surety  is  not  increased 
by  her  signing  as  an  indorser.*^  It  has  been  held  that  where 
the  loan  is  made  to  the  husband,  the  wife  is  not  liable  as  surety, 
even  if  he  applies  the  money  to  the  use  of  his  wife's  separate 
estate,^*  or  to  necessaries  for  the  family/^  Where  on  the  face 
of  the  instrument  the  married  woman  does  not  appear  as  surety, 
some  authorities  hold  that  she  cannot  set  up  her  suretyship 
against  a  hona  fide  holder  for  value  ;*"  others  hold  that  she  can/^ 
It  seems  to  be  held  that  she  estops  herself  from  denying  the 
validity  of  her  note  by  representing  that  the  proceeds  thereof 
are  for  her  separate  estate,'*^  as  where  the  check  given  for  the 
note  is  payable  to  her,*^  or  where  she  acquiesces  in  her  husband's 

38  First,    etc.,    Bank   v.   Hanscom,  Ala.  238;   21   So.  949;   Wiltbank  v. 

104  Mich.  67;  62  N.  W.  167.  Tobler,  181  Pa.  St.  103;  37  Atl.  188. 

39Fisk   V.   Mills,    104  Mich.   433;  45  Elston  v.  Corner,  108  Ala.  76; 

62  N.  W.  559.  19   So.  324. 

40  Emerson,  etc.,  Co.  V.  Knapp,  90  46  Scott   v.    Taul,    115    Ala.    529; 
Wis.  34;  62  N.  W.  945.  22  So.  447;  Venable  v.  Lippold,  102 

41  Merchants',  etc.,  Association  v.  Ga.  208;    29   S.  E.    181    (where  she 
Jarvis,  92  Ky.  566;   18  S.  W.  454;  was  a  joint  maker). 

Magill  V.   Trust  Co.,   81   Ky.    129;  47Leschen   v.   Guy,    149   Ind.   17; 

Hirshman  v.  Brashears,  79  Ky.  258.  48  N.  E.  344;  Voreis  v.  Nussbaum, 

42  Hounshell  V.  Ins.  Co.,  81  Ky.  304.  131   Ind.   267;    16  L.  R.  A.  45;    31 

43  Continental,  etc..  Bank  v.  Clark,  N.  E.  70. 

117  Ala.  292;  22  So.  988;  National  48  McVey   v.    Cantrell,    70    N.    Y. 

etc.,    Bank   v.    Whicher,    173    Mass.  295;   26  Am.  Rep.  605;   Bratton  v. 

517;  73  Am.  St.  Rep.  317;  53  N.  E.  Lowry,  39  S.  C.  383;  17  S.  E.  832. 

1004.  49  Hackettstown,     etc..     Bank     v. 

44 Richardson     v.     Stephens,     114  Ming,  52  N.  J.  Eq.  156;  27  Atl.  920. 


1452  PAGE    ON    CONTRjiCTS. 

statement  that  the  money  is  to  be  used  in  paying  off  a  mortgage 
on  the  wife's  property.^"  A  note  by  a  husband  and  wife  who 
are  partners  is  valid  as  to  her/^  or  a  note  given  to  raise  money 
for  a  corporation  in  which  she  is  a  stockholder,^^  or  medical 
services  for  her/^  or  to  cultivate  a  farm  owned  by  her,^*  A 
clause  in  a  mortgage  to  the  effect  that  the  mortgagors  will  pay 
the  note  with  interest  does  not  bind  a  married  woman  who  signs 
as  mortgagor  only.^^ 

§927.     Mortgage  or  conveyance  of  wife's  property  to  secure  debt 
of  husband. 

A  married  woman  has  power  to  mortgage  her  propery  to 
peeure  her  husband's  debt  if  she  is  authorized  by  statute  to 
contract  as  a  feme  sole;  or  if  she  has  power  by  statute  or  in 
equity  to  deal  with  her  separate  estate.^  Even  under  statutes 
which  do  not  allow  a  married  woman  to  be  surety  or  guarantor 
for  her  husband,  it  is  held  that  such  statutes  refer  to  personal 
liability,  and  that  her  power  to  mortgage  or  pledge  her  property 
for  her  husband's  debt  is  not  thereby  limited."     Such  statute 

soVosburg   V.    Brown,    119    Mich.  Wilcox  v.  Todd.  64  Mo.  390;  Schnei- 

697;   78  N.  W.  886.  der  v.  Staihr,  20  Mo.  269;    Wilson 

siCompton    v.    Smith,     120    Ara.  v.   Xew,   1   Neb.   Un.  42;    95  N.    VV. 

233 ;  25  So.  300.  502 ;   Watts  v.  Gantt,  42  Neb.  869 ; 

52  Williams  v.  Bank  (Ky.),  49  S.  61  N.  \\.  104;  Holmes  v.  Hull,  50 
W.  183.  Contra,  Allen  v.  Beebe,  63  Neb.  656;  70  N.  W.  241;  Linton  v. 
N.  J.  L.  377;  11  Am.  &  Eng.  Corp.  Cooper,  53  Neb.  400;  73  N.  W.  731; 
Cas.  N.  S.  20;  43  Atl.  681.  Meares  v.  Butler,  123  N.  C.  206;  31 

53  Harper  v.  O'Neil,  194  Pa.  St.  S.  E.  477;  Knoll  v.  Kiessling,  23 
141 ;  44  Atl.  1065.  Or.    8;    35    Pac.    248;    Campbell    v. 

54  Richardson  v.  Stephens,,  122  Snyder,  27  Ore.  249;  41  Pac.  659; 
Ala.  301 ;   25  So.  39.  Citizens',  etc.,  Association  v.  Heiser, 

55  Exchange,  etc.,  Bank  v.  Wolver-  150  Pa.  St.  514;  24  Atl.  733. 

ton,  11  Wash.  108;   39  Pac.  248.  2  Meares  v.  Butler,  123  N.  C.  206; 

1  Thompson  v.  Kyle,  39  Fla.  582;  31    S.    C.    477;    Gore   v,    Townsend, 

63    Am.    St.    Rep.    193;    23    So.    12;  105  N.  C.  228;   8  L.  R.  A.  443;   11 

Marx  V.   Bellel,    114  Mich.   631;    72  S.  E.  160;  Siebert  v.  Bank.  186  Pa. 

N.  W.  620;   Ferguson  v.  Soden,  111  St.  233;  40  Atl.  472;  Kuhn  v.  Ogil- 

Mo.  208;   33  Am.  St.  Rep.  512;    19  vie,    178   Pa.   St.   303;    35   Atl.   957. 

S.   W.   727 ;    Rines  v.  Mansfield,   96  So     with     suretyship     in     general. 

Mo.   394;    9   S.   W.   798;    Hagerman  Meads  v.  Hutchinson,  111  Mo.  620; 

V.  Sutton,  91  Mo.  519;  4  S.  W.  73;  19  S.  W.  1111. 


CONTKACTS    OF    MARRIED    WOMEX.  1453 

does  not  prevent  her  from  assigning  a  life  insurance  policy  of 
which  she  is  the  beneficial  owner  as  security  for  the  debt  of 
her  husband.^  Under  the  Kentucky  statute  a  married  woman 
can  secure  her  husband's  debt  only  by  setting  aside  some  part  of 
her  property  by  deed,  mortgage  and  the  like/  A  pledge  of  an 
insurance  policy  to  secure  the  joint  note  of  husband  and  wife/ 
or  a  written  assignment  of  a  life  insurance  policy,*  complies 
with  this  statute;  but  a  note  given  by  her  to  take  up  her  hus- 
band's note  is  invalid/ 

Under  statutes  specifically  forbidding  a  married  woman  to 
mortgage  her  property  for  her  husband's  debts;  and  even  in 
some  cases  under  statutes  which  forbid  her  to  act  as  surety,  she 
cannot  give  a  valid  mortgage  for  his  debt/  So  an  assignment 
of  a  life  insurance  policy  as  security  for  her  husband  is  void/ 
So  a  pledge  of  a  note  owned  by  a  married  woman  to  secure  a 
debt  which  is  due  in  part  from  herself  and  in  part  from  her 
husband  is  valid  as  to  her  debt  but  not  as  to  her  husband's/" 
So  a  mortgage  on  land  owned  by  husband  and  wife  in  com- 
mon,^^  or  by  the  entirety,^'  is  invalid  at  least  as  to  the  wife's 
interest.  The  mortgage  is  not  valid  even  if  the  wife  gives  it 
by  way  of  compromise,  believing  that  her  husband's  debt  is 
enforceable  out  of  her  estate/^     A  mortgage  given  to  a  surety 

sDusenberry  v,  Ins.  Co.,  188  Pa.  19    So.   324;    MeXeil  v.  Davis,    105 

St.  454;  41  Atl.  736.  Ala.    657;    17    So.    101;    First,   etc.. 

4  New,  etc.,  Bank  v.  Blytlie  (Ky.),  Bank  v.  Bayless,  96  Ga.  684;   23  S. 

53   S.  W.  409.  E.  851;  Merchants,  etc.,  Association 

sWirgman  v.  Miller,  98  Ky.  620;  v.   Scanlan,    144   Ind.   11;    42   X.   E. 

33  S.  W.  937.  1008;    Carrigan  v.  Drake,   36   S.   C, 

6  New    York,    etc.,    Co.    v.    Miller  354;    15  S.  E.  339. 
(Ky.),  56   S.  W.  975.  9  Union,  etc.,   Ins.  Co.  v.   Woods. 

T  Russell  V.  Rice   (Ky.),  44  S.  W.  11    Ind.    App.    335;    37    N.    E.    180, 

110;    Crumbaugh   v.   Postell    (Ky.),  353;  39  N.  E.  205. 
49   S.   W.    334;    Bank   v.   Stitt,    107  lo  Johnston   v.   Gulledge,    115   Ga. 

Ky.  49;   52  S.  W.  950;   Milburn  v.  981;  42  S.  E.  354. 
Jackson    (Ky.),  52  S.  W.  949.  n  Osborne    v.    Cooper,     113    Ala. 

8  American,  etc.,  Co.  v.  Owens   (S.  405;    59  Am.   St.   Rep.   117;    21    So. 

C),  72  Fed.  219;   18  C.  C.  A.  513;  320. 

American,  etc.,  Co.  v.  Owens,  64  Fed.  12  Wilson  v.  Logue,  131  Ind.  191; 

249;    Osborne   v.    Cooper,    113    Ala.  31  Am.  St.  Rep.  426;  30  N.  E.  1079. 
405;    59   Am.   St.   Rep.   117;   21   So.  i3  First,  etc..  Bank  v.  Bayless,  96 

320;   Elston  v.  Comer,  108  Ala.  76;  Ga.   684;   23   S.   E.   851. 


1454  PAGE    ON    CONTRACTS. 

or  co-suretj  of  her  husband's  to  indemnify  him,  has  been  held 
invalid/*  Under  this  statute  such  a  mortgage  is  void  at  law 
and  equity,  even  as  to  a  bona  fide  purchaser.  No  decree  in 
equity  is  needed  to  interpose  such  defense  in  an  action  of  eject- 
ment at  law,^^ 

Evasions  of  this  statute  are  common,  but  are  repressed  by  the 
courts  wherever  shown  by  the  evidence.  A  mortgage  was  held 
invalid  where  the  creditor  suggested  that  the  married  woman 
deed  the  property  to  her  son,  and  that  the  son  then  give  a 
mortgage  for  his  debt  f^  and  so  where  a  husband  and  wife, 
tenants  by  the  entirety,  joined  in  conveying  the  realty  to  a  third 
person,  who  reconveyed  to  the  husband ;  the  latter  then  mort- 
gaged the  land  to  secure  his  individual  debt,  this  way  of  evad- 
ing the  statute  being  taken  with  the  knowledge  of  the  agent  of 
the  mortgagee.^^  A  different  rule  applies  where  the  husband 
held  the  legal  title  as  trustee  for  his  wife  and  with  her  consent 
deeded  the  property  to  their  son  by  a  deed  reciting  a  money 
consideration,  in  order  to  enable  the  son  to  raise  money  for  his 
father  by  mortgage.^^  If  a  married  woman  borrows  money 
secured  by  mortgage  on  her  property  to  discharge  a  prior  mort- 

14  McNeil  V.  Davis,  105  Ala.  657;  feet  see  Taylor  v.  Allen,  112  Ga. 
17  So.  101.     Contra:  where  a  trust      330;   37   S.   E.  408. 

deed  given  to  indemnify  several  mak-  le  National    Bank   v.    Carlton,    96 

ers  of  a  note  against  liability  there-  Ga.  469;  23  S.  E.  388. 

on  was  held  valid  though  the  prin-  i7  Abicht  v.  Searls,  154  Ind.  594; 

cipal    debtor   was   her   husband   and  57  N.  E.  246 ;  Bennett  v.  Mattingly, 

the   others   his   sureties.     McCollum  110  Ind.  197;   10  N.  E.  299;   11  N. 

v.  Boughton,  132  Mo.  601;  35  L.  R.  E.  792;  Crooks  v.  Kennett,  111  Ind. 

A.  480;    30  S.   W.    1028;   33   S.  W.  347;    12  N.  E.  715;   Machine  Co.  v. 

476;   34  S.  W.  480.  Scovell,  III  Ind.  551;   13  N.  E.  58; 

15  Richardson  v.  Stephens,  122  Long  v.  Crosson,  119  Ind.  3;  4  L.  R. 
Ala.  301;  25  So.  39;  distinguishing  A.  783;  21  N.  E.  450;  Wilson  v. 
Williams,  etc.,  Co.  v.  Bass,  57  Ala.  Logue,  131  Ind.  191;  31  Am.  St. 
487,  as  under  a  statute  by  which  Rep.  426;  30  N.  E.  1079;  Sohn 
appropriation  of  property  by  a  wife  v.  Gantner,  134  Ind.  31;  33  N.  E. 
for  her  husband's  debt  would  be  de-  787;  Klein  v.  Gantner,  135  Ind. 
clared  void  on  her  application,  and  699;  35  N.  E.  2;  Gezesk  v.  Hibberd, 
which  required  a  precedent  decree  149  Ind.  354;  48  N.  E.  361;  Govern- 
so  declaring  it  void;  and  qualifying  ment,  etc.,  Institution  v.  Denny,  154 
Richardson    v.    Stephens,     114    Ala.  Ind.  261;   55  N.  E.  757. 

238;   21   So.   949.     To  the  same  ef-  is  Smyth  v.  Fitzsimmons,  97  Ala. 

451;    12   So.  48. 


CONTKACTS  OF   MARKIED  WOMEN.  1455 

gage  given  by  her  to  secure  her  husband's  debt,  such  subsequent 
loan  and  mortgage  are  both  valid. ^"^ 

Under  a  statute  forbidding  a  married  woman  to  act  as  surety, 
she  may,  if  within  the  general  powers  conferred  on  her  by 
equity  or  by  statute,  pay  the  debt  of  her  husband  or  of  a  third 
person, ^^  even  though  she  cannot  a6t  as  surety,^^  and  her  execu- 
tory contracts  of  suretyship  are  void,^"  such  as  a  contract  to 
convey  her  realty  to  pay  for  the  sale  to  her  husband  of  a  print- 
ing establishment.^^  Thus  she  may  convey  realty  to  pay  such 
debt."*  Thus  if  she  joins  her  husband  in  conveying  property 
owned  by  them  in  entirety,  in  trust  for  her  husband's  debts, 
this  amounts  to  a  payment  of  her  husband's  debts  after  a  sale 
of  such  property  under  such  trust  deed,  and  she  cannot  maintain 
ejectment  against  the  purchaser. ^^  In  Georgia  a  married  wom- 
an, while  she  cannot  be  surety  may  pay  the  debt  of  a  third 
person,^*'  but  cannot  pay  her  husband's  debt  even  by  way  of 
compromise  of  an  alleged  claim  against  her  therefor, ^^  or  if  she 
was  surety  for  such  debt.^^  If  the  wife  delivers  property  to  pay 
her  husband's  debt,^**  or  money,^'*  she  may  recover  it.  So  where 
a  married  woman  borrowed  money  and  gave  her  note  for  the 

19  Field  V.  Campbell,  —  Ind.  App.  Shewmaker,  27  Ind.  App.  631 ;  87 
— ;  67  N.  E.  1040;  rehearing  denied,      Am.  St.  Rep.  274;   60  N.  E.  462. 

,   68  N.  E.  911.  25  Rogers   v.   Shewmaker,   27   Ind. 

20  Hollingsworth  v.  Hill,  116  Ala.  App.  631;  87  Am.  St.  Rep.  274; 
184;  22  So.  460;  Hubbard  v.  Sayre,      60  N.  E.  462. 

105  Ala.  440;  17  So.  17;  Babbitt  v.  26  Villa  Rica,  etc.,  Co.  v.  Paratain, 

Morrison,  58  N.  H.  419;  Thompson  92  Ga.  370;   17  S.  E.  340;  Finch  v. 

V.   Ela,   58   N.  H.  490;    Shipman  v.  Barclay,  87  Ga.  393;   13  S.  E.  566; 

Lord,    60    N.    J.    Eq.    484;    46    Atl.  Freeman   v.    Coleman,    86    Ga.   590; 

1101;   affirming   58   N.   J.   Eq.   380;  12   S.   E.   1064. 

44   Atl.   215;    Meiley   v.   Butler,   26  27  Mickleberry   v.   O'Neal,   98   Ga. 

O.   S.   535.  42;   25   S.  E.   933. 

21  Hubbard  v.  Sayre,  105  Ala.  28  Riviere  v.  Ray,  100  Ga.  626 ;  28 
440;    17   So.   17.  S.  E.  391. 

22  Warwick  v.  Lawrence,  43  N.  J.  29  Grant  v.  Miller,  107  Ga.  804; 
Eq.  179;  3  Am.  St.  Rep.  299;  10  33  S.  E.  671  (where  the  husband  de- 
Atl.  376.  livered  the  property  with  the  wife's 

23  Thomas    v.    Weaver,    52    N.    J.  consent). 

Eq.  580;  29  Atl.  353.  so  Maddox  v.  Oxford,  70  Ga.  179; 

24  Pratt,  etc.,  Co.  v.  McClain,  135      Chappell  v.  Boyd,  61  Ga.  662. 
Ala.    452;    33    So.    185;    Rogers    v. 


1456  PAGE    ON    CONTRACTS. 

amount  of  the  loan  plus  a  debt  of  her  husband's,  and  paid  part 
of  her  note,  she  could  recover  the  excess  so  paid  over  the 
amount  of  the  loan  to  her.^^  A  statute  forbidding  a  conveyance 
for  the  debt  of  the  husband  is  held  to  include  a  mortgage.^^ 

A  married  woman  may  buy  up  her  husband's  debts  and  give 
a  mortgage  on  her  lands  to  secure  the  purchase  price  thereof.^' 

§928.     Contracts  between  husband  and  wife. 

At  Common  Law  a  valid  contract  between  husband  and  wife 
was  impossible ;  since  the  wife  had  no  power  to  contract  gen- 
erally, and  further  the  Common  Law  theory  of  the  legal  unity 
of  husband  and  wife  made  a  promise  between  husband  and 
wife  one  which  in  law  had  but  one  party.^  It  was  therefore 
unenforceable  by  either  even  after  divorce,"  or  after  the  death  of 
the  other.^  Thus  a  contract  for  the  division  of  property  be- 
tween husband  and  wife,  each  agreeing  to  make  no  claim  to  the 
estate  of  the  other,  does  not  bar  the  right  of  either.*  Under 
this  rule  a  note  by  a  wife  to  a  partnership  of  which  her  hus- 
band is  a  member  is  invalid.^  This  rule  applied  at  Common 
Law  even  to  executed  contracts,*^  including  direct  conveyances 

31  Lewis  V.  Howell,  98  Ga.  428;  Dee.  95;  Johnston  v.  Johnston,  31 
25  S.  E.  504.  Pa.  St.  450;  Putnam  v.  Bicknell,  18 

32  Parsons  v.  Rolfe,  66  N.  H.  620;  Wis.  333.  The  court  calls  it  "the 
27  Atl.   172.  rule  of  the  Common  Law  which  has 

33  Ellis  V.  Cribb,  55  S.  C.  328;  been  declared  and  recognized  by  the 
33  S.  E.  484.  Igeislature   and   by  this   court  that 

1  Wallingsford    v.    Allen,    10    Pet.  contracts  between  husband  and  wife 

(U.   S.)    583;    Erringdale  v.   Riggs,  are  void."     National   Granite   Bank 

148  111.  403;  36  N.  E.  93;   Scarbor-  v.  Tyndale,   176  Mass.  547,  550;   51 

ough  V.  Watkins,  9  B.  Mon.    (Ky.)  L.  R.  A.  447;  57  N.  E.  1022. 

540;    50    Am.    Dec.    528;    National  2  pittman  v.   Pittman,  4  Or.  298. 

Granite  Bank  v.  Whicher,  173  Mass.  3  Clark    v.    Royal    Arcanum,    176 

517;  53  N.  E.  1004;  Clark  v.  Patter-  Mass.  468;   57  N.  E.  787. 

son,  158  Mass.  388;   33  N.  E.  589;  4  Jewell  v.  McQuesten,   68  N.   H. 

Roby    V.    Phelan,     118    Mass.    541;  233;    34  Atl.   742. 

Loomis  V.  Brush,  36  Mich.  40;  Tur-  s  Clark   v,    Patterson,    158    Mass. 

ner  v.  Davenport,  61  N.  J.  Eq.  18;  388;  35  Am.  St.  Rep.  498;  33  N.  E. 

49  Atl.  463 ;   Woodruff  v.  Apgar,  42  589. 

N.  J.  L.  198;  Homan  v.  Headley.  58  e  Homan  v.  Headley,  58  N.  J.  L. 

N.  J.  L.  485;    34  Atl.  941;   Fowler  485;   34  Atl.  941;   Woodruff  v.  Ap- 

V.  Trebein,    16  O.   S.   493;    91   Am.  gar,  42  N.  J.  L.  198. 


CONTRACTS    OF    MAKKIED    WOMEN. 


1457 


of  land  by  one  to  the  other.'  These  rules  apply  only  to  a 
contract  with  a  lawful  wife,  a  contract  with  a  wife  by  a  biga- 
mous marriage  not  being  invalid  for  that  reason.^ 

Such  contracts  were  invalid  in  equity  while  executory,^  but 
if  executed  and  fair  and  reasonable,  equity  would  enforce 
them."  But  as  such  conveyance  does  not  pass  the  legal  title, 
it  is  not  available  in  an  action  in  ejectment.^^  The  effect  of 
modern  statutes  upon  the  power  of  a  married  woman  to  make 
contracts  with  her  husband  is  a  question  on  which  there  is  a 
l?ck  of  harmony  arising  in  part  only  from  a  diversity  of  the 
statutes.  IsTo  question  can  arise  where  the  statute  specifically 
permits  a  husband  and  wife  to  make  contracts  with  each  other,^^ 
except  where  they  attempt  to  modify  the  rights  and  duties 
growing  out  of  the  marriage  relation  itself.  A  promise  by  a 
husband  to  pay  his  wife  for  performing  domestic  duties  is 
invalid  ;^^  and  so  seems  to  be  a  promise  to  pay  her  for  assisting 
him  in  his  business,^*  or  a  promise  by  him  that  the  property 
produced  by  their  joint  labor  in  farming  shall  be  the  property 
of  the  wife  in  consideration  of  her  working  for  him.^^'    As  addi- 


7  Newman  v.  Willetts,  48  111.  534 ; 
Sims  V.  Ricketts,  35  Ind.  181;  9  Am. 
Rep.  679;  Fowler  v.  Trebein,  16  O. 
S.  493;  91  Am.  Dec.  95;  Ball  v. 
Ball,  20  R.  I.  520;   40  Atl.  234. 

8  Vaughn  v.  Vaughn,  100  Tenn. 
282;  45  S.  W.  677. 

9  Erringdale  v.  Riggs,  148  111. 
403;  36  N.  E.  93. 

10  Jones  V.  Clifton,  101  U.  S.  225; 
Ogden  V.  Ogden,  60  Ark.  70 ;  46  Am, 
St.  Rep.  151;  28  S.  W.  796;  Corr's 
Appeal,  62  Conn.  403;  26  Atl.  478; 
McCormick  v.  Hammersley,  1  Ajjp. 
D.  C.  313;  Eckermeyer  v.  Hoffmeier, 
98  Ky.  724;  34  S.  W.  521;  Vought 
V.  Vought,  50  N.  J.  Eq.  177;  27  Atl. 
489;  Ball  v.  Ball,  20  R.  I.  520;  40 
Atl.   234. 

11  Wallace  v.  Pereles,  109  Wis. 
316;  83  Am.  St.  Rep.  898:  58  L.  K. 
A.  644;  85  N.  W.  371. 

i2Larkin  v.   Baty,   111   Ala.   303; 
93 


18  So.  666;  Osborne  v.  Cooper.  113 
Ala.  405;  59  Am.  St.  Rep.  117;  21 
So.  320;  Roth's  Estate,  6  Ohio  N. 
P.  498. 

13  Brittain  v.  Crowther,  54  Fed. 
295;  Lee  v.  Guano  Co.,  99  Ga.  572; 
59  Am.  St.  Rep.  243;  27  S.  E.  159; 
Michigan,  etc.,  Co.  v.  Chapin,  106 
Mich.  384;  58  Am.  St.  Rep.  490; 
64  N.  W,  334;  Blaechinska  v.  How- 
ard Mission,  130  N.  Y.  497;  15  L.  R. 
A.  215;  29  N.  E.  755;  Birkbeck  v. 
Ackroyd,  74  N.  Y.  356;  30  Am.  Rep. 
304. 

i*7«  re  Kaufmann,  104  Fed.  768; 
Brittain  v.  Crowther,  54  Fed.  295; 
Turner  v.  Davenport,  61  N.  J.  Eq. 
18;  47  Atl.  766;  Blaechinska  v. 
Howard  Mission,  130  N.  Y.  497;  15 
L.  R.  A.  215;  29  N.  E.  755. 

15  Dempster  Mill  Mfg.  Co.  v.  Bun- 
dy.  64  Kan.  444;  67  Pac.  816;  6fi 
L.  R.  A.   739. 


1458  PAGE    ON    CONTRACTS. 

tional  reasons  for  the  invalidity  of  sucli  contracts  have  been  sug- 
gested a  lack  of  consideration,^"  and  the  requirements  of  public 
policy."  But  a  contract  by  a  wife  to  furnish  board  for  prison- 
ers in  jail,  made  with  her  husband  who  had  a  right  to  sublet 
his  contract  with  the  county  to  furnish  such  board,  has  been 
held  to  be  so  far  outside  the  duties  incident  to  the  marriage  re- 
lation as  to  be  enforceable.^^  So  under  a  statute  expressly  for- 
bidding a  contract  between  husband  and  wife  Avith  reference  to 
realty,  it  is  clear  that  such  a  contract  is  invalid,  even  if  they 
have  separated. ^^  So  power  to  husband  and  wife  to  contract 
with  each  other  does  not  include  contracts  for  future  separa- 
tion.-°  Power  to  a  married  woman  to  convey  directly  to  her 
husband  does  not  authorize  mutual  releases  of  dower  rights."^ 
By  statute  in  some  jurisdictions  husband  and  wife  cannot  con- 
tract with  each  other  with  reference  to  their  dower  rights.^^ 
Statutes  providing  for  separate  property  subject  to  the  absolute 
disposition  of  the  married  woman  are  held  to  permit  her  to 
contract  with  her  husband.^^  In  some  jurisdictions  contracts 
between  husband  and  wife  are  enforceable  in  equity  and  not 
at  law.^*  Statutes  conferring  contractual  power  either  gen- 
enerally  or  with  reference  to  the  separate  estate  have  been  held 
to  make  contracts  between  husband  and  wife  valid.^^  Even 
though  the  wife  cannot  sue  her  husband  in  his  lifetime,  she  can 

16  Le?  V.  Guano  Co.,  99  Ga.  572;  22  Potter  v.   Potter,  43   Ore.   149; 
59  Am.  St.  Rep.  243;  27  S.  E.  159.  72  Pae.   702. 

17  Michigan,    etc.,    Co.   v.    Chapin,  23  Lulirs    v.    Hancock,    181    U.    S. 
106    Mich.    384;    58    Am.    St.    Rep.  567. 

490 ;  64  N.  W,  334.  See  §  426.  24  First  National  Bank  v.  Albert- 
is  Carse   V.    Reticker,    95    la.   25;  son   (X.  J.  Eq.),  47  Atl.  818;  Bish- 

58  Am.  St.  Rep.  421;  63  N.  W.  461.  op  v.  Bourgeois,  58  N.  J.  Eq.  417; 

(This    ease   was    also   explained   by  43  Atl.  655;  Rahway  Bank  v.  Brew- 

the  court  as  in  effect  a  gift  of  the  ster,  49  N.  J.  L.  231;   12  Atl.  769. 

profits. )  25  Ward  v.  Shallet,  2  Ves.  Sr.  16 ; 

19  Phillips    V.    Blaker,    68    Minn.  Jones   v.    Clifton,    101    U.    S.    225; 

152;    70  N.   W.    1082.  Jones  v.  Chenault,  124  Ala.  610;  82 

aoFoote   v.    Nickerson,    70   X.   H.  Am.  St.  Rep.  211 ;  27  So.  515;  Luhrs 

496;  54  L.  R.  A.  554;  48  Atl.  1088.  v.   Hancock,   —   Ariz.   — ;    57   Pac. 

See   §   428.  605 ;  Magruder  v.  Belt,  7  App.  D.  C. 

2iPinkham    v.    Pinkham,    95    Me.  303;  Fritz  v.  Fernandez,  — Fla. — ; 

71;    85   Am.   St.   Rep.   392;   49  Atl.  34  So.  315;   Herbert  v.  Mueller,  83 

48.  111.  App.  391;   North  v.  North,   166 


COXTKACTS    OF    MARRIED    WOMEN. 


1459 


enforce  payment  out  of  his  estate  after  his  death.^*'  Thus  a 
contract  by  a  wife  to  repay  to  her  husband  money  advanced  to 
improve  her  property,  even  if  it  is  used  as  the  family  home- 
stead;" or  by  a  husband  to  repay  to  his  wife  a  loan  made  by 
her,^*  or  interest  thereon,^''  is  valid,  as  is  a  contract  to  dismiss 
a  divorce  suit,^°  or  a  conveyance  of  reaF^  or  personal  property,^' 
or  a  contract  by  a  wife  to  release  her  dower  in  her  husband's 
realty  in  consideration  of  his  promise  to  pay  her  a  certain  part 
of  the  purchase  money  received  by  him.^^  So  is  a  contract  by  a 
married  woman  to  repay  her  husband  out  of  her  share  of  her 
father's  estate  for  advances  to  her  by  him.^*     So  a  husband 


111.  179;  46  N.  E.  729;  affirming  63 
111.  App.  129;  Luttrell  v.  Boggs,  168 
111.  361;  48  N.  E.  171;  Milburn  v. 
Milburn,  143  Ind.  187;  42  X.  E. 
611;  Walker  v.  Walker  (Ky.),  41  S. 
W.  315;  McCann  v.  Letcher,  8  B. 
Mon.  (Ky.)  320;  Moaj'on  v.  Moa- 
yon,  —  Ky.  — ;  60  L.  E.  A.  415;  72 
S.  W.  33;  Peaks  v.  Hutchinson,  96 
Me.  530;  59  L.  R.  A.  279;  53  Atl. 
38;  Matley  v.  Sawyer,  38  Me.  68; 
Trader  v.  Lowe,  45  Md.  1 ;  Sturm- 
felsz  V.  Frickey,  43  Md.  569;  Need- 
ham  V.  Sanger,  17  Pick.  (Mass.) 
500;  19  Am,  Dec.  292;  Bullard  v. 
Briggs,  7  Pick.  (Mass.)  533;  Just  v. 
Bank,  —  Mich.  — ;  94  N.  W.  200; 
Jenne  V.  Marble,  37  Mich.  319;  Far- 
well  V.  Johnston,  34  Mich.  342; 
Gregory  v.  Doods,  60  iliss.  549  ;  Rice 
V.  Sally,  176  Mo.  107;  75  S.  W.  398; 
Crawford  v.  Crawford,  24  Xev.  410; 
56  Pac.  94;  distinguishing  Dickerson 
V.  Dickerson,  24  Neb.  530;  8  Am. 
St.  Rep.  213;  Nims  v.  Bigelow,  44 
N.  H.  343;  Thompson  v.  Taylor,  66 
N.  J.  L.  253;  88  Am.  St.  Rep.  485; 
54  L.  R.  A.  585;  49  Atl.  544  (de- 
cided under  >sew  York  law)  ;  In  re 
Collister,  153  N.  Y.  294;  60  Am.  St. 
Rep.  620;  47  N.  E.  268;  Cornman's 
Estate,  197  Pa.  St.  125;  46  Atl. 
940;  Kolbo  V.  Harrington,  15  S.  D. 


263;  88  N.  W.  572;  Ficklin  v. 
Rixey,  89  Va.  832;  37  Am.  St.  Rep. 
891;  17  S.  E.  325;  Atkins  v.  At- 
kins, 69  Vt.  270;   37  Atl.  746. 

26  7,t  re  Callister,  153  N.  Y.  294; 
60  Am.  St.  Rep.  620;  47  N.  E.  268; 
Atkins  V.  Atkins,  69  Vt.  270;  37 
Atl.   746. 

27  North   V.   North,    166   111.    179; 

46  N.  E.  729 ;  affirming  63  111.  App. 
129. 

28  Fritz  V.  Fernandez,  —  Fla.  — ; 
34    So.    315;     Herbert    v.    Mueller, 

.83  111.  App.  391;  In  re  Callister,  153 
N.   Y.   294;    60   Am.   St.   Rep.   620; 

47  N.  E.  268;  Kolbe  v.  Harrington, 
15  S.  D.  263;  88  N.  W.  572. 

29  Cornman's  Estate,  197  Pa,  St. 
125;   46  Atl.  940. 

30  Crawford  v.  Crawford,  24  Nev. 
410;  56  Pac.  94;  distinguishing 
Dickerson  v.  Dickerson,  24  Neb. 
530;   8  Am.  St.  Rep.  213. 

31  Duffy  V.  White,  115  Mich.  264; 
73   N.  W\  363. 

32  Sherman  v.  Davenport,  106  la. 
741;    75   N.  W.   187. 

33Dailey  v.  Dailey,  26  Ind.  App. 
14;   58  N.  E.  1065. 

34  Hendricks  v.  Isaacs,  117  N.  Y. 
411;  15  Am.  St.  Rep.  524;  6  L.  R, 
A.  559;  22  N.  E,  1029. 


1400 


PAGE    ON    CONTRACTS. 


signing  a  note  as  surety  for  his  wife  may  recover  from  her 
estate.^^  So  under  a  contract  whereby  a  wife  authorizes  her 
Inisband  to  buy  property  for  her  as  her  agent,  the  title  to  such 
property  vests  in  the  wife,  even  as  against  her  husband's  cred- 
itors.^^ So  a  contract  whereby  it  is  agreed  that  a  house  built 
by  a  husband  on  his  wife's  land  shall  remain  his  property  is 
valid.^^  While  under  statutes  allowing  a  married  woman  to 
contract  with  reference  to  her  separate  estate  as  if  unmarried, 
it  is  often  held  that  she  may  contract  with  her  husband,^^  it 
has  been  held  that  such  statutes  do  not  authorize  contracts  be- 
tween husband  and  wife.^^  So  while  a  statute  conferring  gen- 
eral power  to  contract  has  been  held  to  make  valid  a  contract 
between  husband  and  wife,'**'  the  opposite  view  has  been  taken, 
on  the  theory  that  though  the  wife's  disabilities  are  removed, 
those  of  her  husband  are  not.*^     So  a  husband  and  wife  can- 


35  Feather  v.  Feather,  116  Mich. 
384;    74  N.  W.  524. 

36  Jones  V.  Chenault,  124  Ala. 
610;  82  Am.  St.  Rep.  211;  27  So. 
515;  Paull  v.  Parks  (Ky.),  45  S. 
W.  873;  Young  v.  Hurst  (Tenn, 
Ch.  App.),  48  S.  W.  355. 

37  Peaks  V.  Hutchinson,  96  Me. 
530;  59  L,  R.  A.  279;  53  All.  38. 

38  Leach  v.  Rains,  149  Ind.  152; 
48  N.  E.  858 ;  Huffman  v.  Copeland, 
139  Ind.  221;  38  N.  E.  861;  Third 
National  Bank  v.  Guenther,  123  N. 
Y.  568;  20  Am.  St.  Rep.  780;  25 
N.  E.  986;  Suau  v.  Gaffe,  122  N.  Y. 
308;  9  L.  R.  A.  593;  25  N.  E.  488; 
Williams  v.  Harris,  4  S.  D.  22;  46 
Am.  St.  Rep.  753 ;  54  N.  W.  926. 

39  0'Daily  v.  Morris,  31  Ind.  Ill; 
Jenne  v.  Marble,  37  Mich.  319;  Hen- 
dricks V.  Isaacs,  117  N.  Y.  411;  15 
Am.  St.  Rep.  524;  6  L.  R.  A.  559; 
22  N.  E.   1029. 

40Grubbe  v.  Grubbe,  26  Or.  363; 
38  Pac.  182  (holding  that  the  stat- 
ute restricting  the  form  of  convey- 
ing realty  did  not  apply  to  con- 
tracts). 


41  Heacock  v.  Heacock,  108  la. 
540;  75  Am.  St.  Rep.  273;  79  N.  W. 
353  (a  note  given  by  husband  to 
wife  during  coverture)  ;  citing  and 
following  Hoker  v.  Boggs,  63  111. 
161;  Lord  v.  Parker,  3  All.  (Mass.) 
127;  Knowles  v.  Hull,  99  Mass.  562; 
Roby  V.  Phelon,  118  Mass.  541; 
Aultman  v.  Obermeyer,  6  Neb.  260; 
White  V.  Wagner,  25  N.  Y.  328; 
Real  Estate,  etc.,  Co.  v.  Roop,  132 
Pa.  St.  496;  7  L.  R.  A.  211;  19 
Atl.*278;  which  do  not  all  sustain 
the  proposition.  "  Both  husband 
and  wife  were  under  such  legal  dis- 
abilities at  Common  Law  as  that 
they  could  not  contract  with  each 
other.  To  remove  the  disability  of 
one  will  not  validate  the  contract 
for  one  of  the  contracting  parties 
has  no  assenting  mind;  and  it  would 
be  strange  doctrine  to  announce  that 
because  the  disability  was  removed 
from  one  of  the  contracting  parties, 
the  contract  is  good,  although  the 
other  is  without  a  concurring  mind." 
Heacock  v.  Heacock,  108  la. 
540,  544;   75  Am.  St.  Rep.  273;   79 


CONTKACTS    OF    MAERIED    WOMEN.  1461 

not  contract  as  to  the  distributive  share  of  the  husband  in  the 
wife's  estate/"  Contracts  between  husband  and  wife  had  pre- 
viously been  recognized  in  lowa/^  and  as  the  statute  allowed 
either  to  sue  the  other  for  conversion  of  property,  it  was  held 
that  a  note  given  by  the  husband  to  the  wife  for  property  of 
hers  which  he  had  converted  was  valid/* 

§929.     Partnership  between  husband  and  wife. 

There  is  a  lack  of  harmony  on  the  question  of  whether  hus- 
band and  wife  can  act  as  partners  with  each  other,  due  in  part 
to  differences  in  statutory  provisions  and  in  part  to  differences 
in  determining  the  legal  effect  of  similar  statutes.  A  married 
woman  may  be  a  partner  of  her  husband  in  business  under 
statutes  authorizing  her  to  contract  as  if  she  were  unmarried.^ 
A  statute  authorizing  her  to  contract  with  reference  to  her 
separate  estate  specifically  providing  that  she  may  contract  with 
her  husband  allows  her  to  form  a  partnership]  with  him."  Under 
a  statute  allowing  her  to  contract  with  others  than  her  husband 
as  if  she  were  unmarried,  and  forbidding  her  to  become  his 
surety  except  by  a  mortgage  it  is  held  that  she  can  incur  liability 
to  third  persons  as  his  partner.^  Under  statutes  authorizing  her 
to  contract  with  reference  to  her  separate  estate,  she  cannot  enter 
into  a  partnership  with  her  husband.*     From  the  cases  cited 

N.  W.  353.     See  the  dissenting  opin-  4*  Dunham    v.    Bentley,     103     la. 

ion  in  this  case.     To  the  same  effect  136;  72  N.  W.  437. 
see      National      Granite      Bank      v.  i  Burney  v.   Grocery  Co.,   98   Ga. 

Whicher,  173  Mass.  517;  73  Am.  St.  711;  58  Am.  St.  Rep.  342;  25  S.  E. 

Rep.  317;  53  N.  E.  1004   (also  on  a  915;   Hoaglin  v.  Henderson,  119  la. 

note).  720;  97  Am.  St.  Rep.  335;  61  L.  R. 

42  Poole  V.  Burnham  105  la.  620;  A.  756;  94  N.  W.  247;  Louisville, 
75  N.  W.  474.  (Under  a  statute  etc.,  Ry.  v.  Alexander  (Ky.),  27  S. 
providing  that  if  either  husband  or  W.  981;  Snell  v.  Stone,  23  Or.  327; 
wife  owned  property  the  other  had  31  Pac.  663. 

no   interest   therein   which   could  be  2  Reiser  v.  Banking  Co.,  105  Ala. 

contracted  for.)  514;  17  So.  40. 

43  Corse  V.  Reticker,  95  la.  25;  58  s  Lane  v.  Bishop,  65  Vt.  575;  27 
Am.  St.  Rep.  421;  63  N.  W.  461  (a  Atl.  499. 

contract  by  a  wife  to  board  prisoners  4  Gilkerson,   etc.,   Co.   v.   Salinger, 

for  her  husband,  who  had  the  care  of      56  Ark.  294;   35  Am.  St.  Rep.  105; 
them).  16  L.  R.  A.  526;  19  S.  W.  747;  Bar- 


1462 


PAGE    ON    CONTRACTS. 


it  ■will  be  seen  that  this  view  is  taken  bj  states  that  allow 
a  husband  and  wife  to  make  contracts  with  reference  to  her 
separate  estate,^  and  by  those  which  hold  that  a  married  woman 
may  bind  her  separate  estate  by  her  contracts  as  effectually  as 
her  husband  can  bind  his  f  as  well  as  by  states  which  restrict 
her  power  under  the  statute  to  contracts  intended  for  the  man- 
agement and  benefit  of  her  estate/  His  management  of  her 
farm  does  not  constitute  a  partnership,  however  f  nor  does  their 
leasing  a  hotel  together  and  buying  furniture.^  A  statute  giv- 
ing her  the  power  to  contract  as  a  feme  sole  and  providing  that 
she  should  have  the  same  powers  in  law  as  her  husband  does 
not  authorize  her  to  form  a  partnership  with  him.  She  is  not 
liable  to  third  persons  as  a  partner."  A  statute  making  her 
personally  liable  on  debts  incurred  in  her  own  name  does  not 
authorize  her  to  form  a  partnership  with  her  husband.^^  Under 
statutes  allowing  her  to  conduct  business  on  her  sole  and  sepa- 
rate account  she  cannot  form  a  partnership  with  her  husband. ^^ 


low  Bros.  Co.  V.  Parsons,  73  Conn. 
696;  49  Atl.  205;  Haas  v.  Shaw,  91 
Ind.  384;  40  Am.  Rep.  607;  Scarlett 
V.  Snodgrass,  92  Ind.  262;  Lord  v. 
Parker,  3  All.  (Mass.)  127;  Lord  v. 
Davison,  3  All.  (Mass.)  131;  Ed- 
wards V.  Stevens,  3  All.  (Mass.) 
315;  Palmer  v.  Lord,  5  All.  (Mass.) 
460;  Bowker  v.  Bradford,  140  Mass. 
521;  5  N.  E.  480;  Artman  x.  Fergu- 
son, 73  Mich.  146;  16  Am.  St.  Rep. 
572;  2  L.  R.  A.  343;  40  N.  W.  907; 
Speier  v.  Opfer,  73  Mich.  35;  16  Am. 
St.  Rep.  556 ;  2  L.  R.  A.  345 ;  40  N. 
W.  909;  Bassett  v.  Shepardson,  52 
Mich.  3;  17  N.  W.  217;  Payne  v. 
Thompson,  44  O.  S.  192;  5  X.  E. 
654;  Weisiger  v.  Wood,  36  S.  C. 
424 ;  15  S.  E.  597 ;  Gwynn  v.  Gwynn, 
27  S.  C.  525;  4  S.  E.  229;  Cox  v. 
Miller,  54  Tex.  16;  Seattle  Board  of 
Trade  v.  Hayden,  4  Wash.  263;  31 
Am.  St.  Rep.  919;  16  L.  R.  A.  530; 
30  Pac.  87;  32  Pac.  224:  Carey  v. 
Burruss,  20  W.  Va.  571 ;  43  Am. 
Rep.   790;    Fuller,   etc.,   Co.   v.   Mc- 


Henry,    83   Wis.    573;    18   L.   R.   A. 
512;  53  N.  W.  896. 

5  Haas  V.  Shaw,  91  Ind.  384;  46 
Am.  Rep.  607. 

6  Payne  v.  Thompson,  44  O.  S. 
192 ;  5  N.  E.  654. 

7  Fuller,  etc.,  Co.  v.  McHenry,  83 
Wis.  573;  18  L.  R.  A.  512;  53  N. 
W.  896. 

sKrouskop  v.  Shontz,  51  Wis. 
204;  37  Am.  Rep.  817;  8  N.  W.  241. 

9  Wineman  v.  Phillips,  93  Mich. 
223;  53  N.  W.  168. 

10  Seattle  Board  of  Trade  v.  Hay- 
den, 4  Wash.  263;  31  Am.  St.  Rep. 
919;  16  L.  R.  A.  530;  32  Pac.  224; 
30  Pac.  87. 

iiHaggett  V.  Hurley,  91  Me.  542; 
41  L.  R.  A.  362;  40  Atl.  561. 

12  Gilkerson,  etc.,  Co.  v.  Salenger, 
56  Ark.  294;  35  Am.  St.  Rep.  105; 
16  L.  R.  A.  526;  19  S.  W.  747;  Lord 
V.  Parker,  3  All.  (Mass.)  127. 
Contra,  Suau  v.  Caffe,  122  X.  Y. 
308;  9  L.  R.  A.  593;  25  N.  E.  488. 


CONTKACTS    OF    MAKKIED    WOMEN. 


1463 


As  partners  are  principals,  and  not  sureties  each  for  the  other, 
a  statute  forbidding  a  wife  to  act  as  surety  for  her  husband 
does  not  of  itself  prevent  them  from  acting  as  partners.^^ 

§930.     Agent  of  married  woman. 

Unless  restrained  bv  statute  a  married  woman  may  appoint 
an  agent,  or  an  attorney  in  fact,^  to  make  any  contract  or  con- 
veyance which  she  could  make  herself.  If  the  contract  is  one 
which  she  cannot  make  herself,  she  cannot  make  it  by  an  agent. ^ 
Where  a  married  woman  cannot  charge  her  general  estate  she 
cannot  appoint  an  agent  to  charge  it.^ 

§931.     Ratification. 

As  a  married  woman's  contract  is  void  and  not  voidable  it  is 
incapable  of  ratification  by  any  agreement  or  conduct  after  the 
woman  acquires  the  power  to  make  contracts,^  whether  such 
power  is  acquired  by  the  death  of  the  husband,"  or  by  her  ob- 


is Belser  V.  Banking  Co.,  105  Ala. 
514;   17  So.  40. 

1  Williams  v.  Paine,  169  U.  S. 
55;  Davie  v.  Davie  (Ark.),  18  S.  W. 
935 ;  Williams  v.  Paine,  7  App.  D.  C. 
116;  Security  Savings  Bank  v. 
Smith,  38  Or.  72;  62  Pac.  794; 
Farmers',  etc.,  Bank  v.  I.oftus.  133 
Pa.  St.  97;  7  L.  R.  A.  313;  19  Atl. 
347. 

-  Freeman's  Appeal,  68  Conn.  533 ; 
57  Am.  St.  Rep.  112;  37  L.  R.  A. 
452;  37  Atl.  420;  Weisbrod  v.  Ry., 
18  Wis.  35;  86  Am.  Dec.  743. 

3  Macfarland  v.  Heim,  127  Mo. 
327;  48  Am.  St.  Rep.  629;  29  S.  W. 
1030. 

1  Xew  England,  etc.,  Co.  v.  Powell, 
94  Ala.  423;  10  So.  324;  Heiney  v. 
Lontz,  147  Ind.  417;  46  N.  E.  665; 
Austin  v.  Davidson, '  128  Ind.  472; 
25  Am.  St.  Rep.  456;  12  L.  R.  A. 
120;  26  N.  E.  890;  Davis  v.  Schmidt 
(Ind.  App.),  31  N.  E.  84;  Ruppel  v. 


Kissel  (Ky.),  74  S.  W.  220;  Porter- 
field  v.  Butler,  47  Miss.  165;  12  Am. 
Rep.  329;  Musick  v.  Dodson,  76  Mo. 
624;  43  Am.  Rep.  780;  Weathers  v. 
Borders,  121  N.  C.  387;  28  S.  E. 
524;  Buchanan  v.  Hazzard,  95  Pa. 
St.  240;  Glidden  v.  Strupler,  52  Pa. 
St.  400;  Radican  v.  Radican,  22  R. 
I.  405;  48  Atl.  143;  Sherwin  v. 
Sanders,  59  Vt.  499;  59  Am.  Rep. 
750;  9  Atl.  239.  But  where  the  in- 
strument takes  effect  on  delivery,  a 
re-delivery  after  acquiring  capacity 
makes  the  instrument  valid.  Brown 
V.  Bennett.  75  Pa.  St.  420;  Jourdan 
V.  Jourdan,  9  S.  &  R.  (Pa.)  268;  11 
Am.  Dec.  724. 

2  Meyer  v.  Haworth,  8  Ad.  &  El. 
467;  35  E.  C.  L.  442;  Union,  etc.. 
Bank  v.  Hartwell,  84  Ala.  379;  4 
So.  ^56;  Austin  v.  Davis,  128  Ind. 
472;  25  Am.  St.  Rep.  456;  12  L.  R. 
A.  120;  26  N.  E.  890;  Long  v. 
Brown,   66   Ind.   160;    Porterfield  v. 


1464  PAGE    ON    CONTRACTS. 

taining  an  absolute  divorce  from  him/  or  by  a  cbange  in  tbe 
law  giving  her  jwwer  to  make  contracts/  or  by  the  rendition 
of  a  decree  of  court  under  local  statutes,  conferring  the  powers 
of  a  feme  sole.^  In  obiter,  however,  some  dissent  from  this 
view  may  be  found.^  Under  some  statutes,  moreover,  a  con- 
tract of  a  married  woman  may  be  voidable  only,  and  subject  to 
ratification/  Ratification  must  be  at  least  as  formal,  even  un- 
der these  statutes,  as  an  original  contract.^  It  must  also  be 
effected  by  conduct  unequivocally  intended  as  a  ratification. 
Thus  if  it  was  possible  to  ratify  business  debts  after  the  act  of 
1897  authorizing  a  married  woman  to  incur  such  debts,  the 
mere  recognition,  after  the  passage  of  the  act,  of  the  existence 
of  a  note  given  for  such  debts  before  the  passage  of  the  act, 
does  not  make  her  liable.^  While  perfectly  harmonious  with 
the  views  already  expressed,  it  must  be  noticed  that  if  the  con- 
tract could  cause  any  liability  in  equity,  such  liability  would 
support  a  promise  made  after  capacity  had  been  acquired  and 
this  contract  would  be  enforceable  at  law.^"  So  a  subsequent 
promise  after  acquiring  capacity  to  contract,  to  perform  a  con- 
tract made  before  such  capacity  is  acquired  is  enforceable  if 
based  on  a  new  consideration.     Thus  a  note  executed  bv  a 


Butler,  47  Miss.   165;    12  Am.  Rep.  avoid  them  she  must  plead  her  dis- 

329;    Condon  v.   Barr,   49  N.  J.  L.  ability."     Strauss  v.  Glass,  108  Ala. 

53;    6  Atl.   614;   Xesbitt  v.  Turner,  546,  551;  18  So.  526. 

155  Pa.  St.  429;  23  Atl.  750.  ?  Steiner  v.  Tramum,  98  Ala.  315; 

3  Putnam  v.  Tennyson.  50  Ind.  13  So.  365.  This  case  was  decided 
456;  Thompson  v.  Warren,  8  B.  under  a  statute  allowing  a  wife  to 
Mon.  £Ky. )  488;  Musick  v.  Dodson,  authorize  her  husband  to  sell  or  ex- 
76  Mo.  624;  43  Am.  Rep.  780;  Hay-  change  her  estate;  and  it  was  held 
ward  V.  Barker,  52  Vt.  429;  36  Am.  that  she  might  ratify  an  exchange 
Eep.  762.  made  by  him  so  as  to  vest  in  herself 

4  Thompson  v,  Hudgins,  116  Ala.  title  to  the  property  received  in  ex- 
93;   22  So.  632;  Xew  England,  etc.,  change. 

Co.  V.  Powell,  94  Ala.  423;    10  So.  « Duncan    v.    Freeman,    109    Ala. 

324;  Loomis  v.  Brush,  36  Mich.  40;  185;  19  So.  433. 

Valentine   v.    Bell,   66   Vt.   280;    29  9  Mercantile    Co.    v.    Bowers,    105 

Atl.  251.  Tenn.  138;  58  S.  W.  287. 

5  Russell  v.  Rice  (Ky.),  44  S.  W.  lo  Condon  v.  Barr,  49  N.  J.  L.  53; 
110.                                                      *  6  Atl.  614;   Sherwin  v.  Sanders,  59 

c'Her    contracts    independent    of  Vt.  499;   59  Am.  Rep.   750;   9  Atl. 

statute  were  merely  voidable  and  to  239. 


CONTEACTS    OF    MARRIED    WOMEN.  1465 

niamed  woman  and  her  husband  was  void  as  to  her  before  1881, 
in  Indiana/^  but  a  renewal  after  1881  by  husband  and  wife  of 
note  given  before  is  good  as  to  both/^ 

§932.    Restitution. 

If  a  married  woman  invokes  coverture  as  a  defense  to  an 
executory  contract/  or  a  means  of  recovering  what  she  has 
parted  with  under  an  executed  contract,^  she  is  liable  for  what- 
ever she  has  received  under  such  contract.^  Thus  a  married 
woman  to  obtain  a  loan  gave  her  note  payable  to  her  husband, 
who  indorsed  it  over  to  the  creditor.  The  note  itself  was  held 
to  be  void,  as  being  a  contract  between  husband  and  wife  ;*  but 
recovery  of  the  amount  so  loaned  was  allowed  in  assumpsit.^ 
In  some  jurisdictions,  no  personal  liability  exists  against  her 
if  the  contract  is  void,  and  the  only  remedy  of  the  adversary 
party  is  an  action  m  rem  against  the  money  received  by  her 
under  the  contract  or  against  any  property  into  which  it  can 
be  traced.*'  If  the  money  was  paid  to  her  husband  and  it  is 
not  shown  to  have  been  paid  over  to  her,  she  is  not  liable  for 
it  on  avoiding  her  contract.^  She  cannot  retain  the  property 
conveyed  to  her  and  avoid  having  the  purchase  money  collected 
by  a  sale  of  such  property  therefor.* 


11  Lackey  v.  Boruff,  152  Ind.  371;  25   Tex.    Civ.   App.    503;    61    S.    W. 
53  N.  E.  412.  939. 

12  Lackey  V.  Boruff,  152  Ind.  371;  *  Xational       Granite       Bank       v. 
53  N.  E.  412.  \Yhicher,  173  Mass.  517;  73  Am.  St. 

1  National   Granite   Bank  v.  Tyn-  Rep.  317;  53  N.  E.  1004. 

dale,    176   Mass.    547;    51   L.   R.   A.  5  National   Granite  Bank  v.   Tyn- 

477;   57   X.   E.   1022;   Willock's  Es-  dale,    176   Mass.    547;    51    L.   R.   A. 

tate,  165  Pa.  St.  522;  30  Atl.  1043;  447;  57  N.  E.  1022. 

Bueknor's   Estate,    136   Pa.   St.   23;  «  Smith  v.  Ingram,  130  N.  C.  100; 

20  Am.  St.  Rep.  891;  19  Atl.  1069.  61  L.  R.  A.  878;  40  S.  E.  984. 

2  Pilcher      v.      Smith,      2      Head.  7  ilcKinney  v.    Street,    107    Tenn. 
(Tenn.)    208.  526;  64  S.  W.  482. 

^Contra,    where   her    acknowledg-  « Kennedy  v.  Harris,   3   Ind.   Ter. 

ment  to  the  conveyance  of  her  sepa-  487;   58  S.  W.  567;  Blantz  v.  Bain, 

rate   estate   was   not   taken    as   pro-  95  Tenn.  87;  31  S.  W.  159. 
vided    by    law.     Silcock    v.    Baker, 


1466  PAGE    ON    CONTRACTS. 

§933.    Estoppel. 

Within  the  limits  of  her  statutory  capacity  she  may  be  bound 
by  estoppel  like  a  person  of  full  capacity.^  Thus  a  deed  by  a 
married  woman  of  lands  devised  to  her  estops  her  from  setting 
up  an  after-acquired  title.^  So  if  she  ostensibly  borrows  money, 
the  fact  that  she  indorses  the  check  to  her  husband  does  not 
relieve  her  from  liability,  though  she  could  not  act  as  his 
surety.^  If  she  signs  the  instrument  first  and  represents  that 
she  is  the  j)rincipal  thereon  she  is  estopped  from  avoiding  liabil- 
ity by  claiming  to  be  surety.*  She  is  not  bound  by  estoppel  in 
instruments  outside  her  statutory  capacity.  So  where  by  statute 
she  cannot  mortgage  her  property  for  the  debt  of  her  husband, 
she  is  not  estopped  to  deny  the  validity  of  such  mortgage,^  nor  is 
she  estopped  by  joining  in  her  husband's  deed  of  her  property, 
releasing  dower  therein  as  if  it  were  his.®  Thus  if  she  has  no 
capacity  to  make  a  covenant  of  warranty  she  is  not  estopped  to 
set  up  an  after-acquired  title  in  realty  conveyed  by  her  by  deed 
containing  such  covenant.^  However,  if  she  has  agreed  to  a 
separation,  the  written  agreement  for  which  is  not  acknowledged 
by  her  as'  required  by  statute,  but  which  is  immediately  per- 
formed, she  cannot  retain  what  she  has  received  under  such 
contract  and  claim  the  dower  released  by  such  defective  con- 
tract.* Mere  delay  in  giving  notice  of  the  fact  that  an  instru- 
ment is  a  forgery  has  been  held  not  to  estop  her.® 

§934.     Right  to  avoid  executed  contracts. 

In  some  jurisdictions  a  married  woman  may  acquire  prop- 
erty, and  yet  may  not  bind  herself  by  an  executory  contract.     In 

1  Estoppel  by  deed,  Jones  v.  Hill,  5  Bentley  v.  Goodwin,  26  Ind.  App. 
70   Ark.   34;    66   S.   W.   194;    Sand-      689;  60  N.  E.  735. 

•wich,  etc.,  Co.  v.  Zellmer,  48  Minn.  6  Gibson  v.  Clark,   132  Ala.   370; 

408;  51  N.  W.  379.  31   So.  472.     Contra,  Jones  v.  Hill. 

2  Bruce    v.    Goodbar,     104    Tenn.      70  Ark.  34;  66  S.  W.  194. 

638;  58  S.  W.  282.  7  Threefoot  Bros.  v.  Hillman,   130 

3  Hackettstown,  etc.,  Bank  v.  Ala.  244;  89  Am.  St.  Rep.  39;  30 
Ming,  52  N.  J.  Eq.  156;  27  Atl.  920.  So.  513;  Wadkins  v.  Watson,  86  Tex. 

4  Tompkins  v.  Triplett,  110  Ky.  194;  22  L.  R.  A.  779;  24  S.  W.  385. 
824;  96  Am.  St.  Rep.  472;  62  S.  W.  «  Kaiser's  Estate,  199  Pa.  St.  269; 
1021,  85  Am.  St.  Rep.  785;  49  Atl.  79. 

9  Hunt  V.  Keilly,  24  R.  I.  68;   96 


CONTRACTS    OF    MAKEIED    WOMEN.  1467 

such  jurisdictions  a  married  woman  cannot  avoid  a  purchase  of 
property,  and  recover  money  paid  therefor  by  her,  after  such 
purchase  has  been  executed,  even  if  she  might  have  avoided 
liability  under  the  contract  while  it  was  executory.^ 

§935.     Coverture  must  be  pleaded. 

To  be  available  as  a  defense  coverture  must  be  pleaded.'^  If 
such  defense  is  not  made,  a  judgment  against  on  a  void  con- 
tract is  valid.^  If  under  the  law  a  married  woman  is  liable 
except  in  certain  cases,  an  answer  alleging  coverture,  but  not 
alleging  facts  within  one  of  such  cases  is  insufficient.^  As  to  a 
petition  filed  against  a  married  woman  the  weight  of  authority 
is  that  facts  must  appear  both  in  i)leading  and  evidence  to  bring 
the  married  woman  within  the  provisions  of  the  statute  in  order 
to  hold  her  on  her  contracts,  her  liability  not  being  presumed.* 

§936.     Who  can  use  coverture  as  a  defense. 

Only  the  married  woman  can  take  advantage  of  coverture  as 
a  defense.^  Thus  under  a  statute  forbidding  a  married  woman 
to  act  as  surety  only  she  or  her  privies  in  blood  representation 
or  estate  can  interiDose  coverture  as  a  defense."     The  husband 

Am.  St.  Rep.  707;  52  Atl.  681.      (De-  S.  W.  489;   Emmett  v.  Yandes,  60 

lay  for  three  years.)  Ind.   548;    Westervelt   v.   Baker,   56 

1  Sellmeyer  v.  Welch,  47  Ark.  485;  Xeb.  63;   76  N.  W.  440;  citing  and 

1   S.  W.   777;   Johnson  v.  Jones,  51  following.  Grand,  etc.,  Co.  v.  Wright, 

Miss.  860;  Gould  v.  McFall,  118  Pa.  53   Xeb.   574;    74  X.  W.  82;   Moore 

St.  455;  4  Am.  St.  Rep.  606;  12  Atl.  v.  Wolfe,   122  X.  C.   711;    30  S.   E. 

336;  Pitts  v.  Elser,  87  Tex.  347;  28  120;    Koechling  v.  Henkel,   144  Pa. 

S.  W.  518.  St.    215;    22    Atl.    808;    Hecker    v. 

1  Strauss  v.  Glass,  108  Ala.  546;  Haak,  88  Pa.  St.  238;  Duval  v.  Chef, 
18   So.   526;   Rogers  v.   She\\-maker,  92  Va.  489;  23  S.  E.  893. 

27  Ind.  App.  631;   87  Am.  St.  Rep.  i  Jones  v.   Harrell,    110   Ga.   373; 

274;   60  X.  E.  462;   Smoot  v.  Judd,  35  S.  E.  690;  Hawes  v.  Favor,   161 

161  Mo.  673;  84  Am.  St.  Rep.  738;  111.  440;  43  X.  E.   1076;   Lackey  v. 

61  S.  W.  854.  Boruflf,  152  Ind.  371;  53  X.  E.  412; 

2  Smoot  v.  Judd,  161  Mo.  673;  84  Slagle  v.  Hoover,  137  Ind.  314;  36 
Am.  St.  Rep.  738;  61  S.  W.  854.  X.  E.  1099. 

3  Strauss  v.  Glass,  108  Ala.  546;  2  Lackey  v.  BoruflF,  152  Ind.  371; 
18  So.  526.  53  X.  E.  412. 

4  Warner  v.  Hess,  66  Ark.  113;  49 


1468 


PAGE    OIS"    C0^^T1^ACTS. 


or  those  claiming  under  liim  cannot  plead  lier  coverture.^  So 
the  adversary  party  to  the  contract  cannot  avoid  the  contract  on 
the  ground  of  coverture  if  the  married  woman  offers  to  per- 
form.* Thus  if  she  has  agreed  to  convey  realty,  and  tenders  a 
valid  deed/  the  adversary  party  cannot  interpose  the  objection 
of  her  original  lack  of  capacity.  So  he  cannot  recover  pay- 
ments made  by  him  under  such  contract.*'  If  she  has  performed 
and  cannot  be  placed  in  statu  quo  she  may  have  specific  perform- 
ance.^ So  after  she  has  jDerformed,  the  adversary  party  is 
liable  for  the  payments  stipulated  in  the  contract.^ 

If,  however,  the  contract  is  executory  on  both  sides,  and  the 
promise  of  the  married  woman  is  the  sole  consideration  for 
the  promise  of  the  adversary  party,  no  consideration  exists  for 
such  promise  of  the  adversary  party,  where  the  jDromise  of  the 
married  woman  is  void.  In  cases  of  this  sort,  the  adversary 
party  does  not  use  coverture  as  a  defense ;  but  there  is  no  con- 
sideration and  hence  no  contract.^ 


3Slagle  V.  Hoover,  137  Ind.  314; 
36  N.  E.  1099. 

4Hawes  v.  Favor,  161  111.  440;  43 
N.  E.  1076;  Carpenter  v.  Mitchell, 
54  111.  126;  Holmes  v.  Holmes,  107 
Ky.  163;  92  Am.  St.  Eep.  342;  53  S. 
W.  29. 

5  Holmes  v.  Holmes,  107  Ky.  163; 
92  Am.  St.  Eep.  342;  53  S.  W.  29. 
(She  was  a  feme  covert  when  the 
contract  was  made,  but  discovert 
when  the  deed  was  tendered.) 

6  Keystone  Iron  Co.  v.  Logan,  55 
Minn.  537;  57  N.  W.  156. 


7  Richards  v.  Doyle,  36  O.  S.  37; 
38  Am.  Rep.  550. 

sLindsey  v.  Lindsey,  116  la.  480; 
89  N.  W.  1096.  (In  this  case  she 
had  authority  to  contract  for  her 
own  services.  She  was  living  with 
her  husband,  and  contracted  with  a 
third  party  to  furnish  board  to  his 
employees.  It  was  held  that  a  set- 
tlement between  such  third  person 
and  her  husband  could  not  discharge 
her  liability.) 

9  Shirk  V.  Stafford,  31  Ind.  App. 
247;  67  N.  E.  542. 


PAKTNEESHIP.  1469. 


CHAPTER  XLII. 


PARTNERSHIP. 

§937.     Nature  and  formation  of  partnership. 

A  partnersliip  is  a  business  relation  between  two  or  more 
persons  arising  out  of  a  contract^  by  which  they  agree  to  unite 
their  property,  credit,  services,  skill  or  influence  in  some  busi- 
ness, so  that  they  have  a  community  of  interest  in  such  business,^ 
and  usually  divide  the  profits  and  losses  between  themselves 
in  a  fixed  j^roportion. 

A  partnership  differs  from  a  corporation  in  this:  that  a 
corporation  is  a  legal  personalty,^  while  a  partnership  is  merely 
a  relation  between  two  or  more  persons*  and  "  is  not  a  be- 
ing distinct  from  its  members."^  The  contract  of  partner- 
ship may  be  express,  and  either  written^  or  oral/  An  oral 
contract  of  partnership  to  last  for  more  than  one  year  from 

iMayfield  v.  Turner,  180  111.  332;  67  N.  W,  650;  Baldwin  v.  Eddy,  64 

54  N.  E.  418;  Briggs  v.  Rice  Co.,  83  Minn.  425;  67  N.  W.  349;  Willey  v. 

111.  App.  618;   Simmons  v.  Ingram,  Renner,  8  N.  M.  641;  45  Pac.  1132; 

78  Mo.  App.  603;  Martin  v.  Baird,  Harvey  v.  Childs,  28  O.  S.  319;   22 

175  Pa.  St.  540;   34  Atl.  809.     "A  Am.    Rep.    387;    Frazier   v.    Linton, 

copartnership    is    in    its    essence    a  183  Pa.  St.  186;  38  Atl.  589;  Carter 

contract    of    agency.     Each    partner  v.  McClure,   98   Tenn.   109;   60  Am. 

is  the  general  agent  of  the  firm,  and  St.  Rep.  842;   36  L.  R.  A.  282;  38 

the  firm  is  the  agent  of  each  partner,  S.  W,  585. 
with  power  to  bind  him  to  a  personal  3  See  §   1065. 

liability    in     favor     of    partnership  4  Harris  v.  Visscher,  57.  Ga.  229; 

creditors."     Lapento  v.   Lettieri,   72  Mayfield  v.  Turner,  180  111.  332;  54 

Conn.    377,    383;    77   Am.    St.    Rep.  X.  E.  418. 
315;  44  Atl.  730.  5  Chambers  v.  Sloan,  19  Ga.  84,  85. 

2StaflFord  v.  Sibley,  113  Ala.  447;  e  Gibbs's  Estate,  157  Pa.  St.  59; 

21  So.  459;   National  Surety  Co.  v,  22  L.  R.  A.  276;  27  Atl.  383. 
Townsend,    etc.,    Co.,    176    111.    156;  'Jones   v.   Davies,   60   Kan.    309; 

52  N.  E.  938;  affirming,  74  111.  App.  72  Am.  St.  Rep.  354;  56  Pac.  484. 
312;  McKasy  v.  Huber,  65  Minn.  9; 


1470 


PAGE    ON    CONTEACTS. 


the  date  of  the  making  is  held  to  be  within  the  statute  of  frauds 
in  some  jurisdictions  and  unenforceable  with  reference  to  its 
duration.^  The  contract  of  partnership  may  be  implied  from 
the  conduct  of  the  parties.*^  It  may  include  a  single  transac- 
tion^" as  well  as  an  extended  series  of  transactions. 

As  between  the  parties  the  question  of  partnership  is  one  of 
intention,  being  in  the  first  instance  a  question  of  fact/^  but 
when  the  facts  are  conceded  or  established,  a  question  of  law.^^ 
If  the  parties  enter  into  a  relationship  Avhich  the  law  holds 
to  be  a  partnership  they  are  partners  although  they  may  not 
have  known  the  legal  effect  of  their  acts,"  or  though  they  may 
have  called  the  contract  one  of  employment.^*  A  partnership 
is  not  an  artificial  person   at  law.     Its   liability   exists  only 


sWahl  V.  Barnum,  116  N.  Y.  87; 
5  L.  R.  A.  623 ;  22  N.  E.  280". 

9  Haug  V.  Hang,  90  111.  App.  604 ; 
Hallenbaek  v.  Rogers,  57  N.  J.  i^q. 
199;  40  Atl.  576;  affirmed,  58  N.  J. 
Eq.  580;  43  Atl.  1098;  William 
Deering,  etc.,  Co.  v.  Coberly,  44  W. 
Va.  606;  29  S.  E.  512.  An  actual 
partnership  in  which  the  partnership 
contract  is  inferred  as  a  fact  from 
the  conduct  of  the  parties  must  be 
distinguished  from  those  cases  where 
there  is  no  partnership,  but  the  per- 
sons have  estopped  themselves  from 
denying  its  existence. 

See  §  950  et  seq. 

10  Winstanley  v.  Gleyre,  146  111. 
27;  34  N.  E.  628;  Holmes  v.  Mc- 
Cray,  51  Ind.  358;  19  Am.  Rep.  735; 
Pennybacker  v.  Leary,  65  la.  220; 
21  N.  W.  575;  Richards  v.  Grinnell, 
63  la.  44;  50  Am.  Rep.  727;  18  N. 
W.  668;  Jones  v.  Davies,  60  Kan. 
309;  72  Am.  St.  Rep.  354;  56  Pac. 
484;  Simpson  v.  Tenney,  41  Kan. 
561;  21  Pac.  634;  Hunter  v.  White- 
head, 42  Mo.  524;  Chester  v.  Dick- 
erson,  54  N.  Y.  1 ;  13  Am.  Rep.  550; 
Yeoman  v.  Lasley,  40  O.  S.  190; 
Hulett  V.  Fairbanks,  40  O.  S.  233; 
Spencer  v.  Jones,  92   Tex.  516;    71 


Am.    St.   Rep.   870;    50   S.   W.    118; 
Canada  v.  Barksdale,  76  Va.  899. 

11  Adamson  v.  Guild,  177  Mass. 
331;  58  N.  E.  1081;  Densmore  v. 
Mathews,  58  Mich.  616;  26  N.  W. 
146;  Seabury  v.  Bolles,  51  N.  J.  L. 
103;  11  L.  R.  A.  136;  16  Atl.  54; 
Spencer  v.  Jones,  92  Tex.  516;  71 
Am.  St.  Rep.  870;  50  S.  W.  118. 

12  Morgan  v.  Parrel,  58  Conn.  413 
18  Am.  St.  Rep.  282;  20  Atl.  614 
Schmidt  v.  Balling,  91  111.  App 
388;  Janney  v.  Springer,  78  la.  617 
16  Am.  St.  Rep.  460;  43  N.  W.  461 
Kingsbury  v.  Thorp,  61  Mich.  216 
28  N.  W.  74;  Farmers'  Ins.  Co.  v. 
Ross,  29  O.  S.  429. 

13  Chapman  v.  Hughes,  104  Cal. 
302;  37  Pac.  1048;  38  Pac.  109; 
Webster  v.  Clark,  34  Fla.  637;  43 
Am.  St.  Rep.  217;  27  L.  R.  A.  126; 
16  So.  601;  Jones  v.  Davies,  60  Kan, 
309;  72  Am.  St.  Rep.  354;  56  Pac. 
484;  Magovern  v.  Robertson,  116  N. 
Y.  61;  5  L.  R.  A.  589;  22  N.  E. 
398;  Spaulding  v.  Stubbings,  86 
Wis.  255;  39  Am.  St.  Rep.  888;  56 
N.  W.  469. 

14  Cameron  v.  Ry.,  108  La.  83;  32 
So.  208. 


PARTNERSHIP.  1471 

through  the  liability  of  its  partners.  Without  statutory  a^u- 
thority  it  cannot  be  sued  in  its  firm  name/^  A  statute  allowing 
a  suit  against  a  firm  by  the  firm  name  does  not  destroy  the 
Common  Law  right  to  sue  the  individual.^® 

§938.     Name  of  partnership. 

A  partnership  may,  in  the  absence  of  statutory  provision, 
transact  business  under  an  arbitrary  or  fictitious  name.^  Some 
statutes  forbid  a  partnership  to  use  a  name  which  will  deceive 
the  general  public  as  to  the  identity  of  the  members  of  the 
partnership.^  Under  many  of  the  statutes  allowing  a  firm  to 
sue  in  its  firm  name  it  must  file  a  certificate  with  some  specified 
officer  showing  the  true  names  of  the  partners.^  This  statute 
does  not  apply  to  a  firm  whose  name  shows  the  surnames  of  its 
partners,*  or  to  a  foreign  partnership  which  has  no  place  of 
doing  business  within  the  state.^  A  partnership  having  a  ficti- 
tious name  must  file  a  new  certificate  on  a  change  in  member- 
ship, or  it  cannot  take  a  cognovit  judgment.® 

§939.     Joint  ownership. 

The  real  test  of  the  existence  of  a  partnership  is  a  community 
of  interest  in  the  partnership  business.     Joint  ownershij)^  or  a 

15  Fox  V.  Grocery  Co.  (Ky.),  GO  3  Calvert  v.  Newberger,  20  Ohio 
S.  W.  414.  C.  C.  35.3;  11  Ohio  C.  D.  184. 

16  Davidson  v.  Knox,  67  Cal.  143;  *  Carlock  v.  Cognacci,  88  Cal. 
7  Pac.  413;  Sawyer  v.  Armstrong,  600;  26  Pac.  597;  Pendleton  v. 
23  Colo.  287;  47  Pac.  391;  Craig  v.  Cline,  85  Cal.  142;  24  Pac.  659; 
Smith,  10  Colo.  220;  15  Pac.  337;  Guiterman  v.  Wishon,  21  Mont.  458; 
Peabody  v.  Oleson,  15  Colo.  App.  54  Pac.  566;  Czatt  v.  Case,  61  O.  S. 
346;  62  Pac.  234.  392;  55  N.  E.  1004. 

iWinship  v.  Bank,  5  Pet.   (U.  S.)  5  Swope  v.  Burnham,  6  Okla.  736; 

529;    Manufacturers',   etc.,   Bank   v.  52  Pac.  924. 

Winship,    5    Pick.    (Mass.)     11;    16  6  Cobble  v.   Bank,   63   O.   S.   528; 

Am.  Dee.  369;  Holbrook  v.  Ins.  Co.,  59  N.  E.  221. 

25  Minn.  229;  Kelley  v.  Bourne,  15  i  Anaconda,    etc.,    Co.    v.    Mining 

Or.  476;  16  Pac.  40.  Co.,    17    Mont.    519;    43    Pac.    924; 

2  Gay  v.  Seibold,  97  N.  Y.  472 ;  49  State  Bank  v.  Kelley   Co.,   47   Neb. 

Am.   Rep.   533;    Zimmerman  v.   Er-  678;    66   N.   W.   619;    rehearing,   49 

hard,    83    N.   Y.    74;    38    Am.    Rep.  Neb.   242;   68  N.  W.  481;   Dunham 

396.  V.    Loverock,    158    Pa.    St.    197;    38 


1472  PAGE    ON    CONTKACTS. 

joint  leasing"  of  property  does  not  constitute  a  partnership. 
So  a  partnership  was  not  formed  where  the  owner  of  property 
transferred  it  to  others  to  enable  them  to  form  a  corporation, 
stock  in  which  was  to  be  part  consideration  for  the  property.' 
So  a  communistic  society  owning  all  jiroperty  in  common  but 
not  carrying  on  any  business  is  not  a  partnership.* 

§940.     Sharing  profits. 

Sharing  profits  and  losses  is  so  usjial  an  attribute  of  a  part- 
nership that  it  is  implied  from  the  relationship,  and  there  need 
not  be  an  express  agreement  to  share  losses.^  An  agreement 
to  share  losses  is  implied  from  a  contract  to  share  net  profits.^ 
So  where  A  is  to  furnish  capital,  B  to  furnish  labor,  and  both 
to  share  in  the  profits,  a  sharing  of  losses  is  implied.'  By 
express  contract,  however,  there  may  be  a  partnership  in  which 
there  is  no  sharing  of  losses.*  Conversely,  if  the  contract  pro- 
vides for  a  sharing  in  profits  and  losses  in  business  it  is  ijrima 
facie  a  partnership  contract.^  However,  as  the  question  is  one 
of  the  intention  of  the  parties,  it  is  not  safe  to  make  even  this 
an  arbitrary  test.  If  there  is  no  community  of  interest  in  the 
business  transaction,  mere  sharing  of  profits  and  losses  by  spe- 
cial contract  does  not  constitute  a  partnership  f   as  where  A, 

Am.    St.    Rep.    838;    27    Atl.    990;  4  Leeds  v.  Townsend.  89  111.  App. 

Strickley  v.  Hill,  22  Utah  257;   83  646;  Jones  v.  Murphy,  93  Va.  214; 

Am.  St.  Rep.  786;  62  Pac.  893;  Fish  24  S.  E.  825. 

V.   Thompson,   68   Vt.   273 ;    35   Atl.  5  Straus    v.    Kohn.    83    111.    App. 

174 ;   Ferguson  v.  Gooch,  94  Va.  1 ;  497 ;  Atchinson,  etc.,  Ry.  v.  Huckle- 

40  L.  R.  A.  234;  26  S.  E.  397.  bridge,   62   Kan.    506;    64   Pac.    58; 

2  0ttison  V.  Edmonds,  15  Wash.  Xoyes  v.  Tootle,  2  Ind.  Ter.  144;  48 
362;  46  Pac.  398.  S.  W.   1031;   Hart  v.  Hiatt,  2  Ind. 

3  Hosier  v.  Parry,  60  O.  S.  388;  Ter.  245;  48  S.  W.  1038;  Winter  v. 
54  N.  E.  364.  Pipher,   96   la.   17;    64  N.  W.   663; 

4  Teed  v.  Parsons,  202  111.  455;  Bryan  v.  Bullock,  119  N.  C.  193;  25 
66  N.  E.  1044;  reversing,  100  HI.  S.  E.  865;  Commercial  Bank  v.  Mil- 
App.  342.  ler,  96  Va.  357;  31  S.  E.  812;  Smith 

1  Gates  V.  Johnson,  56  Xeb.  808;  v.  Putnam,  107  Wis.  155;  82  N.  W. 
77  N.  W.  407.  1077;    rehearing   denied,    83    N.   W. 

2  Johnson  v.  Carter,  120  la.  355;      288. 

94  N.  W.  850.  6  Xational    Surety    Co.    v.    Town- 

3  Dow  V.  Dempsey,  21  Wash.  86;  send,  etc.,  Co..  176  111.  156;  52  N.  E. 
57  Pac.  355.  938;   affirming,  74  111.  App.  312. 


PARTNERSHIP. 


1473 


the  owner  of  a  farm  and  the  implements  thereon,  leased  it  to 
B,  who  w^as  to  manage  it,  A  to  have  two-thirds  of  the  profits  or 
pay  two-thirds  of  the  losses,  B  the  other  third/  So  one  partner's 
sharing  profits  and  losses  with  a  stranger  does  not  make  him  a 
partner.^  An  agreement  to  share  profits  alone  is  prima  facie 
a  partnership  contract,  though  the  inference  is  not  as  strong  as 
from  a  sharing  of  both  profits  and  losses.^  At  English  Law  an 
attempt  was  made  to  distinguish  between  a  compensation  equal 
to  a  share  of  the  profits,  and  a  share  of  the  profits  as  profits, 
holding  a  partnership  always  to  exist  in  the  latter  case  as  a 
matter  of  law/**  This  arbitrary  distinction  was  overthrown 
in  England  ;^^  and  at  Modern  Law  contracting  for  a  sharing 
of  profits  does  not  constitute  a  partnership  if  the  parties  do  not 
intend  a  community  of  interest/^     Thus  a  promise  to  pay  a  cer- 


7  Bradley  v.  Ely,  24  Ind.  App.  2 ; 

79  Am.  St.  Rep.  251;  56  N.  E.  44. 

8  O'Connor  v.  Sherley,  107  Ky. 
70;  52  S.  W.  1056. 

9  Paul  V.  Culluin,  132  U.  S.  539; 
London,  etc.,  Corp.  v.  Drennen,  116 
U.  S.  461;  Beauregard  v.  Case,  91 
U.  S.  134;  Pleasants  v.  Fant,  22 
Wall.  (U.  S.)  116;  Tyler  v.  Wad- 
dingham,  58  Conn.  375;  8  L.  R.  A. 
657;  20  Atl.  335;  Dame  v.  Kemp- 
ster,  146  Mass.  454;  15  N.  E.  927; 
Torbert  v.  Jeflfrey,  161  Mo.  645; 
61  S.  W.  823 ;  Fourth  National  Bank 
V.  Altheimer,  91  Mo.  190;  3  S.  W. 
858;  First  National  Bank  v.  Gal- 
laudet,  122  N.  Y.  655;  25  N.  E.  909; 
Southern  Fertilizer  Co.  v.  Reams, 
105  N.  C.  283;  11  S.  E.  467;  Cos- 
sock  V.  Burgwyn,  112  N. "  C.  304; 
16  S.  E.  900;  Sawyer  v.  Bank,  114 
N.  C.  13;  18  S.  E.  949;  Wood  v. 
Vallette,  7  O.  S.  172;  First  Na- 
tional Bank  v.  Ballard,  19  Ohio  C. 
C.  63;  10  Ohio  C.  D.  298;  Wessels  v. 
Weiss,  166  Pa.  St.  490;  31  Atl.  247; 
Walker  v.  Tupper,  152  Pa.  St.  1; 
25   Atl.   172;    Wipperman   v.   Stacy, 

80  Wis.  345;  50  N.  W.  336;  Spauld- 

93 


ing  V.   Stubbings,   86   Wis.   255;    39 
Am.  St.  Rep.  888;  56  N.  W.  469. 

10  Waugh  V.  Carver,  2  H,  Bl.  235. 

11  Cox  V.  Hickman,  8  H.  L.  Cas. 
268. 

12  Cox  V.  Hickman,  8  H.  L.  Cas. 
268;  Wilson  v.  Edmonds,  130  U.  S. 
472 ;  Meehan  v.  Valentine,  145  U.  S. 
611;  Johnson  v.  Rothschilds,  63  Ark. 
518;  41  S.  W.  996;  Cadenasso  v. 
Antonelle,  127  Cal.  382;  59  Pae. 
765;  Nofsinger  v.  Goldman,  122  Cal. 
609;  55  Pac.  425;  Coward  v.  Clan- 
ton,  122  Cal.  451;  55  Pac.  147; 
Butler  V.  Hinckley,  17  Colo.  523; 
30  Pac.  250;  Morton  v.  Nelson,  145 
111.  586;  32  N.  E.  916;  Grinton  v. 
Strong,  148  111.  587;  36  N.  E.  559; 
Gottschalk  v.  Smith,  156  111.  377; 
40  N.  E.  937;  Clark  v.  Barnes,  72 
la.  563;  34  N.  W.  419;  Porter  v. 
Curtis,  96  la.  539;  65  N.  W.  824; 
Winter  v.  Pipher,  96  la.  17;  64  N. 
W.  663;  Leonard  v.  Sparks,  109  La. 
543;  33  So.  594;  McWilliams  v.  El- 
der, 52  La.  Ann.  995;  27  So.  352; 
Drovers',  etc..  Bank  v.  Roller,  85 
Md.  495;  60  Am.  St.  Rep.  344;  36 
L.  R.  A.  767;   37  Atl.  30;   Wild  v. 


1474 


PAGE    ON    CONTEACTS. 


tain  percentage  of  profits  for  the  use  of  a  machine^^  or  of  a 
manufacturing  plant,"  or  for  a  lease  of  property/^  or  for 
services  rendered  in  the  business/*'  as  for  managing  and  selling 
land/^  or  for  services  and  the  use  of  a  patent-right/^  or  for  saw- 
ing logs  for  another/''  or  cutting  and  rafting  logs/"  or  for  selling 
cross-ties  for  another,"^  or  to  share  commissions  for  customers 
furnished/^  are  none  of  them  partnership  contracts  if  the  ele- 


Davenport,  48  N.  J.  L.  129;  57  Am. 
Rep.  552;  7  Atl.  295;  Whiting  v. 
Leakin,  66  Md.  255;  7  Atl.  688; 
Murphy  v.  Craig,  76  Mich.  155;  42 
N.  W.  1097;  Clifton  v.  Howard,  89 
Mo.  192;  58  Am.  Rep.  97;  1  S.  W. 
26;  Kellogg  Newspaper  Co.  v.  Far- 
rell,  88  Mo.  594;  Breman  Savings 
Bank  v.  Saw  Co.,  104  Mo.  425;  16 
S.  W.  209;  Congdon  v.  Olds,  18 
Mont.  487;  46  Pac.  261;  Whitney 
V.  Bank,  50  Neb.  438;  69  N.  W.  933; 
^tna  Ins.  Co.  v.  Bank,  48  Neb.  544; 
67  N,  W.  449 ;  Eastman  v.  Clark,  53 
N.  H.  276;  16  Am.  Rep.  192;  Jernee 
V.  .Simonson,  58  N.  J.  Eq.  282 ;  43 
Atl.  370;  Seabury  v,  Bolles,  51  N. 
J.  L.  103;  11  L.  R.  A.  136;  16  Atl. 
54;  Wild  v.  Davenport,  48  N.  J.  L. 
129;  57  Am.  Rep.  552;  7  Atl.  295; 
Grapel  v.  Hodges,  112  N.  Y.  419; 
20  N.  E.  542;  Waverly  National 
Bank  v.  Hall,  150  Pa.  St.  466;  30 
Am.  St.  Rep.  823;  24  Atl.  665;  Dun- 
ham V.  Loverock,  158  Pa.  St.  197; 
38  Am.  St.  Rep.  838;  27  Atl.  990; 
Butler  Savings  Bank  v.  Osborne,  159 
Pa.  St.  10;  39  Am.  St.  Rep.  665;  28 
Atl.  163;  Taylor  v.  Fried,  161  Pa. 
St.  53;  28  Atl.  993;  Ryder  v. 
Jacobs,  182  Pa.  St.  624;  38  Atl.  471 ; 
Brown  v.  W^atson,  72  Tex.  216;  10 
S.  W.  395;  Riedeburg  v.  Schmitt,  71 
Wis.  644;  38  N.  W.  336. 

13  Nofsinger  v.  Goldman,  122  Cal. 
609;  55  Pac.  425. 

14  Thornton  v.  McDonald,  108  Ga. 
3 ;  33  S.  E.  680. 

15  Bradley    v.    Ely,    24    Ind.    App. 


2;  79  Am.  St.  Rep.  251;  56  N.  E. 
44;  Garrett  v.  Publishing  Co.,  61 
Neb.  541;  85  N.  W.  537;  Austin  v. 
Neil,  62  N.  J.  L.  462;  41  Atl.  834; 
Wormser  v.  Lindauer,  9  N.  M.  23; 
49  Pac.  896;  State  v.  Sanders,  52 
S.  C.  580;  30  S.  E.  616;  Houston, 
etc.,  Co.  V.  McFadden,  91  Tex.  194; 
40  S.  W.  216;  42  S.  W.  593. 

16  Gulf,  etc.,  Co.  V.  Boyles,  129 
Ala.  192;  29  So.  800;  Johnson  v. 
Carter,  120  la.  355;  94  N.  W.  850; 
Morrow  v.  Murphy,  120  Mich.  204; 
79  N.  W.  193;  modified,  80  N.  W. 
255;  Canton  Bridge  Co.  v.  Eaton 
Rapids,  107  Mich.  613;  65  N.  W. 
761;  Stone  v.  Mfg.  Co.,  65  N.  J.  L. 
20;  46  Atl.  696;  Cornell  v.  Redrow, 
60  N.  J.  Eq.  251;  47  Atl.  56;  Kootz 
v.  Tuvian,  118  N.  C.  393;  24  S.  E. 
776;  Murray  City  Ginning  Co.  v. 
Bank  (Tex.  Civ.  App.),  61  S.  W. 
508. 

IT  Coward  v.  Clanton',  122  Cal. 
451;  55  Pac.  147;  Mayfield  v.  Tur- 
ner, 180  HI.  332;  54  N.  E.  418; 
Grigsby  v.  Day,  9  S.  D.  585;  70  N. 
W.  881. 

18  Warwick  v.  Stockton,  55  N.  J. 
Eq.  61;  SQ  Atl.  488. 

19  Hodges  V.  Rogers,  115  Ga.  951; 

42  S.  E.  251. 

20  Gore  v.  Benedict  (Tenn.  Ch. 
App.),  61  S.  W.  1054. 

21  Padgett  V.  Ford,   117   Ga.  508  ;■ 

43  S.  E.  1002. 

22  Wheeler  v.  Lack,  37  Or.  238;  61 
Pac.  849. 


PARTNEKSHIP. 


1475 


ments  of  community  of  interest  and  common  control  of  business 
are  lacking.  A  loan  of  money  for  use  in  partnership  business,^* 
even  if  a  percentage  of  the  profits  is  given  therefor"*  and  the 
lender  gives  advice,"^  or  manages  the  business  as  an  agent,"® 
or  leases  a  fishery  and  lends  money  to  operate  it  for  one-half  of 
the  net  proceeds  as  rental/^  none  of  them  constitute  the  lender  a 
partner.  So  a  contract  to  indemnify  against  a  certain  per 
cent,  of  loss  in  consideration  of  a  corresponding  per  cent,  of 
the  profits  is  not  a  partnership."^  So  a  contract  by  which  one 
furnishes  logs  and  the  other  saws  them  into  lumber  and  they 
divide  the  lumber^''  or  the  profits  ^°  is  not  a  partnership.  If, 
however,  there  is  a  community  of  interest  in  the  capital  of  the 
business  the  transaction  creates  a  partnership,^^  even  if  the 
transaction  assumes  the  outward  form  of  a  loan.^"  So  contracts 
between  A  and  B  whereby  A  is  to  buy  goods  of  certain  kinds 
and  B  is  to  sell  them,  are  held  to  create  partnerships  whether 
profits  alone^^  or  both  profits  and  losses"*  are  to  be  shared.     But 


23  Johnson  v.  Carter,  120  la,  355 ; 
94  N.  W.  850;  Richardson  v.  Carl- 
ton, 109  la.  515;  80  N.  W.  532; 
Krall  V.  Forney,  182  Pa.  St.  6;  37 
Atl.  846, 

24 /n  re  Young  (1896),  2  Q.  B. 
484;  King  v.  Whichelow,  64  L.  J. 
Q.  B.  N.  S.  801 ;  Meehan  v.  Valen- 
tine, 145  U.  S,  611;  Randle  v.  Bar- 
nard, 81  Fed.  682;  Thillman  \.  Ben- 
ton, 82  Md.  64;  33  Atl,  485;  Clayton 
V,  Davett  (N.  J.  Ch.),  38  Atl.  308; 
State  V,  Hunt,  25  R.  I.  69;  54  Atl. 
937.  Contra,  Rahl  v.  Orendorff  Co., 
27  Tex,  Civ,  App.  72;  64  S.  W.  1007, 

25  Page  V,  Simpson,  188  Pa.  St, 
393;  68  Am,  St.  Rep,  874;  41  Atl. 
638. 

26  7,1  re  Young  (1896),  2  Q,  B. 
484, 

27  Hanthorn  v,  Quinn,  42  Or,  1 ; 
69  Pac,  817. 

28  Haines's  Estate,  17G  Pa,  St. 
354;  35  Atl,  237. 

29  Thornton  v.  George,  108  Ga.  9; 
33  S.  E.  633. 


30 (A  share  of  profits  for  sawing 
logs, drying  lumber  and  shipping  it.) 
J.  A.  Fay,  etc.,  Co.  v.  Ouachita,  etc., 
Co.,  51  La.  Ann.  1708;  26  So.  386. 
Contra,  where  one  was  to  furnish 
logs,  the  other  to  saw  them,  and  the 
profits  to  be  divided.  Loveland  v. 
Peter,  108  Mich.  154;  65  N.  W.  748. 

31  Huggins  V,  Huggins,  1 17  Ga. 
151;  43  S.  E.  759;  Snyder  v.  Lind- 
sey,  157  N.  Y.  616;  52  N.  E.  592; 
Orvis  V.  Curtiss,  157  N.  Y.  657;  68 
Am.  St.  Rep.  810;  52  N.  E.  690;  re- 
hearing denied,  53  N.  E.  1129. 

32  Johnson  v,  Rothschilds,  63  Ark. 
518;  41  S,  W,  996.  Citing  Pooley 
V,  Driver,  L.  R.  5  Ch.  Div.  458;  Du- 
bos  V.  Jones,  34  Fla.  539;  16  So. 
392;  Harvey  v.  Childs,  28  O.  S. 
319;  22  Am.  Rep.  387. 

33  Torbert  v,  Jeff"rey,  101  Mo.  645; 
61  S.  W.  823.  '      • 

34  Atchison,  etc.,  Ry.  v.  Huckle- 
bridge,  62  Kan,  506;  64  Pae,  58, 


1476  PAGE    ON    CONTRACTS. 

a  contract  whereby  A  sells  land  to  B,  and  C  is  to  erect  certain 
car-shops  on  part  of  it,  and  on  resale  the  profits  are  to  be  divided 
between  B  and  C,  does  not  create  a  partnership.  A  cannot, 
therefore,  hold  C  for  the  purchase  price  of  the  realtj.^^  Shar- 
ing in  gross  receipts  is  not  a  partnership,^®  as  where  A  trained 
B's  horses,  and  they  divided  the  winnings.^^  So  the  ordinary 
form  of  a  contract  between  a  depot  company  and  a  railroad 
company,^^  or  between  connecting  carriers,^*  does  not  constitute 
a  partnership. 

§941.     Examples  of  partnership. 

A  partnership  is  formed  by  a  combination  of  two  land-owners 
to  sell  the  timber  off  their  lands,^  or  to  sell  land,"  or  where  one 
is  to  furnish  money  to  manufacture  an  article  patented  by  the 
other,^  or  wdiere  one  is  to  furnish  estimates  and  iron  for  bridges 
and  the  other  is  to  furnish  other  material  and  work  and  solicit 
orders,*  or  where  two  attorneys  take  specified  cases  together, 
and  assume  the  costs  and  divide  the  profits.^  But  an  agreement 
betw'een  A  and  B,  attorneys,  on  the  one  part,  and  C,  a  client, 
on  the  other,  whereby  A  and  B  were  to  manage  certain  litigation 
for  C,  C  to  pay  costs,  expenses  and  fees,  and  A  and  B  to  divide 
the  fees,  does  not  constitute  A  and  B  partners.®  So  creditors 
of  an  insolvent  partnership  who  allowed  the  business  to  be  car- 
ried on  to  make  a  profit  for  them  were  held  as  partners.^     A 

35  Hughes  V.  Ewing,  162  Mo.  261 ;      55    L.    R.    A.   481 ;    52    S.    W.   301. 
62  S.  W.  465.  1  Tanner  v.  Hughes    (Ky.),  50  S. 

36  Shrum    v.    Simpson,     155    Ind.      W.  1099. 

160;  49  L.  R.  A.  792;  57  N.  E.  708  2  Cronkrite    v.    Trexler,    187    Pa. 

(a    cropping   contract)  ;    Concannon  St.  100;  41  Atl.  22. 

V.  Rose,  9  Kan.  App.  791;   59  Pac.  s  Illinois,  etc.,  Co.  v.  Reed,  102  la. 

729;  Beecher  v.  Bush,  45  Mich.  188;  538;  71  N.  W.  423. 

40  Am.  Rep.  465;  7  N.  W.  785;  Mc-  4  Clinton,  etc.,  Works  v.  Bank,  103 

Arthur  v.  Ladd,  5  Ohio  514;  Cedar-  Wis.  117;  79  N.  W.  47. 

berg  V.  Guernsey,   12   S.   D.  77;    80  5  Southworth    v.    People,    183    HI. 

N.  W.  159.  621;  56  X.  E.  407;  affirming,  85  111. 

3T  Stone   V.    Supply   Co.,    103    Ky.  App.  289. 

318;  45  S.  W.  78.  6  Willis  v.  Crawford,  38  Or.  522; 

38  Brady  v.  Ry..  114  Fed.  100;  57  53  L.   R.  A.   904;    64  Pac.   866;    63 
L.  R.  A.  712.  Pac.  985. 

39  Post  V.   R.   R.,   103  Tenn.   184;  "Webb  v.  Hicks,   123   N.  C.   244; 


PARTXERSniP.  14YY 

voluntary  association  of  dredgers  to  fix  prices  and  divide  up 
Avork  is  not  a  partnership.* 

§942.    Limited  partnerships. 

Statutes  of  many  states  provide  for  limited  partnerships, 
in  which  one  partner  is  the  general  partner,  personally  liable  for 
all  the  firm's  debts,  while  the  others  are  special  partners,  liable 
only  for  the  amount  contributed  by  them.^  The  statute  in  such 
cases  provides  fully  for  filing  a  certificate  showing  the  facts 
about  the  limited  partnership  and  for  publication  as  a  means  of 
giving  notice.  An  attempted  limited  partnership  which  does 
not  comply  fully  with  the  statute  is  a  general  partnership,^  as 
where  publication  is  omitted,^  or  the  statutory  statement  is 
omitted,*  or  does  not  show  the  value  of  the  contribution  of  the 
special  partner  as  required  by  statute,^  or  is  false,  as  where  it 
omits  a  mortgage,®  or  where  it  recites  that  a  partner's  share  is 
paid  in  when  it  is  not  paid  in  for  a  week  thereafter.'^  An  at- 
tempted limited  i^artnership  becomes  a  general  partnership 
where  the  assets  on  renewal  were  substantially  less  than  at  the 
original  formation,^  or  where  assets  of  the  old  partnership  are 
taken  of  such  a  value  that  it  does  not  leave  enough  to  pay  old 
debts  and  the  new  firm  assumes  some  of  such  debts,®  or  where  all 
the  property  of  the  old  insolvent  partnership  was  set  aside  as  the 
property  of  the  special  partner.^**     A  limited  partnership  be- 

31    S.    E.    479     [citing,    Tayloe    v.  5  Blumenthal  v.  Whitaker,  170  Pa. 

Bush,  75  Ala.  432;  Hitchiiigs  v.  El-  St.  309;  33  Atl.  103   (where  a  refer- 

lis,  12  Gray   (Mass.)  449].     Contra,  ence  to  an  appraisement  of  such  con- 

Fewell  V.  Surety  Co.,  80  Miss.  782;  tribution  filed  in  court  was  held  in- 

92  Am.  St.  Rep.  625;  28  So.  755.  sufficient) . 

8  Potter  V.  Dredging  Co.,  59  N.  J.  6  First   National    Bank   v.    Creve- 

Eq.  422;  46  Atl.  537.  ling,  177  Pa.  St.  270;  35  Atl.  595. 

1  Bobbins   Electric   Co.   v.   ^Yeber,  7  Myers  v.  Electric  Co.,  59  N.  J. 
172  Pa.  St.  635;  34  Atl.  116.  L.  153;  35  Atl.  1069. 

2  Van  Home  v.  Corcoran,  127  Pa.  s  Durgin    v.    Colburn,    176    Mass. 
St.  255;  4  L.  E.  A.  386;  18  Atl.  16;  110;  57  N".  E.  213. 

Ussery     v.     Crusman      (Tenn.     Ch.  » Lee  v.  Burnley,  195  Pa.  St.  58; 

App.),  47  S.  W.  567.  45  Atl.  668. 

3  Davis    V.    Sanderlin,    119    N.    C.  lo  Fourth  Street  National  Bank  V. 
84;  25  S.  E.  815.  Whitaker,   170  Pa.  St,  29V;   33  Atl. 

4  Spencer,  etc..  Co.  v.  Johnson,  53  100. 
S.  C.  533;  31  S.  E.  392. 


1478  PAGE    ON    CONTEACTS. 

comes  a  general  partnership  on  expiration  of  the  time  for  which 
it  was  formed/^  But  under  a  statute  allowing  a  limited  part- 
nership to  succeed  to  a  firm  name  it  may  succeed  to  the  name  of 
one  who  becomes  a  limited  partner,  even  if  without  such  succes- 
sion the  use  of  his  name  would  have  made  him  a  general  part- 
ner/" 

§943.    Joint  stock  companies. 

A  partnership  may  by  agreement  issue  stock  and  thus  resem- 
ble a  corporation  in  outward  form  without  losing  any  of  the 
essential  attributes  of  a  partnership.^ 

§944.    Scope  of  partnership. 

The  scope  of  a  partnership  is  primarily  a  question  of  the  in- 
tention of  the  partners.  There  is  no  restriction  on  the  exercise 
of  such  powers  as  it  chooses  at  any  time  to  exercise,  except  such 
prohibitions  on  illegal,  immoral  or  fraudulent  conduct  as  apply 
equally  to  individuals.^  A  partnership  may  itself  be  a  member 
of  another  firm  if  the  partners  of  the  constituent  firm  consent 
thereto.^  If  it  appears  that  all  the  partners  have  either  author- 
ized or  ratified  the  contract,  no  further  question  as  to  its  valid- 
ity ordinarily  remains.  The  cases  where  the  question  of  the 
validity  of  partnership  contracts  arises  is  where  one  partner  has 
made  the  contract  without  specific  authority  from  his  co-part- 

11  Sarmiento  v.  The  Catharine  C,  A  partnership  is  not  a  "  corporation, 
110  ]\Iich.  120;  67  N.  W.  1085.  joint-stock  company,  or  association, 

12  Groves    v.    Wilson,    168    Mass.  or    acting    corporation    or    associa- 
370;  47  N.  E.  100.  tion  "  for  purposes  of  serving  sum- 

1  Wadsworth  v.  Duncan,   164  III.  mons.    In  re  Grossmayer,  177  U.  S. 

360;  45  N.  E.  132;  Hodgson  v.  Bald-  48,  50. 

win,   65   111.   532 ;    Kenyon  v.  Will-  i  In  this  respect  it  differs  sharply 

lams,  19  Ind.  44;  Edwards  v.  Gaso-  from    corporations.     See   §    1067    et 

line  Works,  168  Mass.  564;  38  L.  R.  seq. 

A.  791;   47  N.  E.  502;   Farnum  v.  2  Willson  v.  Morse,  117  la.  581; 

Patch,  60  N.  H,  294;  49  Am.  Rep.  91  N.  W.  823;  Meador  v.  Hughes,  14 

313;    Carter   v.   McClure,    98    Tenn.  Bush     (Ky.)     652;    McLaughlin    v. 

109;  60  Am.  St.  Rep.  842;  36  L.  R.  Mulloy,  14  Utah  490;  47  Pac.  1031; 

A.    282;    38    S.    W.    585;    Willis   v.  Commercial  Bank  v.  Miller,  96  Va. 

Chapman,  68  Vt.  459;   35  Atl.  459.  357;  31  S.  E.  812. 


PAKTNERSHIP.  l-iTO 

ners.  As  to  their  implied  scope  partnersliips  may  be  divided 
into  the  classes  of  the  non-trading  and  the  trading.  Some  pow" 
ers  can  be  exercised  by  partners  in  partnership  of  either  type. 
Thus  a  partner  may  retain  an  attorney  to  protect  the  interests 
of  the  firm.^ 

§945.     Liability  of  partners  on  contract  within  scope  of  business. 

Liability  to  third  persons  on  j)ai'taership  contracts  arises 
from  the  actual  existence  of  the  partnership  in  question,  by  ex- 
press acquiescence,  by  ratification  and  by  estoppel.  If  a  part- 
nership exists  in  fact,  the  partners  are  liable  on  contracts  made 
within  the  scope  of  the  partnership  business  by  any  one  of  the 
partners,  if  the  adversary  party  knows  of  no  limitation  on  his 
authority,^  even  where  the  adversary  party  did  not  know  who 
such  partners  were  when  he  entered  into  such  contract."  If  the 
contract  is  within  the  actual  scope  of  the  partnership  business, 
the  members  are  liable  thereon,  without  any  reference  to  prin- 
ciples of  estoppel.^  Thus  if  a  partner  has  authority  to  obtain 
certain  information  the  partnership  is  liable  for  acts  done  by 
him  to  obtain  such  information.*  Illustrations  of  the  power  of 
a  partner  to  bind  the  firm  within  the  general  scope  of  its  business 
are  given  in  subsequent  sections.^ 

3  Tomlinson         v.          Broadsmith  229;   Weir  Furnace  Co.  v.  Bodwell, 

(1896),  1  Q.  B.  386.  73  Mo.  App.  389;  Jones  v.  Beekman 

iFlagg    V.    Stowe,    85    111.    164;  (N".   J.   Eq.),   47   Atl.    71;    Central, 

Baxter   v.   Rollins,    90    la.   217;    48  etc..  Bank  v.  Walker,  66  N.  Y.  424; 

Am.   St.   Rep.  432;    57   N.  W.   838;  Ash  v.  Guie,  97  Pa.  St.  493;  39  Am. 

Warren   v.*  French,   6   All.    (Mass.)  Rep.  818;  Harrod  v.  Hamer,  32  Wis. 

317;    Mace  v.  Heath,   30  Neb.  620;  162. 

46  K  W.  918;  Pooley  v.  Whitmore,  3  Chicago,   etc..   Bank  v.  Kinnare, 

10  Heisk.   (Tenn.)  629;  27  Am.  Rep.  174  m.  358;   51  N.  E.  607;   revers- 

733.  ing,    67    111.    App.    186;     Slater    v. 

2  Blanehard  v.  Kaull,  44  Cal.  440;  Clark,  68  111.  App.  433;  Patterson  v. 

Bigelow    V.    Gregory,    73    111.    197;  Swickard     (Ky.),    41     S.    W.    435; 

Coleman   v.   Coleman,   78   Ind.   344;  Vetsch  v.   Neiss,  66  Minn,  459;    69 

Kaiser  v.  Bank,  56  la.  104;  41  Am.  N.  W.  315. 

Rep.  85;   8  N.  W.  772;   Johnson  v.  ^Hamlyn    v.    Houston    (1903),    1 

Carter,  120  la.  355;  94  N.  W.  850;  K.  B.  81."^ 

Parrish  v.  Maupin    (Ky.),  42  S.  W.  5  See  §§  946,  947. 
1121;  Holbrook  v.  Ins.  Co.,  25  Minn. 


■1-:S0 


PAGE    OJST    CONTEACTS; 


§946.     Non-trading  firms. 

A  partner  in  a  non-trading  firm  has  very  limited  power  to 
bind  tlie  partnershij).  A  partner  in  a  non-trading  firm  may 
contract  for  supplies/  but  lie  cannot  otherwise  contract  firm 
debts,"  and  he  cannot  give  the  firm's  note  even  for  the  firm's 
debt,  so  as  to  bind  his  partners  if  they  object  thereto.^  Thus  a 
member  of  a  law  firm  cannot  borrow  money  for  the  firm,^  or 
bind  the  firm  by  a  note,°  or  agree  to  collect  a  note  without 
charge,^  or  be  a  constructive  trustee  so  as  to  charge  his  partner 
with  knowledge.'^  So  one  of  a  firm  of  solicitors  cannot  allow  a 
third  person  to  use  the  firm  name.*  A  member  of  a  mining 
partnership  has  not  general  power  to  bind  his  partners."  So  a 
member  of  a  firm  of  physicians/''  publishers,"  or  planters,^^ 


iMcPherson  v,  Bristol,  122  Mich. 
354;  81  N".  W.  254. 

2  Schellenbeck  v.  Studebaker,  13 
Ind.  App.  437;  55  Am.  St.  Rep.  240; 
41  N.  E.  845;  Breckinridge  v. 
Shrieve,  4  Dana  (Ky.)  375;  Smitli 
V.  Sloan,  37  Wis.  285;  19  Am.  Rep. 
757. 

sDowling  V.  Bank,  145  U.  S.  512; 
Teed  v.  Parsons,  202  111.  455 ;  66  N. 
E.  1044;  reversing,  100  111.  App. 
342;  Schellenbeck  v.  Studebaker,  13 
Ind.  App.  437;  55  Am.  St.  Rep.  240; 
41  K  E.  845;  Lee  v.  Bank,  45  Kan. 
8;  11  L.  R.  A.  238;  25  Pac.  196; 
Harris  v.  Baltimore,  73  Md.  22;  25 
Am.  St.  Rep.  565;  8  L.  R.  A.  677; 
17  Atl.  1046;  20  Atl.  Ill,  985;  Mc- 
Pherson  v.  Bristol,  115  Mich,  258; 
73  N.  W.  236 ;  Stavnow  v.  Kenefick, 
79  Mo.  App.  41 ;  National,  etc..  Bank 
V.  Xoyes,  62  N.  H.  35;  Walker  v. 
Walker,  66  Vt.  285;  29  Atl.  146; 
Snively  v.  Matheson,  12  Wash.  88; 
50  Am.  St.  Rep.  877;  40  Pac.  628; 
Smith  V.  Sloan,  37  Wis,  285;  19  Am. 
Rep.  757. 

*Worster  v.  Forbush,  171  Mass. 
423;  50  N.  E.  936. 

sHedley    v.    Bainbridge    3    Q,    B. 


316;  Garland  v.  Jacomb,  L.  R.  8 
Exch.  216;  Lexj  v,  Pyne,  Car.  &  M. 
453;  Breckinridge  v.  Shrieve,  4 
Dana   (Ky.)  375. 

6  Davis  V.  Dodson,  95  Ga.  718;  51 
Am.  St,  Rep.  108;  29  L,  R,  A.  496; 
22  S.  E.  645.  (Hence  if  he  misap- 
propriates the  money,  the  firm  is  not 
liable.) 

7  Mara  v.  Browne  (C.  A.)  (1896), 
1  Ch.  199, 

8  Marsh  v.  Joseph  (C.  A.)  (1897), 
1  Ch.  213. 

sMcConnell  v.  Denver,  35  Cal. 
365;  95  Am.  Dec.  107;  Skillman  v. 
Lachman,  23  Cal.  199;  83  Am.  Dec. 
96 ;  Patrick  v.  Weston,  22  Colo,  45 ; 
43  Pac,  446;  Judge  v.  Brasewell,  13 
Bush  (Ky.)  67;  Congdon  v.  Olds, 
18  Mont.  487;  46  Pac.  261;  Wal- 
dron  V.  Hughes,  44  W.  Va.  126;  29 
S.  E.  505. 

10  Crosthwait  v.  Ross,  1  Humph. 
(Tenn.)  23;  34  Am.  Dee.  613, 

11  Pooley  V,  Whitmore,  10  Heisk. 
(Tenn.)   629;  27  Am.  Rep.  733. 

12  Benton  v.  Roberts,  4  La.  Ann. 
216;  Prince  v.  Crawford,  50  Misa- 
344. 


PAETNEESIIIP. 


1481 


3annot  bind  the  firm  bj  a  note.  A  firm  engaged  in  the  business 
of  contracting  and  building/^  or  digging  tunnels,"  or  in  paving 
and  curbing  streets/^  or  in  keeping  a  tavern/^  or  in  milling/''^ 
is  a  non-tradinc;  firm. 


§947.     Trading  firms. 

A  member  of  a  trading  firm  may  bind  his  firm  by  borrowing 
money  on  their  behalf/  especially  if  the  partnership  has  ac- 
quiesced in  similar  loans  on  former  occasions,^  and  giving  their 
note/  or  making  drafts  for  them/  even  if  the  money  thus  ad- 
vanced in  good  faith  is  in  fact  diverted  by  the  borrowing  part- 
ner.^ So  where  A  indorsed  a  note  for  a  firm,  in  good  faith, 
though  the  proceeds  were  not  applied  to  the  firm's  debts,  and  A 
had  to  jDay  the  note,  he  may  recover  from  the  firm.*'  A  partner 
may  give  a  chattel  mortgage.'^  A  partner  cannot  bind  the  firm 
by  accommodation  j^aper,^  or  by  a  contract  of  guaranty,®  nor  by 


13  Snively  v.  Matheson,  12  Wash. 
88;  50  Am,  St.  Rep.  877;  40  Pac. 
628. 

14  Gray  v.  Ward,  18  111.  32. 

15  Harris  v.  Baltimore,  73  Md. 
22;  25  Am.  St.  Rep.  565;  8  L.  R.  A. 
o77;  17  Atl.  1046;  20  Atl.  Ill,  985. 

iG  Cocke  V.  Bank,  3  Ala.  175. 
17  Lanier   v.    McCabe,   2    Fla.   32; 
48  Am.  Dec.  173, 

1  First  National  Bank  v.  Grignon, 
7  Ida.  646;  65  Pac.  365. 

2  Salt  Lake  City  Brewing  Co.  v. 
Hawke,  24  Utah  199;  66  Pac.  1058. 

(A  loan  by  a  brewery  to  a  saloon, 
borrowed  to  cash  miners'  checks.) 

3  Morris  v.  Maddox,  97  Ga.  575; 
25  S.  E.  487;  First  National  Bank  v. 
Grignon,  7  Ida.  646;  65  Pac.  365; 
Dickson  v.  Dryden,  97  la.  122;  66 
N.  W.  148;  Carter  v.  Steele,  83  Mo. 
App.  211. 

4  Farmer  v.  Bank  (Ky.),  51  S. 
W.  586. 

sDowling  V.  Bank,  145  U.  S.  512; 
Winship  v.  Bank,  5  Pet.  (U.  S.) 
529;  Sherwood  v.  Snow,  46  la.  481; 


26  Am.  Rep.  155;  Smith  v,  Collins, 
115  Mass.  388;  Stimsou  v.  Whitney, 
130  Mass.  591;  Fuller  v.  Percival, 
126  Mass.  381;  Atlas  National  Bank 
V.  Savery,  127  Mass.  75;  34  Am. 
Rep.  345;  Reed  v.  Bacon,  175  Mass. 
407;  56  N.  E.  716;  Stevens  v.  Mc- 
Lachlan,  120  Mich.  285;  79  N.  W. 
627;  First  National  Bank  v.  Mor- 
gan, 73  N.  Y.  593;  Real  Estate  In- 
vestment Co.  V.  Smith,  162  Pa.  St. 
441 ;  29  Atl.  855. 

eMeyran  v.  Abel,  189  Pa.  St. 
215;  69  Am.  St.  Rep.  806;  42  Atl. 
122. 

7  Morris  v.  Hubbard,  14  S.  D. 
525;  86  N.  W.  25;  Rock  v.  Collins, 
99  Wis.  630;  67  Am.  St.  Rep.  885; 
75  N.  W.  426.  But  in  Louisiana  a 
partner  must  have  express  authority 
to  execute  a  mortgage.  Kahn  v. 
Becnel,  108  La.  296;  32  So.  444. 

s  Union  National  Bank  v.  Wick- 
ham,  IS  Ohio  C.  C.  685;  6  Ohio  C. 
D.  790. 

9  Kelley-Goodfellow  Shoe  Co.  v. 
Lumber  Co.,  86  Mo.  App.  438. 


1482 


PAGE    ON    CONTEACTS. 


a  note  for  a  debt  of  their  predecessors/"  nor  by  a  note  given  ior 
an  individual  debt  in  wbole/^  or  in  part/"  even  to  prevent  sucb 
creditor  from  reaching  such  partner's  interest  in  such  firni/^ 
nor  can  he  give  a  note  in  renewal  of  a  debt  from  which  the  firm 
has  been  released  by  failure  to  protest/*  nor  can  he  give  a  note 
due  at  once  for  debt  not  yet  due.^^  Ordinarily  he  cannot  as- 
sume debts  of  others/®  or  bind  the  firm  for  his  own  debt/^  and 
he  cannot  pay  individual  debts  with  firm  money/^  or  prefer  indi- 
vidual debts  in  assignment/®  or  mortgage  firm  property  for  an 
individual  debt,^°  nor  can  he  bind  the  firm  by  a  promise  to  in- 
demnify a  surety/^  though  he  may  bind  the  finn  as  surety  on 
their  own  debt.""  Thus  he  may  guarantee  a  note  sold  by  them,"^ 
or  may  buy  a  stock  of  goods  and  assume  debts  against  it,  in  or- 
der to  secure  their  own  debt/*  or  may  give  a  mortgage  to  secure 
a  firm  debt,  even  though  the  notes  of  individual  partners  were 
originally  given  therefor.^^  He  cannot  confess  judgment 
against  the  firm,"''  though  as  such  judgment  is  voidable  only  at 


10  Broughton  v.  Sumner,  80  Mo. 
App.  386. 

iiTeny  v.  Piatt.  1  Penn.  (Del.) 
185;  40  Atl.  243;  Cody  v.  Bank,  103 
Ga.  789;  30  S.  E.  281;  McPvae  v. 
Campbell,  101  Ga.  662;  28  S.  tl. 
920;  Brobston  v.  Penniman,  97  Ga. 
627;  25  S.  E.  3.50. 

12 Hatch  V.  Reid,  112  Mich.  430; 
70  N.  W.  889;  Huttig,  etc.,  Co.  v. 
Mc:\Iahon,  81  Mo.  App.  440. 

i3Durrell  v.  Staples,  169  Mass. 
49;  47  N.  E.  441. 

14  Meyer  v.  Hegler,  121  Cal.  682 ; 
54  Pac.  271. 

isMcCord  Co.  v.  Callaway,  109 
Ga.  796;  35  S.  E.  171. 

16  Rice  V.  Jackson,  171  Pa.  St. 
89;  32  Atl.  1036. 

17  Lewin  v.  Barry,  15  Colo.  App. 
461;  63  Pac.  121  (for  rent);  Tal- 
bott  V.  Plaster  Co.,  86  Mo.  App. 
558;  \Yoolson  v.  Fuller,  71  Vt.  335; 
45  Atl.  753   (for  clothes). 

18  Columbia  National  Bank  v. 
Rice,  48  Xcb.   428;   67   N.  W.   165; 


Brown  v.  Pettit,  178  Pa.  St.  17;  56 
Am.  St.  Rep.  742;  34  L.  R.  A.  723; 
35  Atl.  865. 

19  Field  V.  Romero,  7  N.  M.  630 ; 
41  Pac.  517. 

2oMcCord  Co.  v.  Callaway,  109 
Ga.  796;  35  S.  E.  171;  Johnson  v. 
Shirley,  152  Ind.  453;  53  N.  E.  459; 
Mansur,  etc.,  Co.  v.  Ritchie,  143  Mo. 
587;  45  S.  W.  634  (even  if  all  part- 
ners concur  —  but  see  Buchanan 
V.  Bank  (Tenn.  Ch.  App.),  57  S. 
W.  207). 

21  Seeberger  v.  Wyman,  108  la. 
527 ;  79  N.  W.  290. 

22  McLaughlin  v.  Mulloy,  14  Utah 
490;  47  Pac.  1031. 

23  McXeal  v.  Gossard,  6  Okla.  363 ; 
50  Pac.  159. 

24  National  Bank  v.  Dickinson, 
107  Ala.  265;  18  So.  144. 

25  \Yest  Coast  Grocery  Co.  v.  Stin- 
son,  13  Wash.  255-  43  Pac.  35. 

2G  Harper  v.  Cunningham,  8  App. 
D.  C.  430.  Contra,  Adams  v.  Leeds 
Co.,  195  Pa.  St.  70;  45  Atl.  666. 


.PARTNERSHIP.  1483 

the  election  of  the  partners,  a  creditor  cannot  attack  it.^^  One 
partner  cannot  make  a  general  assignment  for  the  benefit  of  the 
firm's  creditors^  if  the  other  partners  are  accessible,"^  though  he 
can  if  thej  have  absconded.-**  He  cannot  mortgage  all  the  prop- 
erty of  the  firm  even  for  firm  debts  if  the  other  partners  are 
accessible,^"  but  he  may  give  a  chattel  mortgage  on  all  the  firm's 
property  in  the  absence  of  his  partners.^^  He  cannot  execute 
a  sealed  instrument  on  behalf  of  the  firm,^"  even  if  a  sealed  in- 
strument is  negotiable  by  law  in  the  state  iii  which  it  is  exe- 
cuted,^^  but  if  a  seal  is  not  necessary  to  its  validity,  it  may  be 
rejected  as  surplusage.^*  While  a  partner  in  a  trading  firm  has 
power  to  sell  property  of  the  firm  in  the  general  course  of  the 
firm's  business,  he  has  no  power  to  sell  partnership  property,  the 
sale  of  which  will  make  it  practically  impossible  for  the  firm  to 
continue  in  business.^^  Thus  a  member  of  a  farming  firm  can- 
not sell  the  live  stock  and  farming  implements.^®  He  cannot 
sell  property  of  the  firm  in  which  it  does  not  deal.^'  He  can 
buy  and  sell  such  articles  as  are  proper  in  the  exercise  of  the 
business  of  the  firm,  and  the  firm  is  bound  by  such  contract  even 
if  other  partners  have  already  sold  all  of  such  goods  on  hand.^* 
He  cannot  buy,  on  speculation,  articles  in  which  the  firm  deals 

27  Belcher  v.  Curtis,  119  Mich.  1;  25   S.   E.  298;    Waldron  v.  Hughes, 
75  Am.  St.  Rep.  376;  77  N.  W.  310;  44  W.  Va.  126;  29  S.  E.  505. 
McAlpin  Co.  v.  Finsterwald,  57  O.  S.  33  Hull  v.  Young,  30  S.  C.  121 ;  3 
524;  49  N.  E.  784.  L.  R.  A.  521;  8  S.  E.  695. 

28  Parker  v.  Brown,  85  Fed.  595;  34  Waldron  v.  Hughes,  44  W.  Va. 
29  C.  C.  A.  357;  Mills  v.  Miller,  109  126;  29  S.  E.  505. 

la.  688;  81  N.  W.  169;  Loeb  v.  Pier-  35  Lowman    v.    Sheets,     124    Ind. 

pont,  58  la.  469;  43  Am.  Rep.  122;  416;  7  L.  R.  A.  784;  24  N.  E.  351; 

12   N.   W.    544;    Shattuck  v.   Chan-  Hewitt    v.    Sturdevant,    4    B.    Mon. 

dler,  40  Kan.  516;   10  Am.  St.  Rep.  (Ky.)  453;  Cayton  v.  Hardy,  27  Mo. 

227;  20  Pac.  225;  Fox  V.  Curtis,  176  536;    Phillips    v.    Thorp,    12    Okla. 

Pa.  St.  52;  34  Atl.  952.  617;  73  Pac.  268. 

29Voshmik  v.   Urquhart,  91   Wis.  36  Rutherford    v.    McDonnell,     66 

513;  65  N.  W.  60.  Ark.  448;   51   S.  W.   1060.     Contra, 

soMcGrath    v.    Cowen,    57    O.    S.  one    partner    may    sell    the    entire 

385;    49    N.    E.    338;    McManus    v.  stock,  Hetterman  Bros.  Co.  v.  Young 

Smith,  37  Or.  222;   61  Pac.  844.  (Tenn.  Ch.  App.),  52  S.  W.  532. 

siBeckman    v.    Noble,    115    Mich.  37  pimpton  v.  Taylor,  11  Ohio  C. 

523;  73  N.  W.  803.  D.  570. 

32Milwee  v.   Jay,    47    S.   C.   430;  ss  Bass    Dry    Goods    Co.    v.    Mfg. 


1484 


PAGE    ON    CONTKACTS. 


regularly.^*  A  member  of  a  firm  of  cotton  factors  cannot  make 
a  valid  sale  of  cotton  for  his  firm  on  speculation.*"  He  can  com- 
promise claims  if  in  good  faitli/^  but  not  where  the  only  consid- 
eration for  such  compromise  is  a  personal  advantage  received  by 
such  partner.*^  One  partner  cannot  contract  for  liquidated 
damages,*^  or  waive  exemptions/*  or  bind  his  partner  by  repre- 
sentations as  to  property  formerly  owned  by  the  firm  which  has 
been  divided  between  the  partners  and  has  become  individual 
property.*^  A  member  of  a  firm  of  real-estate  brokers  may 
agree  to  pay  a  commission  to  an  agent  acting  for  the  firm  in 
making  sales/''  or  may  revoke  a  contract  to  give  his  firm  ex- 
clusive right  to  sell  realty  on  commission  in  a  certain  time.*^  A 
partner  of  a  firm  in  the  bicycle  business  may  give  a  note  for  a 
rubber  and  cement  business  /^  a  partner  in  a  saw  mill  may  con- 
tract to  return  borrowed  lumber.*^  A  partner  in  a  stage  line 
has  no  power  to  contract  for  mining/"  a  partner  to  train  and 
race  horses,  cannot  sell  one  owned  by  them  as  tenants  in  com- 
mon/^ and  power  to  reorganize  and  issue  new  bonds  is  not  power 
to  change  the  gauge  of  the  road.^^ 


Co.,    113   Ga.    1142;    39    S.   E.   471. 

ssMaurin  v.  Lyon,  69  Minn.  257; 
65  Am.  St.  Rep.  568 ;  72  N.  W.  72. 

40  Sparks  v.  Flannery,  104  Ga. 
323 ;  30  S.  E.  823. 

4i\Yalker  v.  Lumber  Co.  (Ky.)j 
35  S.  W.  272. 

42  Remington  v.  Ry.  Co.,  109  Wis. 
1.54;  84  N.  W.  898;  85  N.  W.  321 
(where  a  fee  due  to  a  firm  of  attor- 
neys was  compromised  by  one  of 
them  by  accepting  employment  as 
attorney  at  a  salary  which  formed  a 
reasonable  compensation  for  such 
services).  So,  Davis  v.  Dodson,  95 
Ga.  718;  51  Am.  St.  Rep.  108;  29  L. 
R.  A.  496;  22  S.  E.  645. 

43  Waldron  v.  Hughes,  44  W.  \'^. 
126;  29  S.  E.  505. 

44  Guscott  v.  Roden,  112  Ala.  632; 
21  So.  313. 


45  Spencer  v.  Jones,  92  Tex.  516; 
71  Am.  St.  Rep.  870;  50  S.  W.  118; 
reversing,  47  S.  W.  29,  665. 

46  Boyd  V.  Watson,  101  la.  214; 
70  X.  W.  120. 

47  Harper  v.  McKinnis,  53  O.  S. 
434;  42  N.  E.  251  (even  in  order  to 
buy  such  realty  himself). 

48  Ketcham  National  Bank  v. 
Hagen,  164  N.  Y.  446;  58  N.  E.  523. 

49  Forbes  v.  Morehead  (Ky.),  58 
S.  W.  982. 

50  Gutheil  v.  Gilmer,  23  Utah  84 ; 
63  Pae.  817;  Cavanaugh  v.  Salis- 
bury, 22  Utah  465 ;  63  Pac.  39. 

51  Williams  v.  Tam,  131  Cal.  64; 
63  Pac.  133. 

52  Browning  v.  Kelley,  124  Ala. 
645:  27  So.  391;  Modifying  on  re- 
hearing, 113  Ala.  420;  21  So.  928. 


PAETNEESHIP.  1485 

§948.     Express  acquiescence. 

A  contract  to  which  all  the  members  of  a  partnership  give 
their  consent  is  binding  upon  them/  even  if  outside  the  ordinary 
business  of  the  partnership."  Thus  all  the  partners  may  agree 
to  an  assignment  for  the  benefit  of  creditors.^  So  with  the  eon- 
sent  of  all  the  partners,  one  partner  may  apply  partnership 
funds  to  an  individual  liability.* 

§949.     Liability  of  partners  on  contract  without  scope  of  business. 

If  a  contract  is  made  by  one  partner  in  excess  of  his  authority 
and  no  circumstances  of  estoppel  exist,  the  remaining  partners 
are  not  liable  upon  such  contract.^  If  the  firm  consists  of  two 
partners,  one  of  them  can  avoid  liability  on  future  contracts  by 
giving  notice  of  his  dissent  to  the  person  with  whom  such  con- 
tract is  made,^  even  if  under  such  contract  property  was  actually 
received  by  the  firm.^  So  if  A  and  B  are  partners  and  X  before 
selling  to  the  firm  through  A  on  credit  is  notified  by  B  not  to  sell 
on  credit,  X  cannot,  after  selling  on  credit,  hold  B.*  If  the 
firm  consists  of  more  than  two  members  a  minority  cannot  re- 
voke the  authority  of  agents  previously  appointed  and  empow- 
ered to  act.^  So  employment  of  an  attorney  by  the  majority 
may  bind  the  firm  even  as  against  the  active  dissent  of  one  part- 

iKling  V.  Tunstall,  109  Ala.  608;  Peterson  v.  Armstrong,  24  Utah  96; 

19    So.    907;    Seeberger    v.    Wyman,  06  Pac.  767. 

108  la.  527;  79  N.  W.  290.  2  Wilcox  v.  Jackson,  7  Colo.  521; 

2Penn  v.  Fogler,   182  111.  76;    55  4  Pac.  966;   Knox  v.  Buffington,  50 

:N.   E.    192;    reversing,   77   111.  App.  la.   320;   Johnston  v.  Bernheim,   86 

365;  Kincaid  v.  Paper  Co.,  63  Kan.  N.   C.    339;    Yeager   v.   Wallace,   57 

288;  88  Am.  St.  Rep.  243;  54  L.  K.  Pa.  St.  365. 

A.  412;  65  Pac.  247.  3  Dawson  v.  Elrod,   105  Ky.  624; 

sDrucker    v.    Wellhouse,    82    Ga.  88  Am.  St.  Rep.  320;  49  S.  W.  465; 

129;  2  L.  R.  A.  328;  8  S.  E.  40.  Monroe  v.   Conner,   15  Me.   178;    32 

4  Kincaid  v.   Paper   Co.,   63  Kan.  Am.  Dec.  148. 

288;  88  Am.  St.  Rep.  243;  54  L.  R.  *  Dawson  v.  Elrod,   105  Ky.  624; 

A.  412;  65  Pac.  247;  Hutchinson  v.  88  Am.  St.  Rep.  320;  49  S.  W.  465; 

Morris,  86  Mo.  App.  40.  Monroe  v.  Conner,   15  Me.  178;   32 

1  Thompson    v.    Bank,    111    U.    S.  Am.  Dec.  148. 

529;  Nofsinger  v.  Goldman,  122  Cal.  s  Johnston  v.  Dutton,  27  Ala.  245; 

609;  55  Pac.  425;  Cook  v.  Slate  Co.,  Lerch  v.  Bard,  177  Pa.  St.  197;   35 

36    0.    S.    135;    38    Am.    Rep.    568;  Atl.  714, 


1486 


PAGE    ON    CONTRACTS. 


ner.®  Still  less  can  a  firm  Le  held  liable  on  a  contracr  with  an 
individual  member,  where  it  is  not  shown  that  such  contract  was 
made  on  behalf  of  the  firm/ 

§950.     Estoppel. 

Although  no  partnership  in  fact  exists,  or  although  its  pow- 
ers have  been  exceeded,  third  persons  who  have  been  misled  as  to 
the  existence  or  powers  of  the  partnership  and  have  acted  in 
reliance  on  such  belief,  may  enforce  partnership  liabilitj'  against 
those  persons  who  have  so  misled  them  and  held  themselves  out 
as  members  of  the  partnership  in  question  or  have  held  out  the 
person  with  whom  such  third  person  dealt  as  n  member  thereof.^ 
A  partnership  is  liable  for  the  transactions,  of  one  whom  they 
allow  to  act  as  a  partner."  So  where  creditors  trust  persons  as 
partners,  and  property  as  firm  property,  they  may  subject  such 
property  to  their  debts  as  against  individ-aal  partners  or  their 
creditors.^  So  secret  limitations  on  the  apparent  power  of  a 
partner  are  ineffectual  as  to  one  dealing  -ivith  him  in  ignorance 


6  At  least  such  attorney  may  rep- 
resent the  firm  in  court.  Clark  v. 
Ry.,  136  Pa.  St.  408;  10  L.  R.  A. 
238;  20  Atl.  562.  So  the  majority 
if  acting  in  good  faith  cannot  be 
charged  with  losses  caused  by  events 
that  could  not  be  foreseen,  as  long 
as  they  act  within  the  scope  of  the 
partnership  business,  even  though 
the  minority  object.  Markle  v.  Wil- 
bur, 200  Pa.  St.  457 ;  50  Atl.  204. 

7  Wood  v.  Martin,  115  Ga.  147; 
41  S.  E.  490;  Rothrock  Construc- 
tion Co.  v.  Mfg.  Co.,  80  Miss.  517; 
32  So.  484. 

iMcGowan  v.  Tan  Bark  Co.,  121 
U.  S.  575;  Tillis  v.  McKinna,  114 
Ala.  311;  21  So.  465;  Carlton  v. 
Grissom,  98  Ga.  118;  26  S.  E.  77;' 
Gray  v.  Blasingame,  110  Ga.  343; 
35  S.  E.  653 ;  Daugherty  v.  Heckard, 
189  111.  239;  .59  N.  E.  569;  Janes  v. 
Gilbert.  168  111.  627;  48  N.  E.  177; 
affirming,  68  111.  App.  611;   Dooley 


v.  Vance,  97  111.  App.  42;  Janes  v. 
Bergevin,  83  111.  App.  607;  Wilson 
V.  Roelofs,  88  111.  App.  480;  Waller- 
ich  V.  Smith,  97  la.  308;  66  N.  W. 
184;  Rideb  v.  Hammell,  63  Kan. 
733;  66  Pac.  1026;  Green  v.  Taylor, 
98  Ky.  330;  56  Am.  St.  Rep.  375; 
32  S.  W.  945,^  Safety,  etc.,  Associa- 
tion V.  O'Meara  (Ky.),  58  S.  W. 
775;  Johnson  v.  Marx,  109  La.  1036; 
34  So.  68;  Houston  River  Canal  Co. 
V,  Kopke,  106  La.  609;  31  So.  156; 
Stimson  v.  Whitney,  130  Mass.  591; 
Princeton,  etc.,  Co.  v.  Gulick,  16  N. 
J.  L.  161;  Fowler  v.  Bank  (Tenn. 
Ch.  App.),  57  S.  W.  209;  Bartlett  v. 
Clough,  94  Wis.  196;  68  N.  W.  875. 

2  Chicago,  etc..  Bank  v.  Kinnare, 
174  111.  358;  51  N.  E.  607;  revers- 
ing, 67  111.  App.  186;  Tyler  v. 
Omeis,  76  Minn.  537 ;  79  N.  W.  528. 

3  Thayer  v.  Humphrey,  91  Wis. 
276;  51  Am.  St.  Rep.  887;  30  L.  R. 
A.  549;  64  N.  W.  1007. 


PAKTIS^EESIIIP.  1487 

thereof,*  as  wlicre  a  partner  had  been  for  years  accustomed  to 
sign  his  firm's  name  to  accommodation  paper  and  they  had  ac- 
quiesced therein.^  So  introducing  one  as  a  partner,  putting  his 
name  on  letter  heads  and  signing  a  letter  announcing  that  he  is  a 
member  of  the  firm  is  admissible  to  prove  liability  as  a  partner.* 

50  a  contract  with  a  firm  whereby  the  firm  is  to  furnish  goods 
as  a  set-off  against  a  debt  incurred  against  the  firm  is  binding 
upon  a  subsequent  secret  partner,  so  that  after  such  goods  are 
furnished  the  new  firm  cannot  recover  from  the  party  to  whom 
they  are  furnished/ 

The  reason  for  this  general  rule  is  that  third  persons  are  not 
bound  to  know  of  the  existence,  scope  or  powers  of  a  partner- 
ship, and  under  principles  of  estoppel  may  rely  upon  repre- 
sentations made  to  them,  believed  by  them  and  acted  on  by  them, 
so  as  to  preclude  those  making  such  representations  from  after- 
wards denying  them.*  Estoppel  may  operate  conversely  to  pre- 
vent proof  of  an  existing  partnership.  Thus,  if  A  has  by  his 
conduct  induced  X  to  believe  that  B  is  the  sole  party  in  interest 
and  to  deal  with  him  accordingly,  A  is  estopped  from  proving 
that  he  was  in  fact  B's  partner.^  This  last  principle  is  not, 
however,  acquiesced  in  by  all  the  courts.  One  who  purchases 
goods  as  an  individual  is  not  estopped  to  show  that  he  is  acting 

4  Irwin  V.  Williar,  110  U.  S.  499;  221;  Locke  v.  Lewis,  124  Mass.  1; 
Bass  Dry-Goods  Co.  v.  Mfg.  Co.,  113  26  Am.  Rep.  631.  Though  such 
Oa.  1142;  39  S.  E.  471;  McDonald  prior  debt  was  not  of  itself  binding 
V.  Fairbanks,  161  111.  124;  43  N.  E.  on  the  incoming  partner. 

783;    affirming,    58    111.    App.    384;  See  §  955. 

Crane   Co.  v.   Tierney,   175   111.   79 ;  s  An    interesting   example   arising 

51  N.  E.  715;  reversing,  75  111.  App.  occasionally  under  estoppel,  of  those 
354;  Rice  v.  Jackson,  171  Pa.  St.  cases  where  a  person  cannot  lie 
89 ;  32  Atl.  1036.  though  he  tries  strenuously  to  do  so, 

5  Bank,  etc.,  v.  Weston,  159  N.  Y.  exists  where  a  retiring  partner  al- 
201;  45  L.  R.  A.  547;  54  N.  E.  40;  lows  a  third  person  to  deal  with  the 
Second  National  Bank  v.  Weston,  firm  after  dissolution  under  the  be- 
161  N.  Y.  520;  76  Am.  St.  Rep.  283;  lief  that  he  is  still  a  member.  As 
55  N.  E.  1080.  he    is    thus    estopped    to    deny    the 

6  Peninsular  Savings  Bank  v.  Cur-  partnership,  he  is  not  guilty  of 
rie,  123  Mich.  666;  82  N.  W.  511.  fraud.     Wilson    v.    Roelofs,    88    111. 

TNeeley      v.      Flummerfelt,      116      App.  480. 
Mich.  344;   74  N.  W.  1118,  and  see  9  Willard  v.  Bullen,  41  Or.  25;  67 

Rogers  v.  Batchelor,  12  Pet.  (U.  S.)      Pac.  924;  68  Pae.  422. 


1488  PAGE    ON    CONTKACTS. 

for  a  firm  of  "which  he  is  a  member,  when  the  vendor  undertakes 
to  apply  a  payment  made  for  such  goods  to  an  individual  debt 
due  from  such  individual/" 

§951.     Wrongful  act  or  omission  necessary  to  create  estoppel. 

Estoppel  can  exist  only  where  there  is  some  wrongful  act  or 
omission  of  the  person  against  whom  estoppel  is  sought  to  be  en- 
iorced.  Where  the  person  held  out  as  a  partner  does  not  know 
that  he  is  thus  held  out  and  is  guilty  of  no  negligence  he  cannot 
be  held  liable.^ 

Conduct  not  calculated  or  intended  to  mislead  cannot  be  relied 
on  as  an  estoppel.  Thus  the  fact  that  a  partnership  has  often 
given  its  check  against  funds  in  a  certain  bank  to  pay  the  indi- 
vidual debt  of  a  partner  is  not  such  a  course  of  dealing  that  it  i^ 
estopped  to  deny  the  validity  of  a  note  signed  with  the  partner- 
ship name,  and  given  to  such  bank  by  one  of  the  partners  to  take 
up  his  individual  debt." 

The  declaration  of  one  alleged  partner  as  to  the  existence  of 
the  partnership  does  not  bind  the  other,^  and  is  not  even  ad- 
missible against  such  other,*  though  it  is  as  against  the  party 
making  it.^ 

§952.    Reliance  necessary  to  create  estoppel. 

In  order  to  estop  one  from  denying  his  liability  as  a  partner, 
the  person  in  whose  favor  the  estoppel  is  alleged  must  have  acted 
in  reliance  upon  the  facts  which  are  claimed  to  create  the  estop- 
pel.^    Eirst,  to  create  estoppel  such  facts  must  be  known  to  the 

loHoaglin  v.  Henderson,   119  la,  57;   20  L.  R.  A.  595;   30  Pac.  94; 

720;  97  Am.  St.  Rep.  335;  61  L.  R.  First  National  Bank  v.  Cody,  93  Ga. 

A.  756;  94  N.  W.  247.  127;  19  S.  E.  831;  Frisbie  v.  Felton, 

iNofsinger  v.  Goldman,   122  Cal.  65  Vt.   138;   26  Atl.   110;    Commer- 

609;  55  Pac.  425;  Munton  v.  Ruth-  cial  Bank  v.  Miller,  96  Va.  357;  31 

erford,  121  Mich.  418;  80  N.  W.  112;  S.  E.  812. 

Seabury  v.  Bolles,  52  N.  J.  L.  413;  4  Thompson   v.   Mallory,    108    Ga. 

51  X.  J.  L.  103;   11  L.  R.  A.  136;  797;   33  S.  E.  986. 
21  Atl.  952.  sDodds    v.    Ragan    Co.,    110    Ga. 

2  People's  Savings  Bank  v.  Smith,  303 ;  34  S.  E.  1004. 
114  Ga.  185;  39  S.  E.  920.  iNofsinger  v.  Goldman,   122  CaL 

sVanderhurst  v.  De  Witt,  95  Cal.  609;  55  Pac.  425. 


PARTNEESIIIP. 


1489 


party  alleging  the  estoppel  at  the  time  at  which  he  enters  into 
the  transaction  with  reference  to  which  the  estoppel  is  invoked. 
Thus  where  he  did  not  then  know  that  the  person  against  whom 
he  is  seeking  to  enforce  liability  was  held  out  as  a  partner,  he 
cannot  claim  that  by  reason  of  a  holding  out  as  a  partner  to 
others,  an  estoppel  exists  in  his  favor.~  So  one  who  knows  that 
no  partnership  exists  cannot  enforce  liability  as  partners  against 
members  of  an  alleged  firm  other  than  the  person  with  whom  he 
dfealt.^  Second,  to  cause  estoppel  there  must  be  an  actual  belief 
of  third  persons  based  on  facts  known  to  them  when  they  deal 
with  the  partnership.*  Where  the  representation  was  known  to 
be  untrue  and  not  relied  on,  no  estoppel  can  be  claimed  to  exist.^ 
Thus  if  the  powers  of  a  partner  are  actually  known  to  one  who 
deals  with  him,  the  latter  cannot  claim  that  the  partnership  is 
bound  by  estoppel  if  such  partner  exceeds  his  powers.^  A  part- 
nership is  therefore  not  liable  on  a  contract  made  in  excess  both 
of  the  real  and  of  the  apparent  scope  of  partnership/ 

§953.    Ratification. 

A  partnership  may  become  liable  on  the  unauthorized  con- 
tracts of  its  members,  by  ratification  thereof/  Acquiescence 
by  all  the  partners  in  a  contract,  whether  before  or  after  the  con- 
tract is  executed,  makes  them  liable  thereon,  and  acquiescence 

2  Thompson  v.  Bank,  111  U.  S.  472;  Fisher  v.  McDonald  Co.,  85  III. 
529;  Webster  v.  Clark,  34  Fla.  637;  App.  653;  Fletcher  v.  Pullen,  70 
43  Am.  St.  Rep.  217;  27  L.  R.  A.  Md.  205;  14  Am.  St.  Rep.  355;  16 
126;    16   So.  601;   Wood  v.  Pennell,  Atl.  887. 

51  Me.  52;   Parehen  v.  Anderson,  5  s  Nightingale  v.  Furniture  Co.,  71 

Mont.  438;  51  Am.  Rep.  65;  5  Pac.  Fed.    234;    Thornton    v.    McDonald, 

588;  Carey  v.  Marshall,  67  N.  J.  L.  108  Ga.  3;    33   S.  E.  680;   Pratt  v. 

236;  51  Atl.  698;  Cook  v.  Slate  Co.,  Langdon,  97  Mass.  97;  93  Am.  Dec. 

36  O.  S.  135;  38  Am.  Rep.  508;  Den-  61 ;  Martin  v.  Fewell.  79  Mo.  401. 

ithorne  v.  Hook,  112  Pa.  St.  240;  3  e  Barwick    v.    Alderman,    —    Fla. 

Atl.    777;    Hicks   v.    Cram,    17    Vt.  — ;  35  So.  13. 

449.  7  Brooks-Waterfield      v.      Jackson 

3  Thornton  v.  McDonald,   108   Ga.  (Ky.),  53  S.  W.  41. 

3;   33  S.  E.  680;   Baldwin's  Estate,  i  McGahan    v.    Bank,    156    U.    S, 

170  N.  Y.  156;  58  L.  R.  A.  122;  63  219;  Pacific,  etc.,  Ins.  Co.  v.  Fisher, 

]^.  E.  62.    .  109  Cal.  566;   42  Pac.   154;    Sparks 

4  Wilson  V.   Edmonds,    130   U.   S.  v.  Flannery,  104  Ga.  323;  30  S.  E. 

94 


1490  PAGE    ON    CONTRACTS. 

after  the  execution  of  the  contract  is  ratification."  Thus  a  chat- 
tel mortgage  given  by  one  partner  without  authority  is  valid  if 
the  rest  acquiesce  therein.^  So  if  a  partner  is  authorized  only 
to  obtain  an  option  on  certain  property,  and  he  purchases  it  and 
gives  the  firm's  note,  subsequent  acquiescence  by  the  remaining 
partners  makes  such  contract  valid.*  Ratification  is  also  ef- 
fected by  receiving  the  benefits  of  the  transaction.^  So  receiv- 
ing money  obtained  from  notes  is  a  ratification  thereof.*^  Tak- 
ing possession  and  paying  rent  under  a  lease  is  ratification  by 
the  lessee,  and  receiving  such  rent  is  ratification  by  the  lessor.'^ 
Partial  ratification  is  impossible.  Thus  where  a  partner  sold 
goods  under  an  agreement  that  a  part  of  the  purchase  price 
should  be  set  off  against  his  individual  debt,  the  partnership 
cannot  recover  such  part  and  affirm  the  sale.^  Ratification  to 
be  binding  must  be  made  with  full  knowledge  of  the  material 
facts.  Thus  part  payment  by  the  firm's  checks  without  the 
knowledge  of  the  other  partner,  is  not  ratification.®  So  a  ratifi- 
cation of  a  note  under  seal  has  been  held  invalid  if  the  partner 
so  ratifying  did  not  know  that  it  was  under  seal.^*'  A  ratifica- 
tion has  been  held  binding  where  the  partner  had  not  full  knowl- 

823;  Buettner  V.  Steinbreclier,  91  la.  Neb.  508;    76  N.  W.   1054;   Rock  v. 

588;  60  N.  W.  177;  Corbett  v.  Can-  Collins,    99    Wis.   630;    67    Am.   St. 

non,  57  Kan.  127;  45  Pac.  80;  Burk-  Rep.  885;  75  N.  W.  426. 

hardt  v.   Yates,   161   Mass.   591;    37  3  Columbus    State    Bank   v.    Dole, 

N.  E.  759;  Koch  v.  Endiiss,  97  Mich.  56  Neb.  508;   76  N.  W.  1054;  Rock 

444;    56    N.    W.    847;    Edwards    v.  v.  Collins,  99  Wis.  630;  67  Am.  St. 

Spalding,  20  Mont.  54,  60;  49  Pac.  Rep.  885;  75  N.  W.  426. 

443,   591;   Columbia  National  Bank  *  Tj'ler  v.  Waddingham,  58  Conn. 

V.  Rice,  48  Neb.  428;  67  N.  W.  165;  375;  8  L.  R.  A.  657;  20  Atl.  335. 

Columbus    State    Bank    v.    Dole,    56  5  Smith  v.  Packard,  98  Fed.  793 ; 

Neb.    508;     76    N.    W.    1054;     Mc-  39  C.  C.  A.  294. 

Naughten  V.  Partridge,  11  Ohio  223;  e  O'Connor    v.    Sherley,    107    Ky. 

38   Am.   Dec.   731;    Miller   v.   Glass  70;  52  S.  W.  1056. 

Works,  172  Pa.  St.  70;  33  Atl.  350;  7  Golding  v.    Brennan,    183   Mass. 

Gutheil  V.  Gilmer,  23  Utah  84;   63  286;  67  N.  E.  239. 

Pac.  817.  sGrover  v.  Smith,  165  Mass.  132; 

2  Sparks  v.  Flannery,  104  Ga.  323;  52  Am.  St.  Rep.  506;  42  N.  E.  555. 

30  S.  E.  823;  Corbett  v.  Cannon,  57  9  Meyer  v.  Hegler,   121   Cal.  682; 

Kan.  127;  45  Pac.  80;  Clippinger  v.  54  Pac.  271. 

Starr,  130  Mich.  463;  90  N.  W.  280;  lo  Hull  v.  Young,  30  S.  C.  121*  •» 

Columbus   State   Bank  v.   Dole,    56  L.  R.  A.  521 ;  8  S.  E.  695, 


PAKTNEKSHIP. 


1491 


edge,  but  knew  facts  enough  to  put  him  on  inquiry  which  would 
have  resulted  in  full  knowledge/^  Ratification  is  binding 
though  made  in  ignorance  of  the  legal  effect  of  the  contract/^ 
The  partner  who  made  the  contract  cannot  ratify  it/^ 

§954.     Dissolution. 

A  partnership  when  once  formed  may  be  dissolved  by  the 
agreement  of  the  partners/  or  by  the  act  of  either,  even  if  be- 
fore the  time  for  Avhich  the  contract  was  to  last."  Some  courts 
have  expressed  the  view  that  such  a  partnership  cannot  be  dis- 
solved without  cause  before  the  time  limited.^  If  a  partnership 
is  formed  to  last  for  a  fixed  time,  but  the  right  to  dissolve  the 
partnership  by  giving  written  notice  is  reserved,  it  may  be  dis- 
solved at  any  time  by  such  written  notice.*  Dissolution  by  op- 
eration of  law  may  be  caused  by  efilux  of  the  time  fixed  by  the 
partnership  agreement,^  or  by  death  of  a  partner.^     There  is 


11  Sibley  v.  Bank,  97  Ga.  126;  25 
S.  E.  470. 

12  Miller  v.  Glass  Works,  172  Pa. 
St.  70;  33  Atl.  350  (as  that  the 
partners  were  individually  liable  on 
the  contract) . 

13  Peterson  v.  Armstrong,  24  Utah 
96;  66  Pac.  767. 

1  Rii:hardson  v.  Gregory,  126  111. 
166;  18  N.  E.  777;  Howard  v. 
Pratt,  110  la,  583;  81  N.  W.  722; 
Wood  V.  Fox,  1  A.  K.  Mar.  (Ky.) 
451. 

2Lapenta  v.  Lattieri,  72  Conn. 
377;  77  Am.  St.  Rep.  315;  44  Atl. 
730;  Solomon  v.  Kirkwood,  55  Mich. 
256;  21  N.  W.  336;  Skinner  v.  Day- 
ton, 19  Johns.  (N.  Y.)  513;  10  Am. 
Dec.  286.  Undoubtedly  either  has 
the  power  to  end  the  partnership 
whenever  he  pleases;  though  his  ex- 
ercise of  that  power  without  just 
cause  may  leave  him  liable  in  dam- 
ages for  such  dissolution.  See  La- 
penta  v.  Lattieri,  72  Conn.  377; 
77  Am.  St.  Rep.  315;  44  Atl.  730. 


3  Hannaman  v.  Karrick,  9  Utah 
236;  33  Pac.  1039;  Cole  v.  Moxley, 
12  W.  Va.  730;  Moore  v.  May,  117 
Wis.  192;  94  N.  W.  45.  Hannaman 
V.  Karrich,  9  Utah  236;  33  Pac. 
1039,  was  affirmed  by  the  supreme 
court  of  tlie  United  States  in  Kar- 
rick V.  Hannaman,  168  U.  S.  328, 
not  on  the  ground  that  the  rule  of 
law  there  laid  down  was  correct, 
for  the  Supreme  Court  was  "  not 
prepared  to  assent  "  to  the  proposi- 
tion involved;  but  on  the  ground 
that  the  measure  of  damages  given 
was  exactly  the  same  as  would  be 
allowed  if  the  one  partner  could  by 
his  wrongful  act  dissolve  the  part- 
nership before  the  expiration  of  the 
time  limited. 

4  Swift  v.  Ward,  80  la.  700;  11  L. 
R.  A.  302;  45  N.  W.  1044. 

5  Morrill  v.  Weeks,  70  X.  H.  178; 
46  Atl.  32. 

6  Parker  v.  Parker,  99  Ala.  239; 
42  Am.  St.  Rep.  48;  13  So.  520; 
Maynard  v.  Richards,   166  HI.  466; 


1492 


PAGE    ON    CONTRACTS. 


qualified  existence  of  the  partnership  for  purposes  of  settle- 
ment.^ By  contract  it  may  be  agreed  that  death  will  not  cause 
dissolution.^  A  partnership  formed  by  contract,  as  a  joint-stock 
company,  is  not  dissolved  by  the  death  of  a  member  if  such  is 
the  original  agreement,''  or  by  a  sale  of  the  share  of  a  partner  to 
a  person  outside  the  company.^''  In  legal  effect  a  provision  that 
death  shall  not  dissolve  the  partnership  creates  a  new  partner- 
ship.^^ Conveyance  of  all  the  firm's  property,^^  sale  of  the  en- 
tire business,^^  ceasing  to  do  business,^*  and  rescission  by  one 
partner  because  the  other  wrongfully  refuses  to  pay  in  his  share 
of  the  capital,^^  cause  dissolution  by  operation  of  law.  So  a 
sale  of  one  partner's  interest  is  held  to  effect  a  dissolution.^" 


57  Am.  St.  Rep.  145;  46  N.  E.  1138; 
affirming,  61  111.  App.  336;  Schmidt 
V.  Archer,  113  Ind.  365;  14  N.  E. 
543;  Van  Kleeck  v.  McCabe,  87 
Mich.  599;  24  Am.  St.  Rep.  182; 
49  X.  W.  872;  Russell  v.  McCall, 
141  N.  Y.  437;  38  Am.  St.  Rep.  807; 
36  X.  E.  498;  Stubbings  v.  O'Con- 
nor, 102  Wis.  352;  78  N.  W.  577. 
Contra  of  mining  partnerships,  Pat- 
rick V.  Weston,  22  Colo.  45 ;  43  Pac. 
446;  Childers  v.  Xeely,  47  W.  Va. 
70;  81  Am.  St.  Rep.  777;  49  L.  R. 
A.  468;  34  S.  E.  828. 

-  Maynard  v.  Richards,  166  111. 
466;  57  Am.  St.  Rep.  145;  46  X.  E. 
1138;  affirming,  61  111.  App.  336. 

8  Scholefield  v.  Eichelberger,  7 
Pet.  (U.  S.)  586;  Vincent  v.  Mar- 
tin, 79  Ala,  540;  Rand  v.  Wright, 
141  Ind.  226;  39  X.  E.  447;  Stan- 
wood  V.  Owen,  14  Gray  (Mass.) 
195;  Exchange  Bank  v.  Tracy,  77 
Mo.  594;  Wilcox  v.  Derickson,  168 
Pa.  St.  331;  31  Atl.  1080;  Brew  v. 
Hastings,  196  Pa.  St.  222;  79  Am. 
St.  Rep.  706;  46  Atl.  257;  Davis  v. 
Christian,  15  Gratt.  (Va.)  11;  Mc- 
Xash  V.  Oat  Co.,  57  Vt.  316;  Willis 
V.  Chapman,  68  Vt.  459;  35  Atl. 
459.  Contra,  Laney  v.  Laney,  6 
Dem.   (X.  Y.)   241. 


9  Carter  v.  McClure,  98  Tenn.  109; 
60  Am.  St.  Rep.  842;  36  L.  R.  A. 
282;  30  S.  W.  585. 

10  Machinists'  Xatioual  Bank  v. 
Dean,  124  Mass.  81;  McXeist  v. 
Oat  Co.,  57  Vt.  316;  Walker  v.  Wait, 
50  Vt.  668. 

11  Pitkin  V.  Pitkin,  7  Conn.  307; 
18  Am.  Dec.  Ill;  Exchange  Bank  v. 
Tracy,  77  Mo.  594;  Kennedy  v.  Por- 
ter, 109  N.  Y.  526;  17  X.  E.  426; 
McGrath  v.  Cowen,  57  O.  S.  385 ;  49 
N.  E.  338. 

12  Dellapiazza  v.  Foley,  112  Cal. 
380;  44  Pac.  727. 

i3Haeberly^s  Appeal,  191  Pa.  St. 
239;  43  Atl.  207. 

i*Ligare  v.  Peacock,  109  111.  94; 
Bank  v.  Page,  98  111.  109 ;  Potter  v. 
Tolbert,  113  Mich.  486;  71  X.  W. 
849;  Jones  v.  Jones,  18  Ohio  C.  C. 
260;   10  Ohio  C.  D.  71. 

15  Lapenta  v.  Lettieri,  72  Conn. 
377;  77  Am.  St.  Rep.  315;  44  Atl. 
730. 

iGRowe  \.  Simmons,  113  Cal. 
688;  45  Pac.  983;  Summerlot  v. 
Hamilton,  121  Ind.  87;  22  X.  E. 
973;  Schlicher  x.  Vogel,  61  X.  J. 
Eq.  158;  47  Atl.  448.  Contra,  in 
mining  partnerships,  Childers  v. 
Xeely,   47   W.  Va.   70;    81   Am,    St, 


PARTNERSHIP.  1493 

So,  taking  in  new  partner  is  a  new  contract,  and  abrogates  a 
provision  that  if  either  partner  becomes  intoxicated  he  shall  pay 
$1,000  to  the  other.^"  But  the  mere  delivery  of  a  "  trust  mort- 
gage,"^^  or  an  agreement  to  sell  partnership  interest,  do  not 
effect  dissolution/"  A  decree  of  court  may  effect  a  dissolution. 
Such  a  decree  may  be  based  on  fraud,^*^  or  exclusion  from  in- 
spection of  books,"^  or  insanity,"'  or  on  the  insolvency  of  a  part- 
ner."* Thus  the  transfer  of  one  partner's  interest  in  partner- 
ship real  estate  made  to  his  father  without  consideration  to  avoid 
paying  debts  of  the  firm  is  ground  for  dissolution.^*  Insanity 
is  not  of  itself  dissolution,  but  is  merely  the  ground  for  a  decree 
of  dissolution,"^  even  after  adjudication."®  Bankruptcy  of  one 
partner  does  not  of  itself  dissolve  a  partnership."^  If  a  partner- 
ship is  formed  between  husband  and  wife,  a  divorce  does  not  of 
itself  dissolve  such  partnership."^  Lack  of  mutual  trust  is 
ground  for  a  decree  of  dissolution."*^  But  the  sale  of  transfer- 
able-shares in  a  partnership  organized  as  a  joint  stock  company, 
if  acquiesced  in  by  other  members,  is  not  dissolution.*" 

§955.     Assumption  of  debts  on  change  of  firm. 

If  a  retiring  partner  sells  his  interest  to  Iiis  co-partners,  it  is 
an  implied  term  of  the  contract  that  the  purchasing  partners 

Rep.  777;  49  L.  R.  A.  468;  34  S.  E.  25  Raymond    v.    Vaughn,    128    111. 

828.  256;    15  Am.  St.  Rep.   112;  4  L.  R. 

"Givens   v.   Berry    (Ky.),    52    S.  A.   440;    21   N.  E.   566;    Walters  v. 

W.  942.  McGrea^y,    111   la.   538;    82   N.   W. 

18  Smith  V.  Smith,  93  Me.  253 ;  44  949. 

Atl.  905.  26  Raymond    v.    Vaughn.    128    111. 

19  Phelps  V.  State,  109  Ga.  115;  256;  15  Am.  St.  Rep.  112;  4  L.  R. 
34  S.  E.  210.  A.  440;  21  N.  E.  566. 

20  White  V.  Smith,  63  Ark.  513;  27  Patrick  v.  Weston,  22  Colo.  45; 
39  S.  W.  555.  43  Pac.  446. 

21  Moore  v.  Price,  116  Ala.  247;  28  Snell  v.  Stone,  23  Or.  327;  31 
22  So.  531.  Pac.    663.     Whether    such    partner- 

22  Walters    v.    McGrea\y,    111    la.  ship  can  be  formed,  see  §  929. 

.538 ;  82  N,  W.  949.  29  Breaux  v.  Le  Blanc.  50  La.  Ann. 

23Havner  v.  Stephens  (Ky.),  58  228;  69  Am.  St.  Rep.  403;  23  So. 
S.  W.  372.  281. 

24  Hubbard  v.  Moore,  67  Vt.  532;  3o  Carter    v.    McClure,    98    Tenn. 

32  Atl.  465.  109;  60  Am.  St.  Rep.  842;  36  L.  R. 

A.  282;   38  S.  W.  585. 


149-i  PAGE    ON    CONTRACTS. 

assume  the  liabilities  of  tlie  firm,  and  will  protect  the  retiring 
partner  against  any  liability  by  reason  thereof/  An  incoming 
partner  does  not  assume  any  liability  for  pre-existing  debts  un- 
less he  agrees  so  to  do.^  So  a  new  firm,  one  member  of  which 
was  a  member  of  the  old  firm,  is  not  liable  for  the  debts  of  the 
old  firm.^  If  one  partner  retires  and  the  remaining  partners 
or  the  members  of  the  new  firm  agree  with  him  to  assume  the 
partnership  debts  a  question  is  presented  as  to  whether  the  retir- 
ing partner  remains  primarily  liable  to  the  creditors  of  the  firm 
whose  debts  were  incurred  while  he  was  a  partner,  or  whether  he 
is  now  a  surety  for  the  members  who  have  assumed  such  debts. 
He  clearly  does  not  become  a  surety  as  to  creditors  who  do  not 
assent  to  such  an  arrangement.*  The  weight  of  authority  is 
that  he  remains  primarily  liable,  even  as  to  assenting  creditors,^ 
and  as  he  does  not  become  a  surety  he  is  not  released  by  an  ex- 
tension of  time  for  valuable  consideration  without  his  assent." 
There  is  some  authority,  however,  for  the  proposition  that  such 
an  arrangement  makes  the  retiring  partner  a  surety  if  the  cred- 
itors assent/  So  he  is  held  to  be  a  surety  released  by  extension 
of  time,^  and  entitled  to  require  the  creditors  of  the  partnership 
to  sue  promptly.^  Such  an  arrangement  certainly  does  not  re- 
lease the  retiring  partner  entirely  unless  the  creditors  specific- 
ally assent  thereto.^''  If  a  purchasing  partner  agrees  to  pay  the 
debts  of  the  firm,  it  has  been  held  that  the  retiring  partner  has  a 

iCobb  V.  Benedict,  27  Colo.  342;  Jack,    47    W.    Va.    201;    34    S.    E. 

62  Pac.  222;  Edens  v.  Williams,  36  991. 

111.    252;    Lambert    v.    Griffith,    50  5  National    Cash    Eegister    Co.    v. 

Mich.  286;   15  K  W.  458:  Schlicher  Brown,   19   Mont.   200;    61   Am.   St. 

V.  Vogel,  61  N.  J.  Eq.  158;  47  Atl.  Rep.  498;  37  L.  R.  A.  515;  47  Pac. 

448.  995. 

2  Nix  V.  Bank,   23   Colo,  511 ;    48  e  National    Cash    Register    Co.   v. 
Pac.  522.  Brown,    19   Mont.   200;    61   Am.   St. 

3  Ball  V.  Mashburn,  110  Ga.  285;  Rep.  498;  37  L.  R.  A.  515;  47  Pac. 
34  S.  E.  851.  995. 

4  Eagle  Mfg.  Co.  v.  Jennings,   29  7  Wiley   v.    Temple,    85    111.    App. 
Kan.  657;   44  Am.  Rep.  668;   Raw-  69. 

son  V.  Taylor,  30  O.  S.  389;  27  Am.  sMillerd  v.  Thorn,  56  N.  Y.  402. 

Rep.  464;    Shapleigh   Hardware  Co.  » Colgrove   v.   Tallman,   67   N.   Y. 

V.  Wells,  90  Tex.   110;   59  Am.   St.  95;   23  Am.  Rep.  90. 

Rep.  783;   37  S.  W.  411;  McCoy  v.  "Andres  v.  Morgan,  62  O.  S.  236; 


PARTNERSHIP. 


1495 


cause  of  action  as  soon  as  the  jiurcliasing  partner  allows  any  bill 
of  the  original  partnershiji  to  remain  unpaid  after  it  is  due.^^ 

§956.    Powers  after  dissolution. 

After  dissolution  either  partner  may  settle  outstanding  ac- 
counts/ and  may  complete  the  performance  of  contracts  previ- 
ously entered  into,^  but  he  cannot  bind  his  partners  on  new 
contracts/  and  he  cannot  give  notes/  even  in  renewal  of  a  pre- 
existing firm  debt/  or  deliver  a  note  previously  signed,"  or 
bind  his  partners  by  a  contract  of  indorsement/  or  extend  limi- 
tations  by  a  new  promise.*  Pre-existing  debts  are  not  dis- 
charged by  dissolution.     Thus  dissolution  does  not  discharge 


78    Am.    St.    Rep.    712;    56    N.    E. 
875. 

iiPeacey  v,  Peacey,  27  Ala.  683; 
Tucker  v.  Murphey,  114  Ga.  662; 
40  S.  E.  836;  Gillen  v.  Peters,  39 
Kan.  489;  18  Pae.  613;  Ham  v. 
Hill,  29  Mo.  275;  Miller  v.  Bailey, 
19  Or.  539;  25  Pac.  27. 

1  Western  Stage  Co.  v.  Walker,  2 
la.  504;  65  Am.  Dec.  789;  Gordon 
V.  Albert,  168  Mass.  150;  46  N.  E. 
423;  Riggen  v.  Investment  Co.,  31 
Or.  35;  47  Pac.  923.  Either  part- 
ner has  a  right  to  possession  of  as- 
sets. Gray  v.  Green,  142  N.  Y. 
316;  40  Am.  St.  Rep.  596;  37  N.  E. 
124. 

2  Western  Stage  Co.  v.  Walker,  2 
la.  504;  65  Am.  Dec.  789;  Page  v. 
Wolcott,  15  Gray  (Mass.)   536. 

3  Bass  Dry  Goods  Co.  v.  Mfg.  Co., 
116  Ga.  176;  42  S.  E.  415;  Richard 
V.  Moulton,  109  La.  465;  33  So. 
563;  Evangelical  Synod  v.  Schoen- 
eich,  143  Mo.  652;  45  S.  W.  647; 
Graves  v.  Bank,  49  Neb.  437;  68 
N.  W.  612  (especially  for  individual 
debts)  ;  Palmer  v.  Dodge,  4  O.  S. 
21;  62  Am.  Dee.  271. 

4  Potter  V.  Tolbert,  113  Mich. 
486;  71  N.  W.  849;  Smith  v.  Shel- 
don, 35  Mich.  42;  24  Am.  Rep.  529. 


5  Harwell  v.  Mfg.  Co.,  123  Ala. 
460;  26  So.  501;  Perrin  v.  Keene, 
19  Me.  355;  36  Am.  Dec.  759;  White 
V.  Tudor,  24  Tex.  639:  76  Am.  Dec. 
126. 

elMerrit  v.  Pollys,  16  B.  Mon. 
(Ky.)  355;  Robb  v.  Mudge,  14  Gray 
(Mass.)  534;  Gale  v.  Miller,  54  N. 
Y.  536;  Woodworth  v.  Downer,  13 
Vt.  522;  37  Am.  Dec.  611.  Contra, 
he  may  renew  notes.  Meyran  v. 
Abel,  189  Pa.  St.  215;  69  Am.  St. 
Rep.  806;  42  Atl.  122. 

7Whitworth  v.  Ballard,  56  Ind. 
279;  Bryant  v.  Lord,  19  Minn.  396; 
Fellows  V.  Wyman,  33  N.  H.  351; 
Dana  v.  Conant,  30  Vt.  246. 

8]Mayberry  v.  Willoughby,  5  Neb. 
368;  25  Am.  Rep.  491;  Shoemaker 
V.  Benedict,  11  K  Y.  176;  62  Am. 
Dec.  95;  Kerper  v.  Wood,  48  0.  S. 
613;  15  L.  R.  A.  656;  29  N.  E. 
501;  Bush  v.  Stowell,  71  Pa.  St. 
208;  10  Am.  Rep.  694.  Contra, 
that  he  can  extend  limitations  by 
a  new  promise.  Cody  v.  Shepard, 
11  Pick.  (Mass.)  400;  22  Am.  Dec. 
379;  Vinal  v.  Burrill,  16  Pick. 
(Mass.)  401;  Mills  v.  Hyde,  19  Vt. 
59;  46  Am.  Dec.  177;  Wheelock  v. 
Doolittle,  18  Vt.  440;  46  Am.  Dec 
163. 


1496 


PAGE    ON    CONTRACTS. 


liability  on  a  lease.*^  The  managing  partner  after  dissolution 
may  incur  debts  for  expenses  necessary  to  winding  up  tbe  busi- 
ness and  lie  is  entitled  to  be  reimbursed  therefor." 

§957.     Notice  necessary  on  dissolution. 

On  dissolution  personal  notice  should  be  given  to  those  who 
have  dealt  with  the  firm  before  dissolution  and  know  of  the 
connection  of  the  partner  in  question  with  such  firm,  if  the  re- 
tiring partner  wishes  to  avoid  liability  on  subsequent  contracts.^ 
Thus  an  attorney  retained  by  the  old  firm,^  a  person  who  has 
made  one  loan  to  the  old  firm/  a  bank  where  the  firm  cashed 
drafts,*  or  borrowed  money,^  and  a  depositor  with  a  dissolved 
banking  firm,^  are  each  entitled  to  personal  notice.  Where 
personal  notice  should  be  given,  a  notice  published  but  not 
known  by  the  party  dealing  with  the  firm,'  or  a  notice  mailed 
but  not  received,^  even  if  a  red  line  is  drawn  around  the  notice,* 
or  a  notice  to  two  commercial  agencies  and  a  local  item  in  one  or 


0  Barnes  v.  Trust  Co.,  169  111. 
112;  48  N.  E.  31;  affirming  66  111. 
App.  282. 

10  Conrad  v.  Buck,  21  W.  Va. 
396. 

1  Court  V.  Berlin  (1897),  2  Q.  B. 
396;  Birckhead  v.  De  Forest,  120 
Fed.  645;  57  C.  C.  A.  107;  Neal  v. 
Smith,  116  Fed.  20;  Camp  v.  South- 
ern, etc.,  Co.,  97  Ga.  582;  25  S.  E. 
362;  Arnold  v.  Hart,  176  111.  442; 
52  N.  E.  936 ;  affirming  75  III.  App. 
165;  Burgan  v.  Lyell,  2  Mich.  102; 
55  Am.  Dee.  53;  Bank  v,  Weston, 
172  N.  Y.  259;  64  N.  E.  946;  Sec- 
ond National  Bank  v.  \Yeston,  161 
N.  Y.  .520;  76  Am.  St.  Rep.  283;  55 
N.  E.  1080;  Ellison  v.  Sexton,  105 
N.  C.  356;  18  Am.  St.  Rep.  907;  U 
S.  E.  180;  Tobin  v.  McKinney,  14 
S.  D.  52;  91  Am.  St.  Rep.  688;  84 
N.  W.  228;  Amidown  v.  Osgood,  24 
Vt.  278;  58  Am.  Dec.  171. 


2  Court  V.  Berlin  (1897),  2  Q.  B. 
396. 

3  Thayer  v.  Goss,  91  Wis.  90;  64 
N.  W.  312. 

4  Camp  V.  Southern,  etc.,  Co.,  97 
Ga.  582;  25  S.  E.  362. 

5  Bank  v.  Weston,  172  N.  Y.  259; 
64  N.  E.  946. 

6  Arnold  v.  Hart,  176  111.  442;  52 
N.  E.  936;  affirming  75  111.  App. 
165.  Even  one  who  has  made  only 
two  such  deposits.  Tobin  v.  McKin- 
ney, 14  S.  D.  52;  91  Am.  St.  Rep. 
688 ;  84  N.  W.  228. 

7H.  H.  Nevens  &  Co.  v.  Bulger, 
93  Me.  502;  45  Atl.  503;  Rose  v, 
Coffield,  53  Md.  18;  36  Am.  Rep. 
380. 

8  Austin  V.  Holland,  69  N.  Y.  571; 
25  Am.  Rep.  246. 

9  Haynes  v.  Carter,  12  Heisk. 
(Tenn.)    7;   27  Am.  Rep.  747. 


PARTNERSHIP.  1497 

iv/0  newspapers,^"  or  the  general  notoriety  of  the  dissolution/^ 
is  each  insufficient.  The  contents  of  new  letter-heads  of  the 
firm  showing  a  change  of  members  is  sufficient  if  such  letter- 
heads were  sent  to  the  customer  in  question,  and  he  had  been 
notified  that  the  formation  of  certain  contracts  was  delayed 
owing  to  a  contemplated  reorganization.^"  A  notice  of  a  change 
in  the  partnership  given  to  a  traveling  salesman  as  agent  of  the 
adversary  party,"  is  sufficient.  liotice  by  publication  is  suf- 
ficient as  to  all  other  persons,^*  in  order  to  free  the  retiring 
partners  from  liability  for  future  contracts.  When  a  dormant 
partner  w^ithdraws,  notice  is  not  necessary  to  those  who  did  not 
know  he  was  a  partner.^^ 

Where  dissolution  takes  place  by  operation  of  law,  notice  is 
not  necessary,^^  So  wdiere  a  firm  is  dissolved  by  bankruptcy 
proceedings  instituted  against  one  partner,  such  proceeding  is 
notice  to  all  creditors. ^^  So  on  the  death  of  one  partner  notice 
of  dissolution  is  not  necessary.^® 

In  the  absence  of  necessary  notice  a  retiring  partner  is  liable 
for  contracts  entered  into  after  dissolution  with  those  who  are 
ignorant  thereof,^^  especially  where  the  old  firm  name  is  re- 


10  Citizens'  National  Bank  v.  Wes-  cuse  a  dormant  partner  from  notice 
ton,    162   N.    f.    113;    56  N.   E.  494  he  must  have  been  unknown  or  not 

(citing  Bank  v.  \Yeston,   159  N.  Y.  generally  known.     Rowland  v.  Estes, 

201;    45    L.    E.   A.    547;    54    N.    E.  190  Pa.  St.  Ill;  42  Atl.  528. 

40;   Mill   Co,  V.   Harris,    124   N.   Y.  le  Little   v.    Hazlett,    197   Pa.    St. 

280;  26  N.  E.  541).  591;  47  Atl.  855. 

11  Pitcher    v.    Barrows,    17    Pick.  i7  Eustis  v.  Bolles,  146  Mass.  413; 
(Mass.)    361;   28  Am.  Dec.  306.  4  Am.  St.  Rep.  327;  16  N.  E.  286. 

12  Edwards    v.    Wheeler's    Estate,  is  Bass  Dry  G.oods  Co.  v.  Mfg.  Co., 
130  Mich,  219;   89  N.  W.  679.  116  Ga.  176;  42  S.  E.  415;  Marlett 

13  Ach  V.  Barnes,  107  Ky.  219;  53  v.    Jackman,    3    All.     (Mass.)     287; 
S.  W.  293.  Little  v.  Hazlett,   197   Pa.   St.  591; 

"Watkinson   v.   Bank,   4    Whart.  47  Atl.  855. 

(Pa.)    4f^2;   34  Am.  Dec.  521;   Elli-  w  Bloch    v.    Price.    32    Fed.    562; 

son   V.   Sexton,    105   N.    C.    356;    18  Y'oung  v.  Clapp.  147  111.  176;  32  N. 

Am.  St.  Rep.  907;  11  S.  E.  180;  New  E.  187;  35  N.  E.  372;  Shapard  Gro- 

Y^ork,  etc..  Bank  v.  Crowell.  177  Pa.  eery  y.   Hynes,   3   Ind.   Ter.   74;    53 

St.  313:  35  Atl.  613:  Thayer  v.  Goss,  S.   W.   486;    Dickson   v.   Diyden,   97 

n  Wis.  90;   64  K   W.   312.  la.   122;    66  N.   W.   148;   Turner  v. 

15  Gorman  v.  Davis,  etc.,  Co.,  118  Gill.   105   Ky.   414;    49   S.   W.   311; 

K     C.   370;    24   S.   E.    770.     To   ex-  H.  H.   Nevens  &   Co.  v.   Bulger.   93 


1498  PAGE    Olf    CONTRACTS. 

tained,"*'  or  the  retiring  member  holds  himself  out  as  a  member 
of  the  firm.^^  The  notice  must  be  given  before  liability  is  in- 
curred by  the  adversary  party  to  relieve  the  retiring  partner. 
Thus  where  notice  of  retirement  was  given  after  A  made  a  con- 
tract with  the  old  firm,  and  after  such  notice  A  shipped  goods  in 
performance  of  such  contract,  the  retiring  partner  is  held  to  be 
a  surety."^  If  the  notice  is  given  but  the  dissolution  never 
took  place,^^  or  if  the  retirement  of  the  partner  was  merely 
ostensible  to  permit  him  to  carry  out  an  illegal  scheme,^*  none 
of  the  j)artners  are  thereby  relieved  from  liability.  While  dis- 
solution with  proper  notice  generally  prevents  further  liability 
of  a  retiring  partner,  he  is  liable  to  the  amount  of  money  left 
in  the  business.^^ 

§958.     Powers  of  surviving  partners. 

On  the  death  of  a  partner,  the  surviving  partner  has,  under 
the  statutes  of  many  states,  the  legal  title  to  the  partnership 
property,  with  power  to  liquidate  the  firm's  business.^  He  can- 
not bind  the  firm  or  the  estate  of  his  deceased  partner,"  or  the 

Me.  502;   45  Atl.   503;   Central  Na-  22  Porter  v.  Baxter,  71  Minn.  195; 

tional  Bank  v.  Frye,  148  Mass.  498 ;  73   N.   W.   844. 

20   N.   E.   325;    Elkinton  v.   Booth,  23  Spragans  v.  Lawson    (Ky.),  60 

143  Mass.  479;  10  N.  K  460;  Knaus  S.  W.  373. 

V.    Givens,    110   Mo.    58;    19    S.   W.  24  Utley    v.    Clements,    79    Minn. 

535;   Stoddard  Mfg.  Co.  v.  Krause,  68;   81  N.  W.  739. 

27  Neb.  83;  42  N.  W.  913;  Ellison  v.  25  Adams  v.  Albert,  155  N.  Y.  356; 

Sexton,   105  N.  C.  356;    18  Am.  St.  63  Am.  St.  Rep.  675;  49  N.  E.  929. 

Rep.  907;   11  S.  E.  180;  Alexander  1  McKinzie    v.    United    States,    34 

V.  Harkins,  120  N.  C.  452;  27  S.  E.  Ct.   CI.  278;    Maynard  v.   Richards, 

120;  Robinson  v.  Floyd,  159  Pa.  St.  166  111.  466;   57  Am.  St.  Rep.  145; 

165;  Brown  v.  Foster,  41  S.  C.  118;  46  N.  E.  1138;  Bauer  Grocer  Co.  v. 

19   S.  E.  299.     Compare   Swigert  v.  Shoe  Co.,  87  111.  App.  434.    The  sur- 

Aspden,    52    Minn.    565;    54    N.    W.  viving  partner   of   a   firm   of  attor- 

738;   Green  v.  Bank,  78  Tex.  2;    14  neys  must  account  for  fees  for  serv- 

S.  W.  253.  iees  rendered  under  the  old  contract. 

20  Thatcher  v.  Allen,  58  N.  J.  L.  Little    v.    Caldwell,    101    Cal.    553; 

240;    33  Atl.  284;   Evans,  etc.,  Co.  40  Am.  St.  Rep.  89;  36  Pac.  107. 

V.  Hadfield,  93  Wis.  665;   68  N.  W.  2  Durant   v.    Pierson,    124    N.    Y. 

468.  444;  2r  Am.  St.  Rep.  686;  12  L.  R. 

2iShapard  Grocery  Co.  v.  Hynes,  A.    146;    26  N.  E.   1095;    Oyster  v. 

."  Tnd.  Ter.  74;  53  S.  W.  486.  Short,  177  Pa.  St.  594,  601;  35  Atl. 

710,  711. 


PARTNEESHIP. 


1499 


executor  of  his  deceased  partner/  bj  a  new  contract  as  by  pur- 
chasing goods/  or  by  giving  a  note.^  He  cannot  bind  the  heirs 
of  decedent  by  renewing  a  lease,  but  their  acceptance  of  rent  for 
one  year  may  ratify  the  lease  for  that  year.*' 

Even  where  decedent  by  will  gives  the  surviving  partner 
power  to  continue  the  business,  he  cannot  bind  the  estate  of  the 
deceased  partner  beyond  the  amount  in  the  business,'^  unless  the 
will  specifically  provides  that  he  may  bind  the  estate  for  new 
debts.*  A  surviving  partner  cannot  give  a  cognovit  note  for  a 
firm  debt,"  though  he  may  confess  judgment." 

Proper  items  of  indebtedness  incurred  by  a  surviving  part- 
ner after  the  death  of  the  other  partner  will  be  allowed  him  by 
the  court  in  settling  accounts.^^  He  may  be  credited  with  ex- 
penses necessary  to  preserve  the  property,  and  even  with  ex- 
penses necessary  to  keep  up  its  value.  Thus  the  surviving  part- 
ner of  a  horse-racing  firm  may  be  credited  with  the  expenses  of 
caring  for  and  training  horses  aiter  his  partner's  death  and 
entering  them  for  stakes.^^     If  the  law  requires  him  to  settle 


3  Mattison  v.  Farnham,  44  Minn. 
95;  46  N.  W.  347. 

4  Friend  v.  Young  (1897),  2  Ch. 
421. 

sBodey  v.  Cooper,  82  Md.  625; 
34  Atl.  362. 

6  Oliver  v.  Olmstead,  112  Mich. 
483;  70  N.  W.  1036;  Belts  v.  June, 
.51  N.  Y.  274. 

7  Smith  V.  Ayer,  101  U.  S.  320; 
Burwell  v.  Cawood,  2  How.  (U.  S.) 
560;  Steiner  v.  Steiner,  etc.,  Co., 
120  Ala.  128;  26  So.  494;  Pitkin  v. 
Pitkin,  7  Conn.  307;  18  Am.  Dec. 
Ill;  Stewart  v.  Robinson,  115  N. 
Y.  328;  5  L.  R.  A.  410;  22  N.  E. 
160,  163;  Wilcox  v.  Derickson,  168 
Pa.  St.  331;  31  Atl.  1080.  Contra, 
where  a  limited  partner  had  become 
liable  as  a  general  partner  by  failure 
to  comply  with  the  statute,  a  pro- 
vision in  the  will  that  the  business 
was  to  continue  was  held  to  charge 
subsequent  debts  against  the  estate. 


J.  B.  Wathen  &  Bro.  Co.  v.  Carney 
(Tenn.  Ch.  App.),  47  S.  W.  1115. 
So  Ussery  v.  Crusman  (Tenn.  Ch. 
App.),  47  S.  W.  567. 

8  Ferris  v.  Van  Ingen,  110  Ga. 
102;  35  S.  E.  347.  Under  such  a 
will  he  can  deed  realty  to  secure 
debts.  In  this  case  the  surviving 
partner  was  made  executor.  Laugh- 
lin  V.  Lorenz,  48  Pa.  St.  275;  86 
Am.  Dec.  592;  Davis  v.  Christian, 
15  Gratt.    (Va.)    11. 

9  Bauer  Grocer  Co.  v.  Shoe  Co., 
87  111.  App.  434. 

10  Evans  v.  Watts,  192  Pa.  St. 
112;   43  Atl.  464.      . 

11  Wolfort  V.  Reilly,  133  Mo.  463; 
34  S.  W.  847.  Even  for  borrowed 
money.  Herron  v.  Wampler,  194 
Pa.  St.  277;  45  Atl.  81;  Kenney  v. 
Howard,  68  Vt.  194;  34  Atl.  700. 

12  Central,  etc.,  Co.  v.  Respass,  112 
Ky.  606;  56  L.  R.  A.  479;  66  S.  W. 
421. 


1500 


PAGE    ON    CONTEACTS. 


his  accounts  with  the  partnership  at  a  certain  time,  and  he  con- 
tinues the  business  bejond  such  time,  he  must,  in  case  subse- 
quent losses  occur,  settle  as  of  the  date  at  which  the  settlement 
should  have  been  made/^ 

§959.     Peculiarities  of  enforcement  of  contract  between  partners. 

At  Common  Law  one  partner  could  not  sue  another  on  mat- 
ters arising  out  of  the  partnership  before  an  accounting  was 
had  between  the  j)artners,^  and  while  the  partnership  was  still 
in  existence."  So  an  action  could  not  be  brought  by  the  execu- 
tor against  the  surviving  partner,^  or  by  the  surviving  partner 
against  the  heirs  of  a  deceased  partner  while  the  partnership  ac- 
counts are  unsettled.*  This  objection  is  waived  by  failure  to 
object  at  trial.^  Such  an  action  at  law  would  lie  after  the  part- 
nership was  ended,  or  after  accounting.''  A  partner  may  sue 
at  law  for  contribution  upon  a  matter  outside  the  partnership,'^ 
or  where  by  express  agreement   a   partnership  item  has  been 


13  Huggins  V.  Huggins,  117  Ga. 
151;  43  S.  E.  759. 

1  Dukes  V.  Kellogg,  127  Cal.  563; 
60  Pac.  44;  Miller  v.  Freeman,  111 
Ga.  654;  51  L.  R.  A.  504;  36  S.  E. 
961;  Sindelare  v.  Walker,  137  111. 
43;  31  Am.  St.  Rep.  353;  27  N.  E. 
59;  Bowzer  v.  Stoughton,  119  111. 
47;  9  N.  E.  208;  Newman  v.  Tich- 
enor,  88  111.  App.  1;  O'Brien  v. 
Smith,  42  Kan.  49;  21  Pac.  784; 
Stone  V.  Mattingly  (Ky.),  19  S.  W. 
402;  Johnson  v.  Ewald,  82  Mo.  App. 
276 ;  Willey  v.  Renner,  8  N.  M.  641 ; 
45  Pac.  1132;  Devore  v.  Woodruff, 
1  N.  D.  143;  45  N.  W.  701;  Kun- 
neke  v.  Mapel,  60  0.  S.  1 ;  53  N.  E. 
259;  Oglesby  v.  Thompson,  59  O.  S. 
60;  51  N.  E.  878;  Eddins  v.  Mene- 
fee  (Tenn.  Ch.  App.),  54  S.  W. 
992. 

2  Miller  v.  Freeman,  111  Ga.  654; 
51  L.  R.  A.  504;   36  S.  E.  961;   Se- 


bastian  V.   Academy   Co.    (Ky. ),   56 
S.  W.  810. 

3  Palm  V.  Poponoe,  60  Kan.  297 
56  Pac.  480. 

4Blakley  v.  Smock,  96  Wis.  611 
71  N.  W.  1052. 

5  Smith  V.  Putnam,  107  Wis.  155 

82  N.    W.    1077;    rehearing   denied 

83  N.  W.  288. 

6  Johnson  v.   Peek,   58   Ark.   580 
25  S.  W.  865. 

7  Bull  V.  Coe,  77  Cal.  54;  11  Am. 
St.  Rep.  235;  18  Pac.  808;  Mullany 
V.  Keenan,  10  la.  224;  Soule  v. 
Frost,  76  Me.  119;  Carpenter  v. 
Greenap,  74  Mich.  664;  16  Am.  St. 
Rep.  662;  4  L.  R.  A.  241;  42  N.  W. 
276;  Bates  v.  Lane,  62  Mich.  132; 
28  N.  W.  753;  Halleck  v.  Streeter, 
52  Neb.  827;  73  N.  W.  219;  Bank 
V.  Delafield.  126  N.  Y.  410;  27  N.  E. 
797 ;  Jennings  v.  Pratt,  19  Utah 
129;  56  Pac.  951;  Coffin  v.  Mcin- 
tosh, 9  Utah  315;  34  Pac.  247. 


PARTNEKSllIP.  1501 

separated  from  the  raass  of  partnership  business.^  One  partner 
may  before  final  accounting  maintain  an  action  at  law  against 
another  to  recover  money  borrowed  by  the  latter  from  the  for- 
nier  to  put  into  the  partnership  business,**  or  for  money  which 
he  is  to  pay  the  former  for  an  interest  in  a  patent  which  they  are 
to  contribute  to  the  partnership/**  So  where  a  partnership  is 
formed  between  physicians  to  carry  out  a  contract  to  transfer 
the  good  will  of  one  to  the  other  a  suit  can  be  brought  for  fail- 
ure to  transfer  such  good  will/^  After  an  accounting  and  an 
adjustment  of  all  rights  and  liabilities  growing  out  of  the  part- 
nership one  partner  may  maintain  an  action  against  the  other 
for  the  balance  due/^  Thus  one  partner  may  sue  another  on  a 
noto  given  on  sufiicient  consideration  based  on  partnership  ac- 
counts/^ or  on  an  express  agreement  based  on  a  mutual  adjust- 
ment of  their  affairs/*  After  dissolution  and  a  sale  by  one 
partner  to  the  others  the  former  may  maintain  an  action  against 
such  others/^  So,  after  a  dissolution  of  a  firm  composed  of 
A,  B  and  C,  whereby  A  was  to  collect  all  claims  and  pay  all 
debts,  A  may  maintain  an  action  on  a  debt  due  from  B  and  C  to 
the  firm  of  A,  B  and  C/**  So,  after  dissolution  of  a  firm  com- 
posed of  A  and  B  under  an  agreement  whereby  A  owns  all  the 
accounts,  A  may  maintain  an  action  against  B  if  B  collects  any 
of  such  accounts/^ 

8  Williams  v.  Henshaw,  11  Pick.  Berry  v.  DeBruyn,  77  111.  App.  359; 
(Mass.)     79;     22     Am.     Dec.     366;       Hey   v.    Harding    (Ky.),    53    S.    W. 

George  v.  Benjamin,   100  Wis.  622;  33;   Chamberlain  v.  Walker,  10  All. 

69  Am.  St.  Rep.  963;  76  N.  W.  619.  (Mass.)    429;   Mitchell  v.  Wells,  54 

Compare    McMahon    v.    Rauhr,    47  Mich.  127;   19  N.  W.  777;  Bank  v. 

N.  Y.  67.  Wood.  128  N.  Y.  35;  27  N.  K  1020; 

9  Bull  V.  Coe,  77  Cal.  54;  11  Am.  Crater  v.  Bininger,  45  N.  Y.  545; 
St.  Rep.  235;  18  Pac.  808;  Crater  Moore  v.  Gano,  12  Ohio  300;  Wilson 
V.  Bininger,  45  N.  Y.  545.  v.  Wilson,  26  Or.  251;  38  Pac.  185. 

10  Cook  V.  Canny,  96  Mich.  398;  i*  Douthit  v.  Douthit,  133  Ind. 
55  N.  W.  987.                                               26;  32  N.  E.  715. 

iiTichenor    v.    Newman,    186    III.  is  Huffman  v.   Huffman,   63   S.   C. 

264;    57  N.  E.   826.  1 ;    40   S.   E.   963, 

12  Douthit    V.    Douthit,    133    Ind.  le  Beede    v.    Eraser,    66    Vt.    114; 
26;  Thompson  v.  Smith,  82  la.  598;  44  Am.  St.  Rep.  824;  28  Atl.  880. 
48  N.  W.  988;  Logan  v.  Trayser,  77  it  Glade   v.   White,   42   Neb.   336; 
Wis.  579;  46  N.  W.  877.  60  N.  W.  556. 

13  Scott  V.  Campbell,  30  Ala.  728 ; 


1502  PAGE    ON    CONTBACTS. 

The  law  cannot  settle  accounts  between  three  partners/*  nor 
could  two  firms  sue  each  other  if  they  had  a  member  in  com- 
mon.^^  However,  if  one  of  two  firms  having  a  common  mem- 
ber gives  a  note  to  the  other  firm  for  a  partnership  debt,  signed 
by  the  individual  names  of  some  of  the  partners,  omitting  the 
name  of  the  member  in  common,  the  payee  firm  may  sue  the 
makers  at  law.""  Where  the  statute  makes  partnership  con- 
tracts joint  and  several,  one  partner  may  sue  the  other  at  law  on 
a  joint  and  several  note.^^  By  reason  of  its  more  flexible  pro- 
cedure, equity  gives  adequate  relief  in  actions  between  partners 
growing  out  of  partnership  business,^^  or  in  an  action  between 
two  firms  having  a  common  member."^ 

"Stevens  v.  Coburn,  71  Vt.  261;  S.  W.  289;   Merrill  v.  Green,  55  N. 

44  Atl.  354.  Y.  270;  Walker  v.  Wait,  50  Vt.  668. 

19  Crosby    v.    Timolat,    50    Minn.  22  Vieth  v.  Ress,   60  Neb.   52;   82 

171;   52  K  W.  526.  N.   W.   116;    Sanger  v.   French,   157 

sojungk  V.  Reed,  9  Utah  49;   33  N.  Y.  213;   51  N.  E.  979. 

Pac.  236.  23  Schnebly  v.  Cutler,  22  111.  App. 

21  Morrison  v.   Stockwell,   9  Dana  87 ;    Crosby    v.    Timolat,    50    Minn. 

(Ky.)     172;    Sturges    v.    Swift,    32  171;    52  N.   W.   526;    Cole  v.  Rey- 

Miss.    239;    Willis    v.    Barron,    143  nolds,  18  N.  Y.  74. 
Mo.  450;   65  Am.  St.  Rep.  673;  45 


AGENCY.  1503 


CHAPTER   XLIII. 

AGENCY. 

§960.    Nature  of  agency. 

An  agent  is  one  appointed  to  transact  business  and  to  make 
contracts  witli  third  persons  in  place  of  and  on  behalf  of  the 
person  appointing  him,  known  as  the  principal.^  If  the  facts 
exist  which  in  law  create  the  relation  of  principal  and  agent 
such  relationship  exists  though  the  parties  may  not  have  in- 
tended such  facts  to  have  such  legal  effect,^  or  though  they  may 
have  expressly  agreed  that  such  should  not  be  the  legal  effect.^ 
Thus  an  ostensible  lease  of  a  mill,  the  lessee  to  conduct  the  busi- 
ness for  a  fixed  salary  and  a  certain  per  cent  of  the  profits  is  a 
contract  of  agency.*  On  the  other  hand,  one  who  is  really  the 
adversary  party  cannot  change  the  nature  of  the  transaction  by 
stipulating  that  he  is  merely  an  agent.^  Agency  has  therefore 
a  two-fold  aspect.  It  is,  on  the  one  hand,  a  contract  between 
principal  and  agent,  which  does  not  differ  as  to  its  fundamental 
principles  from  other  contracts ;  on  the  other  hand,  it  is  a  means 
of  bringing  the  principal  into  contractual  relations  with  persons 
with  whom  in  point  of  fact  he  has  had  no  personal  dealings. 
In  this  chapter  there  will  be  presented  only  the  general  prin- 
ciples of  the  law  of  agency  affecting  the  rights  and  liabilities 
of  parties  dealing  with  the  principal  through  the  agent.     The 

1  Central,    etc.,   Co.   v.   Bank,    101  11,5;   13  Am.  St.  Rep.  768;   2  L.  R. 

Ga.   345;    28   S.   E.   863;   Upham  v.  A.  405;  9  S.  W.  753. 

Richey,  163  111.  5.30;  45  N.  E.  228;  3  Hall  v.  Ins.  Co.,  23  Wash.  610; 

Metzger    v.   'Huntington,    139    Ind.  51  L.  R.  A.  288;   63  Pac.  505. 

501;   37  N.  E.  1084;  39  N.  E.  235;  *  Petteway  v.  Melntyre,  131  N.  C. 

Barbar  v.  Martin,  —  Neb.  — ;  93  N.  432;   42   S.   E.   851. 

W.  722;  Elwell  V.  Coon   (N.  J.  Eq.),  s  So      in      gambling     transaction. 

46  Atl.  580.  Miinns   v.   Commission   Co.,   117   la. 

2Bradstreet   Co.   v.   Gill,    72   Tex.  516;   91  N.  W.  789. 


1504 


PAGE    ON    CONTRACTS. 


question  of  the  rights  of  principal  and  agent  between  them- 
selves is  a  special  branch  of  contract  law,  and  is  out  of  place  in 


a  general  work  on  contract. 


>961.     Appointment  of  agent. 


As  between  principal  and  agent,  an  agent  can  be  appointed 
only  by  a  contract,  which  may  be  express,^  though  informal, 
as  by  a  statement  by  the  principal  that  w'hatever  the  agent  did 
"  went^  " ;  or  implied^  as  by  acquiescence  in  the  assumption  of 
such  authority  by  the  agent.*  The  chief  rule  as  to  form  of  ap- 
pointment is  that  it  must  be  of  as  high  a  nature  as  the  act  to  be 
done  by  the  agent.  At  Common  Law  the  classes  of  contracts  as 
to  dignity  were  the  formal  and  the  simple,  there  being  no  dis- 
tinction in  rank  between  the  oral  and  the  written.  Power  to 
an  agent  to  act  under  seal  must  be  given  by  seal,^  unless  he  acts 
in  the  presence  of  his  principal.*'  So  an  agent  cannot  assign  a 
tax  certificate  where  an  acknowledgment  thereto  is  necessary.^ 
If  the  agent  is  to  make  a  simple  contract,  any  form  of  authority 


1  Graves  v.  Horton,  38  Minn.  66; 
35  N.  W.  568;  Hermann  v.  Ins.  Co., 
100  N.  Y.  411;  53  Am.  Rep.  197; 
3  N.  E.  341;  Cribben  v.  Deal,  21  Or. 
211;  28  Am.  St.  Rep.  746;  27  Pac. 
1046;  Bank  v.  Chester,  6  Humph. 
(Tenn.)  458;  44  Am.  Dec.  318. 

2  Scheibeek  v.  Van  Derbeck,  122 
Mich.  29;  80  N.  W.  880. 

3  Arnold  v.  Spurr,  130  Mass.  347; 
Matteson  v.  Blackmer,  46  Mich. 
393;  9  N.  W.  445;  Reeves  v.  Kel- 
ley,  30  Mich.  132;  Neibles  v.  Ry. 
Co.,  37  Minn.  151;  33  N.  W.  332; 
Cline  V.  Stradlee  (Tenn.  Ch.  App.), 
48  S.  W.  272;  Sheanon  v.  Ins.  Co., 
83  Wis.  507;  53  N.  W.  878;  Van 
Etta  V.  Evenson,  28  Wis.  33;  9  Am. 
Rep.  486.  The  statement  is  some- 
times made  that  there  is  an  agency 
of  necessity.  Benjamin  v.  Dock- 
ham,  134  Mass.  418.  This  is  a  fig- 
urative expression  used  to  denote  a 
liability    which    may    arise    without 


the  consent  and  in  defiance  of  the 
intention  of  the  party  liable. 

4Banlc  V.  Mohr,  130  Cal.  268;  62 
Pac.  511;  Sammis  v.  Poole,  188  111. 
396;  58  N.  E.  934;  affirming  89  111. 
App.  118. 

5  Overman  v.  Atkinson,  102  Ga. 
750;  29  S.  E.  758;  Watson  v.  Sher- 
man, 84  111.  263;  Jackson  v.  Mur- 
ray, 5  T.  B.  Mon.  (Ky.)  184;  17 
Am.  Dec.  53;  Emerson  v.  Mfg.  Co., 
12  Mass.  237;  7  Am.  Dec.  66;  Wor- 
rall  V.  Munn,  5  N.  Y.  229;  55  Am. 
Dec.  330;  Smith  v.  Dickinson,  6 
Humph.  (Tenn.)  261;  44  Am.  Dec. 
306. 

ejansen  v.  Cahill,  22  Cal.  563; 
83  Am.  Dec.  84 ;  Croy  v.  Busenbark, 
72  Ind.  48;  Gardner  v.  Gardner,  5 
Cush.  (Mass.)  483;  52  Am.  Dec. 
740. 

7  Wilson  V.  Wood,  10  Okla.  279; 
61  Pac.  1045. 


AGENCY. 


1505 


is  sufficient  unless  there  is  some  specific  statutory  provision  to 
the  contrary.  Thus  a  contract  which  by  the  statute  of  frauds 
must  be  proved  by  writing,  such  as  a  contract  to  sell  realty,*  may 
be  made  by  an  agent  having  oral  authority.  As  between  the 
principal  and  third  persons,  the  facts  may  be  such  that  the  prin- 
cipal is  estopped  to  deny  the  existence  of  an  agency  which  is  in 
fact  non-existent,  or  to  deny  that  it  extends  beyond  its  actual 
scope.® 

§962.     Termination  of  agent's  authority. 

The  authority  of  an  agent  to  bind  his  principal  may  cease  by 
expiration  of  time,^  or  the  accomplishment  of  the  purpose  for 
which  he  was  appointed,"  or  by  express^  or  implied  revocation 
arising  out  of  the  intention  of  the  principal  to  revoke.*  It  may 
also  be  revoked  by  operation  of  law  regardless  of  the  intention 
of  the  principal,  as  by  the  death  of  either,^  or  by  insanity,*'  as  by 


8  Cobban  v.  Hecklen,  27  Mont. 
245;  70  Pac.  805;  Smith  v.  Browne, 
132  N.  C.  365;  43  S.  E.  915;  Brod- 
head  v.  Reinbold,  200  Pa.  St.  618; 
86  Am.  St.  Rep.  735;  50  Atl.  229. 
See  §§  692,  693. 

9  See  §  965. 

1  Gundlach  v.  Fischer,  59  111.  172. 

2  Short  V.  Millard,  68  111.  292; 
Moore  v.  Stone,  40  la.  259;  Ahern 
V.  Baker,  34  Minn.  98;  24  N.  W. 
341 ;  Hermann  v.  Ins.  Co.,  100  N.  Y. 
411;  53  Am.  Rep.  197;  3  N.  E.  341. 

3  Sheahan  v.  Steamship  Co.,  87 
Fed.  167;  Duffield  v.  Michaels,  97 
Fed.  825;  Linder  v.  Adams,  95  Ga. 
668;  22  S.  E.  687;  Ballard  v.  Ins. 
Co.,  119  N.  C.  187;  25  S.  E.  956; 
Hitchcock  V.  Kelley,  18  Ohio  C.  C. 
808;  4  Ohio  C.  D.  180;  Flaherty  v. 
O'Connor,  24  R.  I.  587;  54  Atl.  376. 
As  by  demand  for  a  power  of  attor- 
ney and  surrender  thereof.  Kelly 
V.  Brennan,  55  N.  J.  Eq.  423;  37 
Atl.  137. 

4  Walker  v,  Denison,  86  111.  142; 

95 


Chenault  v.  Quisenberry  (Ky.),  56 
S.  W.  410;  57  S.  W.  234;  Elliott  v. 
Barrett,  144  Mass.  256;  10  N.  E. 
820.  A  power  of  attorney  to  con- 
vey realty  is  revoked  by  a  convey- 
ance to  the  agent  as  trustee.  Chen- 
ault V.  Quisenberry  (Ky.),  56  S.  W. 
410;    57  S.  W.  234. 

5  Long  V.  Thayer,  150  U.  S.  520; 
Pacific  Bank  v.  Hannah,  90  Fed.  72; 
Krumdich  v.  White,  107  Cal.  37;  39 
Pac.  1066;  Lanaux's  Succession,  46 
La.  Ann.  1036;  25  L.  R.  A.  577;  15 
So.  708;  Brown  v.  Cushman,  173 
Mass.  368;  53  N.  E.  860;  Mills  v. 
Ins.  Co.,  77  Miss.  327;  78  Am.  St. 
Rep.  522;  28  So.  954;  Martine  v. 
Ins.  Co.,  53  N.  Y.  339;  13  Am.  Rep. 
529;  Duckworth  v.  Orr,  126  N.  C. 
674;  36  S.  E.  150;  McDonald  v. 
Black,  20  Ohio  185;  55  Am.  Dec. 
448 ;  Kern's  Estate,  176  Pa.  St.  373 ; 
35  Atl.  231;  Triplett  v.  Woodward, 
98  Va.  187;  35  S.  E.  455. 

6  Blake  v.  Garwood,  42  N.  J.  Eq. 
276;   10  Atl.  874.* 


1506  PAGE    ON    CONTRACTS. 

the  principal's  lunacy  known,  though  not  adjudged/  or  by  bank- 
ruptcy of  the  principal,*  or  assignment  for  the  benefit  of  cred- 
itors." However,  the  appointment  of  a  receiver  for  the  princi- 
pal does  not  revoke  the  agency,  where  the  receiver  accepts  the 
services  of  the  agent.^'*  It  has  been  said  that  the  death  of  the 
principal  does  not  always,  as  a  matter  of  law,  revoke  the  author- 
ity of  the  agent.^^  The  cases  cited,  however,  are  those  in  which 
IDayment  has  been  made  to  an  agent  after  the  death  of  the  prin- 
cipal, such  payment  has  been  transmitted  to  the  legal  representa- 
tives of  the  principal,  and  accordingly  as  they  have  received 
and  retained  the  benefits  of  the  transaction  they  are  estoppel  to 
deny  the  authority  of  the  agent. 

No  one  can  appoint  an  agent  in  a  hostile  country  during  a 
war.^^  War  revokes  the  agency  of  citizens  of  the  one  hostile 
country  appointed  by  a  principal  domiciled  in  the  other,  as  far 
as  the  execution  of  such  power  involves  communication  with  the 
principal  or  transmission  of  property  to  him.^^  Other  powers 
are  not  revoked  by  war.^*  Thus,  a  power  to  sell,  where  advan- 
tageous to  the  donor  of  the  power,  is  not  revoked  by  war.^^ 

A  power  coupled  with  an  interest  cannot  be  revoked,  and  is 
an  exception  to  the  rules  as  to  revocation.^''     Thus  power  to  col- 

7  Matthessen,    etc.,   Co.   v.   McMa-  Ga.  302 ;  Conley  v.  Burson,  1  Heisk. 

hon,  38  N.  J.  L.  536.  (Tenn.)   145. 

«In  re  Daniels,   6   Biss.    (U.   S.)  i*  Williams   v.    Paine,    169    U.    S. 

405.  55;  Ward  v.  Smith,  7  Wall.  (U.  S.) 

sElwell  V.  Coon    (N.  J.  Eq.),  46  447;   Robinson  v.  Society,  42  N.   Y. 

Atl.  580.  54;     1    Am.    Rep.    490;    Darling   v. 

loLeupold  V.  Weeks,  96  Md.  280;  Lewis,   11  Heisk.    (Tenn.)    125;  Ma- 

53  Atl.  937.  loney  v.  Stephens,  11  Heisk.  (Tenn.) 

iiMeinhardt  v.  Newman,  —  Neb,  738;    Manhattan,  etc.,   Co.  v.  War- 

— ;  99  N.  W.  261;  Deweese  v.  Muff,  wick,   20  Gratt.    (Va.)    614;    3  Am. 

57   Neb.   17;   73  Am.   St.  Rep.  488;  Rep.  218. 

42  L.  R.  A.  789;  77  N.  W.  361;  Ish  is  Williams   v.    Paine,    169   U.    S. 

V.  Crane,  8  0.  S.  520;  s.  c,  13  0.  S.  55. 

574.  16  Jn      re     Hannan's,      etc.,      Co. 

12  United  States  v.  Grossmayer,  9  (1896),  2  Ch.  643;  Hunt  v.  Rous- 
Wall.  (U.  S.)  72;  Hubbard  v.  Mat-  manier,  8  Wheat.  (U.  S.)  174;  Wal- 
thews,  54  N.  Y.  43;  13  Am.  Rep.  ker  v.  Denison,  86  111.  142;  Baker 
562.  V.   Baird,   79   Mich.   255;   44  N.   W. 

13  New  York,  etc.,  Co.  v.  Davis.  604;  Durbrow  v.  Eppens.  65  N.  J. 
95  U.  S.  425;  Hovtell  v.  Gordon,  40  L.    10;    46    Atl.    582;    Wheeler    v. 


AGENCY.  150* 

feet  rents  and  apply  proceeds  on  a  mortgage,"  or  power  to  sell 
and  apply  the  proceeds/^  or  an  assignment  of  a  life  insurance 
policy  with  power  to  the  assignee  to  collect  it/®  is  not  revoked  by 
the  death  of  the  princij)al, 

§963.     Scope  of  agent's  authority. 

The  extent  of  the  agent's  authority  as  between  him  and  his 
principal  is  primarily  a  question  of  fact/  The  construction  of 
the  language  creating  the  authority  or  the  inferences  admissible 
from  the  facts  from  which  authority  may  be  inferred  are  ques- 
tions of  law.^  As  illustrating  what  powers  have  been  held  to 
be  implied  and  what  have  not  been  so  held,  general  power  to 
manage  a  business  includes  power  to  do  w^hatever  is  customary 
and  necessary  in  such  business.^  Thus  it  includes  power  to 
lease,*  to  vacate  leased  realty  without  surrendering  the  lease,^ 
to  employ  an  attorney,®  to  borrow  money,^  to  give  a  note,^  to 
endorse  checks  of  his  principal  for  goods  bought  on  credit  in 
pursuance  of  his  authority,^  and  to  rescind  contracts,^^  but  not 
to  loan  the  principal's  credit,"  unless  the  debt  for  which  the 
principal  becomes  surety  is  really  the  principal's  own  debt;^^ 

Knaggs,   8   Ohio    169;    Montague   v.  57  L.  R.  A.  222;   51  Atl.  535    (the 

McCaiToll,    15    Utah    318;    49    Pac.  agent's  conduct  after  the  term  ended 

418    (power  to   sell  land   in  consid-  being  considered  as  a  renewal), 

eration   of   $5.00).  6  Davis  v.  Matthews,  8  S.  D.  300; 

1- Kelly  V.   Bowerman.    113   Mich.  66  N.  W.  456. 

446:   71  N.  W.  836.  -Helena    National    Bank   v.    Tele- 

18  Terwilliger    v.    R.    R.    Co.,    149  graph   Co.,   20   Mont.    379;    63   Am. 
N.  Y.  86;  43  N.  E.  432.  St.  Rep.  628;   51  Pac.  829;  McDer- 

19  (Supreme  Assembly)    Good  Fel-  niott  v.  Jackson,  97  Wis.  64;  72  N. 
lows  V.  Campbell,   17  R.  I.  402;    13  W.  375. 

L.  R.  A.  601;   22  Atl.  307.  8  Whitten  v.  Bank,   100  Va.   .546; 

1  Willcox  V.  Hines,  100  Tenn.  524;  42  S.  E.  309. 

66  Am.  St.  Rep.  761 ;  45  S.  W.  781.  9  Graton,    etc..    Co.    v.    Rodelshei- 

2Seehorn  v.  Hall.  130  Mo.  257;  51  mer,  28  Wash.  370;  68  Pac.  879. 

Am.  St.  Rep.  562;  32  S.  W.  643.  lo  Van    Santvoord    v.    Smith,    79 

3Rathbun    v.    Snow,    123    K    Y.  Minn.  316;  82  N.  W.  642. 

343;  10  L.  R.  A.  355;  25  N.  E.  379.  n  Boord  v.  Strauss,  39  Fla.  381; 

4  Phillips,    etc.,    Co.    v.    Whitney,  22   So.  713. 

109  Ala.  645;  20  So.  333.  12  Andres  v.  Morgan.  62  O.  S.  236; 

5  Byxbee  v.  Blake,  74  Conn.  607;      78  Am.  St.  Rep.  712;  56  X.  E.  875. 


1508 


PAGE    ON    CONTRACTS. 


nor  does  a  general  manager  have  implied  power  to  mortgage.^' 
Power  to  sell  is  not  power  to  employ  an  attorney/*  or  to  buy,^^ 
or  to  dedicate  realty  for  a  street/®  or  to  indemnify  against  loss 
in  business/'^  nor  to  sell  on  credit/*  or  to  sell  on  credit,  taking  a 
note  payable  to  the  agent/^  or  to  rescind  a  sale  already  made.^" 

Power  to  sell  land  is  not  power  to  mortgage/^  or  to  ex- 
change,"" and  power  to  sell  goods  at  retail  is  not  power  to  mort- 
gage the  entire  stock. ^^  Power  to  sell  usually  includes  power  to 
make  such  warranties  as  are  customary  in  that  place  and  busi- 
ness. Thus  in  sales  of  personalty  power  to  warrant  quality  is 
implied  from  powder  to  sell  as  to  such  warranties  as  are  cus- 
tomary.^* Whether  the  warranty  is  customary  or  not  is  a  ques- 
tion of  fact."^     Power  to  sell  a  new  brand  of  fertilizer  has  been 


13  First  National  Bank  v.  Kirkby, 
43  Fla.  376;   32  So.  881. 

i4Kirby  v.  Scraper  Co.,  9  S.  D. 
623;    70  N.  W.    1052. 

15  Mclntogh-Huntington  Co.  v. 
Eice,  13  Colo.  App.  393;  58  Pac. 
358;  Finance  Co.  v.  Coal  Co.,  65 
Minn.  442;   68  N.  W.  70. 

16  Anderson  v.  Bigelow,  16  Wash. 
198;  47  Pac.  426. 

17  Kinser  v.  Clay  Co.,  165  111.  505; 
46  N.  E.  372;  affirming,  64  111.  App. 
437;  Braun  v.  Hess,  187  111.  283; 
58  N.  E  371;  affirming  86  111.  App. 
544. 

18  Sale  of  realty.  Burks  v.  Hub- 
bard, 69  Ala.  379;  Dresden  School 
Dist.  V.  Ins.  Co.,  62  Me.  330;  Lump- 
kin V.  Wilson,  5  Heisk.  (Tenn.) 
555. 

19  McGrath  v.  Vanaman,  53  N.  J. 
Eq.  459;  32  Atl.  686. 

2oDiversy  v.  Kellogg,  44  111.  114; 
92  Am.  Dec.  154;  West  End,  etc., 
Co.  V.  Crawford,  120  N.  C.  347;  27 
S.  E.  31;  Fletcher  v.  Nelson,  6  N. 
D.  94;  69  N.  W.  53.  Contra,  Pal- 
mer V.  Roath,  86  Mich.  602;  49  N. 
W.  590.  But  a  state  agent  to  sell 
machines  has  power  to  agree  to  take 
machine  back  if  unsatisfactory.  Ma- 


rion   Mfg.    Co.    Harding,    155    Ind. 
648;   58  N.  E.  194. 

21  Chapman  v.  Hughes,  134  Cal. 
641;  58  Pac.  298;  60  Pac.  974;  66 
Pac.  982;  Salem  National  Bank  v. 
White,  159  HI.  136;  42  N.  E.  312; 
Minnesota  Stoneware  Co.  v.  Mc- 
Crossen,  110  Wis.  316;  84  Am,  St. 
Rep.  927;   85  N.  W^   1019. 

22  Chapman  v.  Hughes,  134  Cal. 
641;  58  Pac.  298;  60  Pac.  974;  66 
Pac.  982. 

23  Kiefer  v.  Klinsick,  144  Ind.  46; 
42  N.  E.  447. 

24  Dreyfus  v.  Goss,  67  Kan.  57; 
72  Pac.  537;  McCormick  Harvest- 
ing Machinery  Co.  v.  Hiatt.  —  Neb. 
— ;  95  N.  W.  627;  Bierman  v.  Mills 
Co.,  151  N.  Y.  482;  56  Am.  St. 
Rep.  635;  37  L.  R.  A.  799;  45  N.  E. 
856 ;  Reese  v.  Bates,  94  Va.  321 ;  26 
S.  E.  865 ;  Westurn  v.  Page,  94  Wis, 
251;  68  N.  W.  1003;  Pickert  v. 
Marston,  68  Wis.  465;  60  Am.  Rep. 
876;  32  N.  W.  '550;  overruling 
Boothby  v.  Scales,  27  Wis.  626. 

25  Reese  v.  Bates,  94  Va.  321;  26 
S.  E.  865;  Westurn  v.  Page,  94 
Wis.  251;  68  N.  W.  1003;  Larson 
V.  Taylor  Co.,  86  Wis.  281;  39  Am. 
St.  Rep.  893;  56  N.  W.  915. 


AGENCY.  1509 

held  to  include  power  to  warrant  its  quality.^*  Power  to  sell 
as  general  agent  has  been  held  to  include  power  to  warrant," 
even  as  to  one  who  knows  that  local  agents  are  unauthorized  to 
warrant."*  Power  given  by  a  mortgagee  to  a  mortgagor  of 
chattels  to  sell  and  apply  the  proceeds  to  the  mortgage  debt  is 
held  to  include  power  to  warrant.^''  If  the  warranty  is  not  cus- 
tomary the  agent  has  no  implied  authority  to  make  it.^°  Title 
is  usually  warranted.  Accordingly  power  to  sell  land  includes 
power  to  warrant  the  title/^  and  so  does  power  to  sell  person- 
alty.^^ Power  to  sell  guaranteed  goods  to  be  tested  is  power  to 
fix  the  method  of  testing  the  goods,^^  or  to  extend  the  time  of  the 
trial.^*  It  is  presumed  that  the  principal  intends  that  the  cus- 
tom of  the  market  shall  determine  the  agent's  power  to  sell 
therein.'^  Power  given  by  a  wife  to  her  husband  to  mortgage 
her  realty  is  not  power  to  release  her  dower  in  his  realty.^* 
Power  to  pledge  includes  power  to  pledge  again  to  raise  money 
to  pay  the  first  loan;^^  and  power  to  pay  includes  power  to 
promise  to  pay  so  as  to  avoid  limitations.^®  Power  to  loan  is  not 
power  to  negotiate/^  or  to  collect  unless  the  note  is  in  the  posses- 

26Hille  V.  Adair   (Ky.),  58  S.  W.  Howe  v.  Harrington,    18  N.  J.  Eq. 

697;  Reese  v.  Bates,  94  Va.  321;  26  495. 

S.  E.  865.  32  Nelson   v.   Cowing,    6   Hill    (N. 

27Hille  V.  Adair   (Ky.),  58  S.  W.  Y.)    336;   overruling  Gibson  v.  Colt, 

697.  7    Johns.     (N.    Y.)     390;    Nixon    v. 

28  J.  I.  Case,  etc.,   Co.  v.  McKin-  Hyseratt.  5  Johns.    (jST.  Y.)    58. 
non,  82  Minn.  75 ;  84  N.  W.  646.  33  Smith  v.  Mfg.  Co.,  58  N.  J.  L. 

29  National  Citizens'  Bank  v.  Ertz,  242;   33  Atl.  244. 

83  Minn.   12;    53  L.  R.  A.   174;   85  34  Reeves  v.  Cress,  80  Minn.  466; 

N.  W.   821.                                        ♦  83  N.  W.  443. 

30  Wait  v.  Bourne,  123  N.  Y.  592;  35  Taylor  v.  Bailey,  169  HI.  181; 
25  N.  E.  1053;  Smith  v.  Tracy,  36  N.  48  N.  E.  200;  affirming  68  HI.  App. 
Y.  79.  622. 

31  Vanada  v.  Hopkins,  1  J.  J.  Mar.  36  Security  Savings  Bank  v.  Smith, 
(Ky.)  285;  19  Am.  Dec.  92;  Bron-  38  Or.  72;  84  Am.  St.  Rep.  756;  62 
son    v.    Coffin,    118    Mass.    156;    Le  Pac  794. 

Roy  v.  Beard,  8  How.   (U.  S.)   451;  37  Hayes'  Appeal,  195  Pa.  St,  177; 

Backman  v    Charlestown,  42  N.  H.  45  Atl.  1007. 

125;    Scltultz  V.   Griffin,    121   N.   Y.  38 /„  re  Hale  (1899),  2  Ch.  107. 

294;  18  Am.  St.  Rep.  825;  24  N.  E.  so  Fortune    v.    Stockton,    182    111. 

480;    Peters  v.   Farnsworth.    15   Vt.  454;    55    N.    E.    367;    affirming    82 

155;  40  Am.  Dec.  671.     Contra,  see  111.  App.  272. 


1510 


PAGE    ON    CONTRACTS. 


sion  of  the  agent.**^  But  general  power  to  handle  money  for  in- 
vestment is  power  to  extend  payment  or  to  collect  notes.*^ 
Power  to  buy  for  cash  does  not  include  power  to  buy  on  credit.*^ 
Power  to  collect  is  not  power  to  modify  the  contract/^  or  to  ex- 
tend the  time  of  payment/*  or  to  waive  the  principal's  right  in 
property,*^  or  to  set  off  the  debt  to  be  collected  against  a  debt 
owed  by  the  principal,*^  or  to  indorse  checks  received,*^  and 
power  to  foreclose  is  not  power  to  extend  time  of  payment.** 
Power  to  collect  interest  is  not  power  to  collect  the  principal,*® 
at  least  before  maturity,^"  unless  by  custom, ^^  or  by  the  prin- 
cipal's acquiescence  in  such  conduct/^  or  if  the  note  is  in  the 


40  Bacon  v.  Pomeroy,  118  Mich. 
145;  76  N.  W.  324;  Church  Associa- 
tion V.  Walton,  114  Mich.  677;  72 
N.  W.  998;  Bromley  v.  Lathrop, 
105  Mich.  492;  63  N.  W.  510;  Smith 
V.  Kidd,  68  N.  Y.  130;  23  Am.  Rep. 
157;  Hollinshead  v.  Stuart,  8  N.  D. 
35;  42  L.  R.  A.  659;  77  N.  W.  89; 
Bartel  v.  Brown,  104  Wis.  493;  80 
N.  W.  801 ;  Kohl  V.  Beach,  107  Wis. 
409;  81  Am.  St.  Rep.  849;  50  L.  R. 
A.  600;   83  N.  W.  657. 

41  Harrison  National  Bank  v. 
Austin,  65  Neb.  632;  91  N.  W.  540. 

42  Fradley  v.  Hyland,  37  Fed.  49 ; 
2  L.  R.  A.  749;  Wheeler  v.  McGuire, 
86  Ala.  398;  2  L.  R.  A.  808;  5  So. 
190;  Chapman  v.  Oil  Co.,  117  Ga. 
881;  45  S.  E.  268. 

43  Rogers  v.  College,  64  Ark.  627 ; 
39  L.  R.  A.  636;  44  S.  W.  454. 

44  Van  Veehten  v.  Jones,  104  la. 
436;   73  N.  W.   1032. 

45  Johnson  v.  Wilson,  137  Ala. 
468;  97  Am.  St.  Rep.  52;  34  So. 
392. 

46  Hill  V.  Van  Duzer,  111  Ga.  867; 
36  S.  E.  966.  An  agent  to  collect 
cannot  set  off  his  own  debt  to  the 
debtor  of  the  principal  in  payment 
of  his  principal's  debt,  leaving  him- 
self indebted  to  his  principal.  West- 
ern, etc.,  Co.  V.  Portrey,  50  Neb. 
801;    70  N.  W.  383.     (It  is  not  a 


good  novation,  as  the  principal's  con- 
sent  is   lacking.     See   §    1351. 

4T  Deering  v.  Kelso,  74  Minn.  41; 
73  Am.  St.  Rep.  324 ;  76  N.  W.  792 ; 
Jackson  v.  Bank,  92  Tenn.  154;  36 
Am.  St.  Rep.  81.;  18  L.  R.  A.  663; 
20  S.  W.  802.  Contra,  if  the  agent 
collecting  security  of  a  loan  associa- 
tion is  to  pay  the  money  received 
therefrom  to  the  treasurer  he  has 
authority  to  indorse.  Gate  City, 
etc..  Association  v.  Bank,  126  Mo. 
82;  47  Am.  St.  Rep.  633;  27  L.  R. 
A.  401 ;  28  S.  W.  633. 

48Karcher  v.  Gans,  13  S.  D.  383; 
83  N.  W.  431. 

49  Joy  V.  Vance,  104  Mich.  97; 
62  N.  W.  140;  Walsh  v.  Peterson, 
59  Neb.  645;  81  N.  W.  853;  Frey 
v.  Curtis,  52  Neb.  406;  72  N.  W. 
478;  Lawson  v.  Nicholson,  52  N.  J. 
Eq.  821;  31  Atl.  386;  Brewster  t. 
Carnes,  103  N.  Y.  556;  9  N.  E. 
323. 

50  Little  Rock,  etc.,  Co,  v.  Wig- 
gins, 65  Ark.  385;  46  S.  W.  731; 
Dilenbeck  v.  Rehse,  105  la.  749;  73 
N.  W.  1072;  Smith  v.  Kidd,  68  N. 
Y.  130;  23  Am.  Rep.  157.  • 

51  Thornton  v.  Lawther,  169  HI. 
228;  48  N.  E.  412;  reversing  67 
111.  App.  214. 

52  Springfield  Savings  Bank  v. 
Kjaer,  82  Minn.  180;  84  N.  W.  752. 


AGENCY. 


1511 


possession  of  the  agent.^^  Power  to  collect  installments  when 
due  is  not  power  to  collect  before  they  are  due.^*  Power  to  col- 
lect and  reinvest  is  power  to  collect  before  maturity.^^  Power 
to  collect  is  power  to  accept  cash  only  therefor,  not  a  savings  de- 
posit book."^**  Power  to  settle  a  debt  is  power  to  accept  the  note 
of  a  third  person/^  or  personal  property,^^  A  collecting  agency 
has  power  to  employ  an  attorney  for  its  principal.^^  Power  to 
solicit  orders  is  not  power  to  collect,'^"  or  to  rescind,^^  or  to  make 
a  binding  contract  of  sale.*^^  Power  to  ship  goods  includes 
power  to  take  a  special  bill  of  lading.*'^  Power  to  write  insur- 
ance wdthin  certain  territorial  limits  is  not  power  to  write  in- 
surance outside  such  limits.*'*  Power  to  insure  is  not  power  to 
insure  on  credit,  taking  a  promissory  note  for  the  premium.*'^ 
Power  to  lease  is  not  power  to  covenant  to  irrigate  f^  but  such 
agent  may  bind  his  principal  by  a  representation  that  a  wall  of 
the  building  to  be  leased  is  fire-proof. '^'^  An  attorney  has  no 
implied  authority  to  consent  to  a  compromise  judgment  against 


53  Ambrose  v.  Barrett,  121  Cal. 
297;  53  Pac.  805;  54  Pac.  264; 
Hitchcock  V.  Kelley,  18  Ohio  C.  C. 
808;  4  Ohio  C.  D.  180. 

54  Park  V.  Cross,  76  Minn.  187; 
77  Am.  St.  Rep.  630;  78  N.  W. 
1107;  Smith  v.  Kidd,  68  N.  Y.  130; 
23  Am.  Rep.  157 

55  Thornton  v.  Lawther,  169  111. 
228;  48  N.  E.  412;  reversing  67  111. 
App.  214. 

56  Dixon  V.  Guay,  70  N.  H.  161; 
46  Atl.  456.  To  the  same  effect  is 
Cram  v.  Sickel,  51  Neb.  828;  66  Am. 
St.  Rep.  478;  71  N.  W.  724. 

57  Nichols  &  Shepard  Co.  v.  Hack- 
ney, 78  Minn.  461 :  81  N.  W.  322. 

58  Oliver  v.  Sterling,  20  O.  S. 
391. 

59  Strong  V.  West,  110  Ga.  382; 
35  S.  E.  693. 

60  .Jackson  Paper  Mfg.  Co.  v. 
Bank,  199  111.  151;  59  L.  R.  A.  657; 
65  N.  E.  136;  Dreyfus  v.  Goss,  67 
Kan.  57;  72  Pac.  537;  Clark  v. 
Murphy,    164   Mass.   490;    41   N.   E. 


674;  Brown  v.  Lally,  79  Minn.  38; 
81  N.  W.  538;  Smith  v.  Browne, 
132  N.  C.  365;  43  S.  E.  915;  Simon 
v.  Johnson,  105  Ala.  344;  53  Am. 
St.  Rep.   125;    16  So.  884. 

61  Bingham  v.  Hibbard,  28  Or. 
386;  43  Pac.  383. 

62  John  Matthews,  etc.,  Co.  v. 
Renz  (Ky.),  61  S.  W.  9. 

63  California,  etc..  Works  v.  R.  R. 
Co.,  113  Cal.  329;  36  L.  R.  A.  648; 
45  Pac.  691.  But  a  vendor  deliver- 
ing live  stock  to  the  railroad  is  not 
the  agent  of  the  purchaser.  Nor- 
folk, etc.,  R.  R.  Co.  V.  Harman,  91 
Va.  601;  50  Am.  St.  Rep.  855;  22 
S.  E.  490. 

64  Ins.  Co.  V.  Thornton,  130  Ala. 
222;  55  L.  R.  A.  547;  30  So.  614. 

6  5  Mutual  Life  Ins.  Co.  v.  Logan, 
87  Fed.  637;   31  C.  C.  A.  172. 

66  Durkee  v.  Carr,  38  Or.  189; 
63  Pac.  117. 

67Matteson  v.  Rice,  116  Wis.  328; 
92  N.  W.  1109. 


1512  PAGE    ON    CONTRACTS. 

his  client.*'®     A  husband  has  no  implied   authority  to  act  as 
agent  for  his  wife."** 

§964.     Liability  of  principal. — Agent  acting  within  authority. 

If  the  contract  of  the  agent  is  in  fact  within  his  authority,  the 
principal  is  liable  thereon,  without  reference  to  any  facts  creat- 
ing estoppel,  or  to  the  knowledge  possessed  by  the  adversary 
party  of  the  facts  that  make  the  principal  liable.^  Payment  to 
an  authorized  agent  discharges  the  debt  paid."  The  principal  is 
liable  for  the  acts  of  his  agent  within  the  scope  of  his  authority 
even  if  the  existence  of  the  principal  is  not  disclosed.^  Thus 
payment  to  the  agent  of  an  undisclosed  principal  discharges  the 
debt.*  So  if  the  contract  does  not  purport  to  bind  the  real  prin- 
cipal, but  the  agent,^  or  a  third  party  who  does  not  consent 
thereto,'''  the  real  principal  is  liable  thereon. 

§965.     liability  of  principal. —  Estoppel. 

Outside  of  the  class  of  public  agents  the  actual  authority  con- 
ferred by  a  principal  upon  his  agent  is  practically  inaccessible 

68  Kilmer  v.  Gallaher,  112  la,  583;  80  N.  W.  517;  Jones  v.  Johnson,  86 
84  Am.  St.  Rep.  358;  84  N.  W.  697.  Ky.  530;  6  S.  W.  582;  Maxcy  Mfg. 

69  Rust-Owen  Lumber  Co.  V.  Holt,  Co.  v.  Burnham,  89  Me.  538;  56 
60  Neb.  80;  83  Am.  St.  Rep.  512;  82  Am.  St.  Rep.  436;  36  Atl.  1003; 
N.  W.  112.  Schendel    v.    Stevenson,    153    Mass. 

1  Garfield,  etc.,  Co.  v.  Lime  Co.,  351;  26  N.  E.  689;  Simmons  Hard- 
184  Mass.  60;  61  L.  R.  A.  946;  67  ware  Co.  v,  Todd,  79  Miss.  163;  29 
N.  E.  863;  Home  Fire  Ins.  Co.  v.  So.  851;  Weber  v.  Collins,  139  Mo. 
Kuhlman,  58  Neb.  488;  76  Am.  St.  501;  41  S.  W.  249;  Yates  v.  Kepet- 
Rep.  Ill;  78  N.  W.  936;  Nutter  v.  to,  65  N.  J.  L.  294;  47  Atl.  632; 
Brown,  51  W.  Va.  5^8;  42  S.  E.  Belt  v.  Water  Power  Co.,  24  Wash. 
661.  387;    64   Pac.   525.     An   undisclosed 

2  Henken  v.  Schwicker,  174  N.  Y.  principal  is  not  liable  on  a  convey- 
298;   66  N.  E.  971.  ance  of  realty.     Sanger  v.   Warren, 

sBergtholdt   v.   Porter   Bros.   Co.,  91  Tex.  472;  66  Am.  St.  Rep.  913; 

114   Cal.   681;    46  Pac.   738;    Simp-  44  S.  W.  477. 

son  V.  Guano  Co.,  .99  Ga.   168;    25  *  Cheshire  Provident  Institution  v. 

S.  E.  94;  Allison  v.  Sutlive,  99  Ga.  Gibson  (Neb.),  89  N.  W.  243. 

151;   25  S.  E.  11;   Baldwin  v.  Gar-  s  Crawford    v.    Moran,    168    Mass. 

rett,    111    Ga.    876;    36    S.    E.    966;  446;   47  N.  E.   132. 

Woodford    v.    Hamilton,     139    Ind.  6  Simmons  Hardware  Co.  V.  Todd, 

481;  39  N.  E.  47;  Steele-Smith  Gro-  79  Miss.  163;  29  So.  851. 
cerv   Co.   V.   Potthast,   109   la.  413; 


AGENCY. 


1513 


to  the  public  at  large.  Accordingly  persons  who  do  not  know 
what  the  agent's  authority  really  is  are  justified  in  dealing  with 
him  upon  the  assumption  that  he  has  the  authority  which  the 
principal  indicates  by  his  conduct  that  the  agent  possesses. 
Thus  dealing  with  the  agent,  such  persons  may  hold  the  princi- 
pal on  contracts  outside  the  real  authority  of  the  agent  but  in- 
side his  apparent  authority.^  Thus  if  a  husband  is  his  wife's 
agent  to  deliver  a  note  signed  by  them  both,  his  statement  that 
she  is  principal  is  binding  on  her,  if  her  name  is  written  above 
his  and  prevents  her  from  interposing  the  defense  that  she  was  a 
surety.^  In  contracts  made  in  excess  of  the  real  authority  of  the 
agent  the  liability  of  the  principal  depends  on  the  application  of 
principles  of  estoppel.  Thus  the  principal  is  liable  only  so  far 
as  the  person  dealing  through  the  alleged  agent  had  reason  to 
believe  from  the  facts  known  to  him  at  the  time,  that  the  con- 


iPost  V.  Pearson.  108  U.  S.  418; 
Lucas  V.  Brooks,  18  Wall.  (U.  S.) 
436;  Phillips,  etc.  Co.  v.  Whitney, 
109  Ala.  645;  20  So.  333;  A.  G. 
Rhodes  Furniture  Co.  v.  Weeden, 
108  Ala.  252;  19  So.  318;  Buckley 
V.  Silverberg,  113  Cal.  673;  45  Pac. 
804;  Camp  v.  Hall,  39  Fla.  535;  22 
So.  792;  Thornton  v.  Lawther,  169 
111.  228;  48  N.  E.  412;  reversing 
67  111.  App.  214;  Nash  v.  Classen, 
163  111.  409;  45  N.  E.  276;  Croy 
V.  Busenbark,  72  Ind.  48;  Sawin  v. 
Savings  Association,  95  la.  477;  64 
N.  W.  401;  Vanada  v.  Hopkins,  1 
J.  J.  Mar.  (Ky.)  285;  19  Am.  Dec. 
92;  Columbia,  etc.,  Co.  v.  Tinsley 
(Ky.),  60  S.  W.  10;  H.  Herman 
Sawmill  Co.  v.  Bailey  (Ky.),  58 
S.  W.  449;  Heath  v.  Stoddard,  91 
Me.  499;  40  Atl.  547;  Schendel  v. 
Stevenson,  153  Mass.  351;  26  N.  E. 
689;  Lock  v.  Lewis,  124  Mass.  1; 
26  Am.  Rep.  631;  Thompson  v.  Clay, 
60  Mich.  627 ;  27  N.  W.  699 :  Drohan 
v.  Lumber  Co.,  75  Minn.  251 ;  77 
N.  W.  957;  Day,  etc.,  Co.  v.  Bixby. 
(Neb.),    93    N.    W.    688;    Phoenix 


Ins.  Co.  V.  Walter.  51  Neb.  182;  70 
N.  W.  938;  Thomson  v.  Shelton, 
49  Neb.  644;  68  N.  W.  1055;  Cam- 
den, etc.,  Co.  v.  Abbott,  44  N.  J. 
L.  257;  Edwards  v.  Dooley,  120  N. 
Y.  540;  24  N.  E.  827;  Schley  v. 
Fryer,  100  N.  Y.  71 ;  2  N.  E.  280, 
Hubbard  v.  Tenbrook,  124  Pa.  St. 
291;  10  Am.  St.  Rep.  585;  2  L.  R. 
A.  823;  16  Atl.  817;  Minnelly  v. 
Goodwin  (Tenn.  Ch.),  39  S.  W, 
855;  Griggs  v.  Selden,  58  Vt.  561; 
5  Atl.  504;  Rohrbough  v.  Express 
Co..  50  W.  Va.  148;  88  Am.  St.  Rep. 
849;  40  S.  E.  398.  "Persons  deal- 
ing with  an  agent  have  a  right  to 
presume  that  his  agency  is  general 
and  not  limited,  and  notice  of  the 
limited  authority  must  be  brought 
to  their  knowledge  before  they  are 
bound  to  regard  it."  Trainer  v. 
Morison,  78  Me.  160,  163;  57  Am. 
Rep.  790:  3  Atl.  185;  quoted  in 
Wood  v.  Finson,  89  Me.  459,  460 ;  36 
Atl.  911. 

2  Tompkins    v.    Triplett,    110    Ky. 
824;  62  S.  W.  1021. 


1514 


PAGE   ON    CONTRACTS. 


tract  was  within  the  scope  of  the  agent's  authority.'  The  prin- 
cipal may  be  estopped  to  deny  the  authority  of  the  agent  by  ac- 
tively holding  him  out  to  the  world  as  his  agent.  Thus  private 
instructions  contrary  to  the  apparent  authority  of  the  agent  and 
not  known  to  the  person  dealing  with  him/  or  an  uncommuni- 
cated  revocation  of  the  agent's  authority,^  do  not  prevent  the 
principal  from  being  bound  by  the  contract  of  his  agent  made  in 
his  behalf  with  a  person  acting  in  good  faith.  Thus  a  recorded 
power  of  attorney  and  a  deed  made  in  pursuance  thereof  passes 
title  to  a  hona  fide  grantee  is  against  a  grantee  from  the  principal 
by  a  prior  unrecorded  deed.^  So  a  principal  is  bound  by  a  let- 
ter written  by  his  agent  at  his  order,  though  its  contents  differ 


3  Nofsinger  v.  Goldman,  122  Cal. 
609;  55  Pac.  425;  Rodgers  v.  Peck- 
ham,  120  Cal.  238;  52  Pac.  483; 
Blass  V.  Terry,  156  N.  Y.  122;  50 
N.  E.  953;  reversing  87  Hun  (N. 
Y.)  563;  Fabian  Mfg.  Co.  v.  New- 
man (Tenn.  Ch.  App.),  62  S.  W. 
218. 

4  Butler  V.  Maples,  9  Wall.  (U. 
S.)  766;  A.  G.  Rhodes  Furniture 
Co.  V.  Weeden,  108  Ala.  252;  19 
So.  318;  Sweetser  v.  Shorter,  123 
Ala.  518;  26  So.  298;  Lytle  v. 
Bank,  121  Ala.  215;  26  So.  6;  Louis- 
ville, etc.,  Co.  V.  Tift,  100  Ga.  86; 
27  S.  E.  765;  Armour  v.  Ross,  110 
Ga.  403;  35  S.  E.  787;  Grain  v. 
Bank,  114  111.  516;  2  N.  E.  486; 
Hichhorn  v.  Bradley,  117  la.  130; 
90  N.  W.  592;  Dreyfus  v.  Goss,  67 
Kan.  57;  72  Pac.  537;  Sanford  v. 
Ins.  Co.,  174  Mass.  416;  75  Am. 
St.  Rep.  358;  54  N.  E.  883;  Brown 
v.  Ins.  Co.,  165  Mass.  565;  52  Am. 
St.  Rep.  535;  43  N.  E.  512;  Baker 
v.  Produce  Co.,  113  Mich.  533;  71 
N.  W.  866 ;  Allis  v.  Voigt,  90  Mich. 
125;  51  N.  W.  190;  Leo  Austrian 
&  Co.  V.  Springer.  94  Mich.  343; 
34  Am.  St.  Rep.  350;  .54  N.  W.  50; 


Van  Santvoord  v.  Smith,  79  Minn. 
316;  82  N.  W.  642;  Watts  v.  How- 
ard, 70  Minn.  122;  72  N.  W.  840; 
Potter  V.  Milling  Co.,  75  Miss.  532; 
23  So.  259;  Cross  v.  R.  R.  Co.,  141 
Mo.  132;  42  S.  W.  675;  affirming 
71  Mo.  App.  585;  Hall  v.  Hopper, 
64  Neb.  633 ;  90  N.  W.  549 ;  Rathbun 
v.  Snow,  123  N.  Y.  343;  10  L.  R. 
A.  355;  25  N.  E.  379;  Franklin  Fire 
Ins.  Co.  V.  Bradford,  201  Pa.  St. 
32;  88  Am.  St.  Rep.  770;  55  L.  R. 
A.  408;  50  Atl.  286;  Anderson  v. 
Surety  Co.,  196  Pa.  St.  288 ;  46  Atl. 
306;  Wilson  v.  Assurance  Co.,  51  S. 
C.  540;  64  Am.  St.  Rep.  700;  29 
S.  E.  245;  Smith  v.  Droubay.  20 
Utah  443;  58  Pac.  1112;  Hall  v. 
Ins.  Co.,  23  Wash.  610;  83  Am.  St. 
Rep.  844;  51  L.  R.  A.  288;  63  Pac. 
505. 

5  Swinnerton  v.  Argonaut,  etc., 
Co.,  112  Cal.  375;  44  Pac.  719; 
Maxcy  Mfg.  Co.  v.  Burnham,  89  Me. 
538;  56  Am.  St.  Rep.  436;  36  Atl. 
1003. 

6  Gratz  V.  Improvement  Co.,  82 
Fed.  381;  40  L.  R.  A.  393;  27  C.  C. 
A.  305. 


AGENCY.  1515 

from  the  instructions  given/  and  a  third  person  may  rely  on  the 
impression  created  by  A's  agent  that  the  contract  is  made  with 
A,  though  in  fact  the  agent  is  making  it  for  B.*  So  an  uncom- 
municated  rule  that  the  insurance  agent  must  make  a  personal 
examination  is  not  binding  on  persons  taking  insurance.®  So 
secret  instructions  to  an  agent  not  to  insure  certain  kinds  of 
property  do  not  prevent  the  principal  from  being  liable  on  insur- 
ance covering  such  property/"  So  a  sub-agent,  who  was  em- 
ployed as  the  agent  of  the  general  agent  and  not  as  the  agent  of 
the  insurance  company,  may  bind  the  company  if  held  out  as  an 
agent/^  The  same  rule  applies  where  a  sub-agent,  with  similar 
powers,  having  authority  to  sign  the  general  agent's  name,  signs 
it  to  a  policy  contrary  to  the  instructions  of  the  company.  Such 
policy  binds  the  company  and  therefore  the  general  agent  is 
liable  over  to  the  company.^^  So  where  an  agent  having  power 
to  deliver  a  note  on  receipt  of  a  written  contract  delivers  the  note 
before  such  contract  is  executed,  relying  on  the  promise  of  the 
adversary  party  to  execute  it  later,  such  note  is  valid  in  the 
hands  of  a  hona  fide  holder.^^  So  one  who  authorizes  an  agent 
to  make  a  loan  is  liable  for  usury  exacted  by  such  agent,  though 
such  principal  did  not  authorize  usury  or  know  of  it.^*  So  an 
agent  authorized  to  sell  crops  binds  his  principal  by  waiving  his 
principal's  lien  as  landlord  though  he  sells  more  of  the  crops 
than  specified  in  his  secret  instructions.^^     The  principal  may 

7  Morris   v.   Posner,    111   la.   335;  is  Chase   National    Bank   v.    Fau- 

82  N.  W.  755.  rot,  149  N.  Y.  532;  35  L.  R.  A.  605; 

8  Lambert  v.  Loan  Association,  65  44  N.  E.  165.  So  if  the  purchaser 
N.  J.  L.    79;    46   Atl.    766.  of  a  note  leaves  it  in  the  custody 

9  Phillips  V.  Ins.  Co.,  101  Fed.  33,  of  payee  and  knowingly  allows  the 

10  Franklin  Fire  Ins.  Co.  v.  Brad-  payee  to  collect  it  he  is  estopped 
ford,  201  Pa.  St.  32;  88  Am.  St.  to  deny  payee's  agency.  Morgan 
Rep.  770;  55  L.  R.  A.  408;  50  AtL  v.  Neal,  7  Ida.  629;  97  Am.  St.  Rep. 
286.  264:   65  Pac.  66. 

11  Hall  V.  Ins.  Co.,  23  Wash.  610;  i4  Robinson   v.    Blaken,    85   Minn. 

83  Am.  St.  Rep.  844;  51  L.  R.  A.  242;  89  Am.  St.  Rep.  541;  88  N.  W. 
288;  63  Pac.  505.  845. 

12  Franklin  Fire  Ins.  Co.  v.  Brad-  is  Fishbaugh  v.  Spunaugle,  118  la. 
ford,    201    Pa.    St.    32;    88   Am.   St.  337;    92  N.  W.  58. 

Rep.  770;   55  L.  R.  A.  408;   50  Atl. 
286, 


15 IG  PAGE    ON    CONTEACTS. 

be  estopped  by  acquiescence  in  conduct  of  the  alleged  agent, 
known,^®  or  which  should  be  known/^  to  such  principal.  Thus 
if  a  principal  has  acquiesced  in  an  agent's  collecting  certain  pay- 
ments, he  is  estopped  to  deny  his  authority  to  collect  later  pay- 
ments/^ It  has  been  held  that  the  liability  of  the  principal  to 
third  persons  is  not  based  on  estoppel ;  and  that  it  is  not  neces- 
sary to  show  that  the  person  dealing  with  the  agent  knew  of  the 
facts  upon  which  his  apparent  authority  was  based/"  This  is 
not  in  accordance  with  the  weight  of  authority;  and  probably 
the  courts  so  holding  do  so  through  a  confusion  between  ap- 
parent authority  vesting  in  estoppel ;  and  real  authority  which 
is  proved  by  the  past  conduct  of  principal  and  agent,  whether 
such  conduct  is  knowu  to  the  adversary  party  or  not/° 

§966.     Acts  of  unauthorized  a^ent  not  estoppel. 

The  acts  which  create  estoppel  must  be  those  of  the  principal 
to  be  estopped  or  of  some  one  authorized  by  him.  The  acts 
and  declarations  of  the  alleged  agent  cannot  estop  the  principal 
from  denying  the  fact  of  the  agency,  and  are  not  even  admissible 
in  evidence  to  establish  such  agency,  if  such  principal  has  not 

isHolt  V.  Schneider,  57  Neb.  523;      Blake  v.  Mfg.   Co.    (X.  J.  Eq.),   38 

77  N.  W.  1086;  De  Witt  v.  De  Witt,      Atl.  241. 

202  Pa.  St.  255;   51  Atl.  987;  Tele-  20  Moore    v.    Publishing    Associa- 

phone  Co.  v.  Brown,   104  Tenn.  56;  tion,  95  Fed.  485;   Lester  v.   Webb, 

78  Am.  St.  Rep.  906;  50  L.  R.  A,  1  All.  (Mass.)  34;  Perry  v.  Ins. 
277;  55  S.  W.  155.  Co.,  67  X.  H.  291;  68  Am.  St.  Rep. 

"Martin  v.  Webb,   110   U.   S.   7;  668;    33    Atl.    731;    Fifth    National 

Blake  v.  Mfg.   Co.    (X.  J.  Eq.),  38  Bank  v.   Phosphate  Co.,   119   X.   Y. 

Atl.  241;  Hanover  Xational  Bank  v.  256;   23  X.  E.   737.     '^  The  recogni- 

American,  etc.,  Co..  148  X.  Y.  612;  tion  by  a  corporation  of  acts  on  the 

51    Am.    St.    Rep.    721 ;    43    X.    E.  part  of  an  agent  similar  in  charae- 

72.  ter   to  those  which  may  be  in   dis- 

18  Grant   v.    Humerick     (la.),    94  pute  tends  strongly  to  establish  the 

N.  W.  510;  Harrison  Xational  Bank  agent's  authority."     Olcott  v.  R.  R. 

V.  Austin,  65  Xeb.  632;  59  L.  R.  A.  Co.,    27    X.    Y.    546,    560;    84    Am. 

294;  91  X.  W.  540.  Dec.  298.     (Citing  Munn  v.  Commis- 

loPrescott  v.   Flinn,   9   Bing.   19;  sion   Co.,   15  Johns.    (X.  Y.)    44;    8 

Williams  v.  Mitchell,   17  Mass.  98;  Am.   Dec.   219;   Wood  v.  R.  R.  Co., 

8  X.  Y.  160.) 


AGENCY. 


1517 


acquiesced   therein,^   though  his   testimony  to  the  fact  of  his 
authority  is  admissible.^ 

§967.     Liability  of  principal. —  Agent  acting  outside  of  authority. 

The  principal  is  not  liable  for  a  contract  made  by  his  agent 
outside  both  his  real  and  his  apparent  authority.^  The  liability 
of  the  principal  where  the  agent  has  exceeded  his  authority  de- 


1  Trust   Co.   V.   Robinson,   79   Fed. 
420;    Wailes   v.    Neal,    65    Ala.    59; 
Hawcott  V.  Kilbourn,  44  Ark.  213; 
Smith  V.  Ins.  Co.,  107  Cal.  432;  40 
Pac.  540;  Ferris  v.  Baker,  127  Cal. 
520;    59   Pac.   937;   Union  Coal  Co. 
V.    Edman,    16    Colo.   438;    27    Pac. 
1060;  Amicalola,  etc.,  Co.  v.  Coker, 
111  Ga.  872;   36  S.  E.  950;  Massil- 
lon,  etc.,  Co.  v.  Akerman,   110  Ga. 
570;    35   S.  E.   635;    Grand  Rapids, 
etc.,  Co.  V.  Morel,   110  Ga.  321;   35 
S.  E.  312;  Proctor  v.  Tows,  115  III. 
138;  3  N.  E.  569;  Whitam  v.  R.  R. 
Co.,  96  la.  737;  65  N.  W.  403;  Ma- 
chine   Co.    V.    Clark,    15    Kan.   492; 
Eaton  V.   Provident  Association,   89 
Me.  58;  35  Atl.  1015;  Fontaine,  etc. 
Electrical   Co.   v.   Ranch,   117   Mich 
401;    75    N.    W.    1063;    Murphy   v 
Ins.  Co.,  83  Mo.  App.  481;  Associa 
tion  V.  Murray,  47  Neb.  627;  66  N 
W.  635;  Gifford  v.  Landrine,  37  N 
J.  Eq.  127;  Taylor  v.  Hunt,  118  N 
C.  168;  24  S.  E.  359;  Q.  W.  Loverin 
Browne  Co.  v.  Bank,  7  N.  D.   569 
75  N.  W.  923;  Central,  etc.,  Supply 
Co.  V.   Thompson,   112  Pa.   St.   118 
3  Atl.  439 ;  Ehrhardt  v.  Breeland,  57 
S.  C.  142;  35  S.  E.  537;  Dickerman 
V.  Ins.  Co.,  67  Vt.  609;  32  Atl.  489; 
Fisher   v.    White,    94    Va.    236;    26 
S.  E.  573;    Garber  v.  Blatchley,  51 
W.  Va.   147;   41   S.   E.  222;   Rosen- 
dorf  V.   Poling,  48  W.  Va.  621;    37 
S.  E.  555. 

2  McRae  v.  Development  Co.  (Cal. ) , 
54    Pa.    743;    O'Leary    v.    Ins.    Co., 


100  la.  390;  69  N.  W.  686;  Lawall 
V.  Groman.  180  Pa.  St.  532;  57  Am. 
St.  Rep.  662 ;  37  Atl.  98 ;  Connor  v. 
Johnson,  59  S.  C.  115;  37  S.  E.  240; 
Garber  v.  Blatchley,  51  W.  Va.  147; 
41  S.  E.  222. 

1  Simon  v.  Johnson,  101  Ala.  368 ; 
13  So.  491;  Birmingham,  etc.,  Co. 
V.  R.  R.  Co.,  127  Ala.  137;  28  So. 
679;  Snapp  v.  Stanwood,  65  Ark. 
222;  45  S.  W.  546;  Lakeside,  etc., 
Co.  V.  Campbell,  39  Fla.  523;  22  So. 
878;  Brandenstein  v.  Douglas,  105 
Ga.  845;  32  S.  E.  341;  Blackmer 
V.  Mining  Co.,  187  111.  32;  58  N.  E. 
289;  Kinser  v.  Clay  Co.,  165  111. 
505;  46  N.  E.  372;  affirming  64 
111.  App.  437;  Noftsger  v.  Barkdoll, 
148  Ind.  531;  47  N.  E.  960;  Kiefer 
V.  Klinsick,  144  Ind.  46;  42  N.  E. 
447;  Stover  v.  Flower,  120  la.  514; 
94  N.  W.  1100;  Godshaw  v.  Struck, 
109  Ky.  285;  58  S.  W.  781;  51  L.  R. 
A.  668;  Warren  v.  Goodwyn.  110  La. 
198;  34  So.  411;  Munroe  v.  White- 
house,  90  Me.  139;  37  Atl.  866; 
Davies  v.  Steamboat  Co.,  94  Me. 
379;  53  L.  R.  A.  239;  47  Atl.  896; 
Clark  V.  Murphy,  164  Mass.  490;  41 
N.  E.  674;  Gore  v.  Assurance  Co., 
119  Mich.  136;  77  X.  W.  650;  Clark 
V.  Haupt,  109  Mich.  212;  68  N.  W. 
231;  Olson  v.  Ry.  Co.,  81  Minn. 
402;  84  N.  W.  219;  Perrine  v.  Coo- 
ley,  42  N.  J.  L.  623 ;  Law  v.  Stokes, 
32  N.  J.  L.  249;  90  Am.  Dec.  655; 
Ferguson  v.  Mfg.  Co.,  118  N.  C. 
946;    24    S.    E.    710;    Thompson   v. 


1518  PAGE    ON    CONTRACTS. 

pends  on  principles  of  estoppel.  If  no  facts  exist,  therefore, 
to  estop  the  principal  from  denying  the  authority  of  the  agent, 
persons  dealing  with  the  agent  must  take  notice  of  his  powers." 
So  persons  dealing  with  an  agent  are  bound  by  known  limita- 
tions on  his  authority.^  So  where  the  agent  is  a  special  agent 
of  limited  powers,  the  principal  in  the  absence  of  estoppel  or 
ratification,  is  not  bound  by  his  contract  in  excess  of  his  author- 
ity.* Thus  an  agreement  by  a  local  railway  agent  in  violation 
of  a  known  rule  of  the  railway  to  make  no  charge  to  a  large  ship- 
per for  demurrage  or  storage  is  not  binding  on  the  company.^ 
So  an  agent  having  an  assignment  of  a  judgment  for  safe  keep- 
ing cannot  assign  such  judgment  to  one  who  knows  the  facts. ^ 
So  a  conveyance  by  an  attorney  in  fact,  having  known  authority 
to  convey  only  on  approval  by  his  principal,  is  of  no  validity  if 
made  without  such  approval.^  So  if  A  buys  a  piano  from  B  as 
agent  of  X  and  makes  his  note  therefor  payable  to  B  person- 
ally, it  has  been  held  that  if  B  does  not  account  to  X  for  the 
proceeds  of  such  note,  X  may  recover  the  piano,  X  not  having 
ratified  the  sale  and  no  such  custom  of  business  being  shown.* 

Sproul,    179    Pa.    St.    266;    36    Atl.  tion,  97  Ga.  172;  25  S.  E.  826;  Gor« 

290;   Mundis  v.  Emig,   171  Pa.   St.  ham  v.  Felker,  102  Ga.  260;  28  S.  E. 

417;  32  Atl.  1135;   Brown  v.  West,  1002;  Wynne  v.  Parke,  89  Tex.  413; 

69    Vt.    440;    38   Atl.    87;    Parr   v.  34  S.  W.  907;  Wells  v.  Ins.  Co.,  41 

Mfg.  Co.,   117  Wis.  278;   93   N.  W.  W.  Va.  131;  23  S.  E.  527. 

1099;  McKindly  v.  Dunham,  55  Wis.  ^Eigby  v.  Lowe,  125  Cal.  613;  58 

515;    42   Am.   Rep.   740;    13   N.   W.  Pae.  153;   Baldwin  Fertilizer  Co.  v. 

485.  Thompson,    106   Ga.   480;    32   S.   E. 

2  Insurance  Co.  v.  Thornton,  130  591 ;  Phoenix  Ins.  Co.  v.  Gray,  107 
Ala.  222;  89  Am.  St.  Rep.  30;  55  Ga.  110;  .32  S.  E.  948;  Jones  v. 
L.  R.  A.  547;  30  So.  614;  Planters',  Brand.  106  Ky.  410;  50  S.  W.  679; 
etc..  Fire  Association  v.  De  Loach,  Hardwiek  v.  Kirwan,  91  Md.  285; 
113  Ga.  802;  39  S.  E.  466;  Deffen-  46  Atl.  987;  Norton  v.  Nevill«,  174 
baugh  V.  Mfg.  Co.,  120  Mich.  242;  Mass.  243;  54  N.  E.  537;  Mann  v. 
79  N.  W.  197;  Spelman  v.  Milling  Oil  Co.,  92  Tex.  377;  48  S.  W.  567. 
Co.,  26  Mont.  76;  55  L.  R.  A.  640;  5  Harris  v.  Banking  Co.,  91  Ga. 
66  Pae.  597;  Chase  v.  Swift.  60  Neb.  317;  18  S.  E.  159. 

696;  83  Am.  St.  Rep.  552;  84  N.  W.  e  Schmidt  v.  Shaver,  196  111.  108; 

86;    Carney  v.   Ins.   Co.,   162   N.  Y.  89  Am.  St.  Rep.  250;  63  N.  E.  655. 

453;  76  Am.  St.  Rep.  347;  49  L.  R.  7  Alcorn  v.  Buschke,  133  Cal.  655; 

A.  471;  57  N.  E.  78;  Fargo  v.  Cra-  66  Pae.  15. 

vens,  9  S.  D.  646;  70  N.  W.  1053.  «  Baldwin  v.  Tucker,  112  Ky.  282; 

3  Littleton  v.  Loan,  etc.,  Associa-  65  S.  W.  841. 


AGENCY.  1519 

So  a  principal  is  not  bound  where  an  agent  with  mere  power  to 
sell,  inserts  in  a  contract  a  clause  for  interest  in  case  of  delay 
in  delivery/'*  or  makes  specific  representations  that  the  threshing- 
machine  sold  by  him  has  been  shipped,  thereby  inducing  the 
vendee  to  deliver  his  old  machine  in  part  payment,  and  thus 
leaving  him  without  any  threshing  machine  when  needed/"  So 
if  an  insurance  agent  delivers  a  policy  which  by  its  terms  is  not 
to  take  effect  until  the  first  premium  is  paid,  and  the  insured 
agrees  to  pay  therefor  by  giving  the  agent  credit  for  such  pre- 
mium on  his  private  account,  the  insurance  company  is  not  lia- 
ble if  the  agent  does  not  account  to  it  for  such  premium/^  So 
if  an  insurance  policy  shows  on  its  face  that  an  agent  has  no 
authority  to  waive  certain  ])rovisions  thereof,  an  attempted 
waiver  by  an  agent  not  having  such  authority  in  fact  is  invalid.^^ 
So  while  a  rule  of  an  express  company  that  express  orders  must 
be  signed  by  their  local  agent  does  not  prevent  recovery  on  ex- 
press orders  signed  by  a  clerk  in  the  office  of  the  local  agent,  such 
rule  not  being  known,^^  yet  if  this  clerk  had  solicited  business 
outside  the  office  and  had  made  no  charge  therefore,  the  person 
buying  such  orders  with  knowledge  of  these  facts  must  take  no- 
tice that  such  business  is  outside  the  apparent  authority  of  an 
express  agent.  So  an  agent  who  has  merely  power  to  sell  cannot 
bind  his  principal  by  a  contract  of  sale  which  provides  for  pay- 
ment in  something  other  than  cash,  such  as  lumber,^*  second- 
hand machinery,^^  or  a  note  and  a  certificate  of  deposit/^  An 
agent  with  authority  to  inspect  lumber  cannot  bind  his  principal 
by  agreeing  to  accept  lumber  \\hich  he  has  not  inspected.^^     So 

9  Hardwiek    v.    Kirwan,    91    Md.  is  Rohrbaugh   v.   Express  Co.,   50 
285;  46  Atl.  987.                                          W.  Va.   148;   88  Am.  St.  Rep.  849; 

10  J.  L.  Case,  etc.,  Co.  v.  Eichin-      40  S.  E.  398. 

ger,  15  S.  D.  530;  91  N.  W.  82.  i*  J.  A.  Fay,  etc.,  Co,  v.  Causey, 

iiTomsecek  v.  Ins.  Co.,  113  Wis.  131  N.  C.  350;  42  S.  E.  827. 

114;    57    L.   R.   A.   455;    88   N.   W.  is  Elfring  v.    Birdsall    Co.,   —   S. 

1013.  D.  — ;  92  N.  W.  29. 

12  Thornton   v.    Ins.   Co.,    IIG   Ga.  le  Wilken   v.   Voss,    120   la.    500; 

121;   94  Am.  St.  Rep.  99;   42  S.  E.  94  N.  W.  1123. 

287;  Cook  v.  Ins.  Co.,  84  Mich.  12;  it  Camplipllsville    Lumber    Co.    v. 

47  N.  W.  568;   Cleaver  v.  Ins.  Co.,  Rpotswood    (Ky.),  74  S.  W.  235. 

65  Mich   527;   8  Am.   St.  Rep.  908; 

32  N.  W.  660. 


1520  PAGE    ON    CONTRACTS. 

an  agent  with  authority  only  to  collect  rents  cannot  bind  his 
principal  by  a  contract  to  lease.^^  So  a  principal  is  not  bound 
by  the  act  of  his  agent  after  the  authority  of  such  agent  is  known 
to  the  third  person  to  be  revoked.^''  Thus  an  agent  originally 
authorized  to  sell  realty,  cannot  bind  his  principal  by  accepting 
money  from  a  vendee  and  putting  him  in  possession,  after  such 
vendee  knows  that  the  principal  has  already  sold  the  realty  to 
another."*^  If  the  contract  of  the  agent  exceeds  his  authority,  it 
will  be  held  good  as  far  as  his  authority  extends  if  such  part  can 
be  separated  from  the  rest.  Thus  if  an  attorney  in  fact  is 
authorized  to  execute  a  quit-claim  deed  only,  a  warranty  deed 
executed  by  him  will  pass  title,  though  the  covenant  of  warranty 
will  not  bind  the.  principal."^ 

§968.     Ratification. —  Nature  and  effect. 

In  addition  to  liability  created  originally  by  the  contract  of 
the  agent,  a  principal  may  be  liable  by  reason  of  his  ratification 
of  an  unauthorized  contract  made  by  one  who  assumes  to  act  as 
his  agent,  or  who  is  his  agent,  but  who  exceeds  his  authority.^ 
Thus  if  a  wife  signs  her  husband's  name  to  a  note  without  au- 
thority, he  is  bound  thereby  if  he  subsequently  ratifies  it."  The 
principal  cannot  ratify  a  contract  which  he  could  not  have 
authorized  originally.  Thus  where  the  princijDal  is  an  admin- 
istratrix, she  cannot  ratify  a  contract  of  an  agent  which  she 

isDieckman  v.  Weirich   (Ky.),  73  S.  W.  617;  Kelly  v.  Thiiey.  143  Mo. 

S.  W.  1119.  422;    45    S.    W.    300;    reversing    in 

19  Florida,  etc..  R.  R.  v.  Ashmore,  banc,   37   S.   W.   516;    Daughters  of 
43  Fla.  272;  32  So.  832.  American    Revolution    v.     Sehenley, 

20  Chandler  v.  Franklin,  65  S.  C.  204  Pa.  St.  572;   o4  Atl.  366:    (Su- 
544;  44  s.  E.  70.  preme  Assembly,  etc.)   Good  Fellows 

21  Robinson   v.   Lowe,   50   W.   Va.  v.   Campbell.    17    R.   I.    402;    13   L. 
75;  40  S.  E.  454.  R.  A.  601;  22  Atl.  307;  Knights  of 

lAvakian  v.  Noble,  121  Cal.  216;  Pythias  v.  Cogbill,  99  Tenn.  28;  41 

53   Pae.   559;    Lynch   v.   Smyth,    25  S.   W.    340;    Richmond,   etc.,   Co.  v. 

Colo.   103;   54  Pac.   634;   W.  H.   H.  Ry.  Co.,  95  Va.  386;  28  S.  E.  573; 

Peck  Co.  V,  Gordon,  112  Mich.  487;  McDermott  v.  Jackson,  97  Wis.  64; 

70  N.  W.  1034;  Hunter  v.  Cobe,  84  72  N.  W.  375. 

Minn.    187;    87   N.   W.    612;    In    re  2  Hewling  v.   Wilshire    (Ky.),   61 

Soulard's   Estate,    141   Mo.   642;    A2  S.  W.  264. 


AGENCY. 


1521 


could  not  have  authorized,^  The  principal  has  a  reasonable 
time  to  ascertain  the  facts  and  return  what  he  has  received  under 
such  contract.*  Delay  beyond  a  reasonable  time  amounts  to 
acquiescence.^  Ratification  once  made  with  full  knowledge  of 
facts  prevents  subsequent  disaffirmance.®  Since  this  is  properly 
a  ratification,  no  new  consideration  is  necessary.^  Mere  omis- 
sion to  discharge  the  agent  for  other  alleged  misconduct  is  not 
ratification,*  nor  is  a  repudiation  of  the  contract  for  an  errone- 
ous reason.® 

§969.     Methods  of  ratification. 

Ratification  may  be  made  expressly,^  even  if  the  adversary 
parties  have  repudiated  the  contract,^  as  by  insisting  on  new  con- 
ditions which  are  accepted,^  or  it  may  be  implied  from  the  con- 
duet  of  the  principal,*  as  by  accepting  the  proceeds  of  the  con- 
tract.^    This  rule  is  sometimes  stated  in  the  form  that  retention 


3  Upton  V.  Dennis,  —  Mich.  — ; 
94  N.  W.  728. 

4  McDermott  v.  Jackson,  102  Wis. 
419;  78  N.  W.  598;  same  case,  97 
Wis.  64;  72  N.  W.  375. 

5  Georgia  Home  Ins.  Co.  v.  Smith- 
ville  (Tex.  Civ.  App.),  49  S.  W. 
412. 

6  Hunter  v.  Cobe.  84  Minn.  187; 
87  N.  W.  612. 

7  Plumb  V.  Curtis,  66  Conn.  154; 
33  Atl.  998. 

8  Fortune  v.  Stockton.  182  111. 
454;  55  N.  E.  367;  affirming  82  111. 
App.  272. 

9  Brown  v.  Henry,  172  Mass.  559; 
52  N.  E.  1073. 

1  Pope  V.  Armsby  Co.,  Ill  Cal. 
159;  43  Pac.  589;  Brown  v.  Wilson, 
45  S.  C.  519;  55  Am.  St.  Rep.  779; 
23  S.  E.  630;  Johnson  v.  Mfg.  Co., 
103  Wis.  291 ;  79  N.  W.  236. 

2  Tiedemann  v  Ledermann  Freres 
(1899).  2  Q.  B.  66. 

3  Robert,  etc.,  Co.  v.  Mfg.  Co.,  173 
Pa.  St.  447;   34  Atl.  450. 

96 


4Fant  V.  Campbell,  8  Okla.  586; 
58  Pac.  741. 

5  Goodman  v.  Winter,  64  Ala.  410; 
38  Am.  Rep.  13;  Wagoner  v.  Silva, 
139  Cal.  559;  73  Pac.  433;  Duncan 
V.  Kearney,  72  Conn.  585;  45  Atl. 
358;  Smith  v.  Holbrook,  99  Ga, 
256;  25  S.  E.  627;  Booth  v.  Wiley, 
102  111.  84;  France  v.  Haynes,  67 
la.  139;  25  N.  W.  98;  Noble  v. 
White,  103  la.  352;  72  N.  W.  556; 
Higbee  v.  Trumbauer,  112  la.  74; 
83  N.  W.  812;  Fleischman  v.  Ver 
Does,  111  la.  322;  82  N.  W.  757; 
Blaess  v.  Nichols  Shepard  Co.,  115 
la.  373;  88  N.  W.  829;  Cassady  v. 
Ins.  Co.,  109  la.  539;  80  N.  W.  521; 
State   Bank  v.   Kelly.    109   la.   544; 

80  N.  W.  520;  J.  P.  Calnan  Con- 
struction Co.  V.  Brown,  110  la.  37; 

81  N.  W.  163;  White  v.  Creamery 
Co.,  108  la.  522;  79  N.  W.  283; 
Russ  V.  Hansen.  119  la.  375;  93 
N.  W.  502;  McKinstry  v.  Bank,  57 
Kan.  279;  46  Pac.  302;  Graves  v. 
Cord    (Ky.),  44  S.  W.  665;    Singer 


1522 


PAGE    ON    CONTRACTS. 


of  the  proceeds  of  the  contract  estops  the  principal  to  deny  the 
agency.^  Thus  a  vendor  who  receives  and  retains  the  price  of 
machinery  cannot  avoid  a  warranty  thereof  made  by  the  agent 
who  sold  it.'  So  a  vendee  is  liable  for  property  bought  for  him 
by  his  agent  without  authority  and  received  and  accepted  by 
him.*  Retaining  property  received  under  the  agent's  contract 
is  not  ratification  where  rejection  is  impossible,  as  where  the 
material  was  built  into  the  principal's  house,*^  or  repairs  were 
made  upon  property  owned  by  the  principal. ^°  Ratification 
may  be  effected  by  accepting  services  under  the  contract/^  or 
suing  thereon  ;^^  or  by  acquiescence  therein  with  knowledge  of 
the  facts,"  if  for  such  a  length  of  time  that  third  parties  have 
in  the  meanwhile  acted  in  reliance  on  such  acquiescence  ;^*  or  by 


Mfg.  Co.  V.  Stephens  (Ky.),  53  S. 
W.  525;  Sokup  v.  Letellier,  123 
Mich.  640;  82  N.  W.  523;  Payn  v. 
Gidley,  122  Mich.  605;  81  N.  W. 
558;  Payne  v.  Hackney,  84  Minn. 
195;  87  N.  W.  608;  Anderson  v. 
Johnson,  74  Minn.  171;  77  N.  W. 
26;  Wright  v.  Church,  72  Minn.  78; 
74  N.  W.  1015;  Day  v.  Miller,  1 
Neb.  (Un.)  107;  95  N.  W.  359; 
Smith  V.  Barnard,  148  N.  Y.  420;  42 
N.  E.  1054;  Williams  v.  Lumber 
Co.,  118  N.  C.  928;  24  S.  E.  800; 
Woodward  v.  Suydam,  11  Ohio  360; 
Welch  V.  Mfg.  Co.,  55  S.  C.  568 ;  33 
S.  E.  739 ;  Marks  v.  Taylor,  23  Utah 
152;  63  Pac.  897;  modified,  23  Utah 
470;  65  Pae.  203;  Field  v.  Doyon, 
64  Wis.  560 ;  25  N.  W.  653 ;  Kriz  v. 
Peege,  119  Wis.  105;  95  N.  W.  108. 
.  6  Lull  V.  Bank,  110  la.  537;  81 
N.  W.  784. 

7  Blaess  v.  Nichols  Shepard  Co., 
115  la.  373;  88  N.  W.  829. 

sHaney,  etc.,  Co.  v.  Institute,  113 
Ga.  289;  38  S.  E.  761. 

9Moyle  V.  Society,  16  Utah  69; 
50  Pac.  806. 

10  Forman      v.      The      Liddesdale 


(1900),    A.    C.    190     (repair    of    a 
ship) . 

11  People's  National  Bank  v.  Geist- 
hardt,  55  Neb.. 232;  75  N.  W.  582. 

12  Curnane  v.  Scheidel,  70  Conn. 
13;  38  Atl.  875;  Shoninger  v.  Pea- 
body,  57  Conn.  42;  14  Am.  St.  Rep. 
88;  17  Atl.  278;  Warder,  etc.,  Co.  v. 
Cuthbert,  99  la.  681;  68  N.  W.  917; 
Edgar  v.  Breck,  172  Mass.  581;  52 
N.  E.  1083;  Piano  Mfg.  Co.  v.  Mil- 
lage,  14  S.  D.  331;  85  N.  W.  594. 

13  Market,  etc.,  Co.  v.  Hellman, 
109  Cal.  571;  42  Pac.  225;  J.  B. 
Owens  Pottery  Co.  v.  Turnbull  Co., 
75  Conn.  628;  54  Atl.  1122;  Glucose, 
etc.,  Co.  V.  Flinn.  184  III.  123;  56 
N.  E.  400;  affirming  85  111.  App. 
131;  Singer  Mfg.  Co.  v.  Flynn.  63 
Minn.  475;  65  N.  W.  923  (acquies- 
cence for  two  years)  ;  Lyle  v.  Ad- 
dicks,  62  N.  J.  Eq.  123;  49  Atl. 
1121;  Hanover  National  Bank  v. 
American,  etc.,  Co.,  148  N.  Y.  612; 
51  Am.  St.  Rep.  721 ;  43  N.  E.  72. 

14  Smith  V.  Fletcher,  75  Minn. 
189;  77  N.  W.  800;  Dewing  v.  Hut- 
ton,  48  W.  Va.  576;  37  S.  E.  670; 
Roiindy  v.  Erspamer,  112  Wis.  181; 
87  N.  W.  1087. 


AGENCY.  '  1523 

payment  under  such  contract,^^  or  by  receiving  money  there- 
under/" Acquiescence  for  three  years"  tends  to  show  ratifica- 
tion. Mere  failure  to  disavow  an  act  of  one  who  is  not  an  agent 
does  not  amount  to  ratification  unless  such  silence  induces  others 
to  act  in  reliance  upon  the  apparent  validity  of  the  transac- 
tion.^* But  retention  of  a  thing  of  no  value  as  a  deed  made 
without  principal's  authority  to  a  third  person  is  not  ratifica- 
tion.^'* So  refusal  to  receive  the  purchase  money  when  tendered 
excuses  the  principal  from  making  tender  of  the  purchase 
notes.^"  To  constitute  ratification  the  money  or  property  re- 
ceived must  be  received  under  the  unauthorized  contract.  So  if 
a  lease  made  by  an  agent  without  authority  is  expressly  re- 
pudiated by  the  principal,  but  he  allows  the  tenant  to  remain 
from  month  to  month  at  the  rent  fixed  by  the  lease,  this  is  not 
a  ratification."^  If  X,  the  agent  of  A,  a  steamship  company, 
issues  a  bill  of  lading  before  receiving  the  goods,  and  A  re- 
pudiates the  contract  as  soon  as  it  learns  of  it,  A's  act  in  taking 
property  from  X  to  secure  A  against  any  liability  upon  such  bill 
is  not  ratification.^^  So  if  the  principal  claims  damages  from 
his  agent  for  making  an  unauthorized  contract,  this  does  not 
amount  to  a  ratification."^ 

If  the  conduct  of  another  agent  is  relied  upon  as  ratification, 
such  other  agent  must  himself  have  authority  to  perform  or  to 
ratify  such  act."* 

15  Mullaney  V.  Evans,  33    Or.    330;      68    S.    W.    32.       (In    this    case    the 

54  Pac.    886;    Anderson    v.    Surety      abstract,  too,  was  retained.) 

Co.,  196  Pa.  St.  288;  46  Atl.  306.  20  Cole  v.  Baker,  —  S.  D.  — ;   91 

isDes   Moines    National    Bank   v.  N.  W.  324. 

Meredith,   114  la.  9;   86  N.  W.  46;  21  Owens    v.    Swanton,    25    Wash. 

Dillaway  v.  Alden,  88  Me.  230;   33  112;  64  Pac.  921. 

Atl.  981.  22  Lazard    v.    Transportation    Co., 

17  Cheshire    Provident    Institution  78  Md.  1 ;  26  Atl.  897. 

V.  Vandergrift,    1   Neb.    (Un.)    339;  23  Jameson    v.    Colwell,    25    Ore. 

55  N.  W.  615.  199;    35  Pac.   245. 

isRobbins  v.   Blanding,   87  Minn.  24  Fay  v.  Slaughter,  194  113.  157; 

246;  91  N.  W.  844.  88  Am.   St.  Rep.   148;   56  L.  R.   A. 

"Bromley  v.  Aday,  70  Ark.  351;      564;   62  N.  E.  592;   Bohanan  v.  R. 

R.,  70  N.  H.  526;  49  Atl.  103. 


1524 


PAGE    ON    CONTRACTS. 


§970.    Necessity  of  full  knowledge  of  facts. 

In  order  to  bind  the  principal  finally  a  ratification  must  be 
made  with  full  knowledge  of  the  material  facts.  If  made  with- 
out such  knowledge  the  j)rincipal  may  avoid  both  the  ratifica- 
tion and  the  original  contract,  at  least  as  to  those  who  have 
not  in  good  faith  acted  ujion  the  ratification.^  A  sale  is  ratified 
by  the  principal's  receipt  of  money  which  he  had  no  reason 
to  think  came  from  any  other  source  except  the  sale  thus  rati- 
fied ;"  but  mere  delivery  of  goods  by  the  principal  according 
to  the  terms  of  the  contract  made  by  his  agent  would  not  be 
a  ratification  unless  +he  principal  knew  of  the  contract,^  as  where 
the  goods  had  been  sold  with  an  unauthorized  warranty.*  So  if 
a  claim  agent  agrees  to  pay  one  injured  by  the  fault  of  the  road 
a  certain  sum  of  money  and  employment  for  life  in  settlement 
of  his  claim,  payment  of  such  sum  and  employment  of  such 
person  by  the  railroad  for  a  limited  time  is  not  ratification 
of  the  contract  for  jDermanent  employment  unless  known  to  the 


1  Marsh  v.  Joseph  (1897),  1  Ch. 
213;  Bennecke  v.  Ins.  Co.,  105  U. 
S.  355;  Bell  v.  Cimninghani,  3  Pet. 
(U.  S.)  69;  Wheeler  v.  McGuire, 
86  Ala.  398;  2  L.  R.  A.  808;  5  So. 
190;  Martin  v.  Hickman,  64  Ark. 
217;  41  S.  W.  852;  Ballard  v.  Nye, 
(Cal.),  69  Pae.  481;  Estrella  Vine- 
yard Co.  V.  Butler,  125  Cal.  232; 
57  Pae.  980;  Dean  v.  Hipp,  — 
Colo.  App.  — ;  66  Pae.  804;  Oxford 
Lake  Line  v.  Bank,  40  Fla.  349; 
24  So.  480;  Ludden,  etc..  Music 
House  V.  McDonald,  117  Ga.  60;  43 
S.  E.  425;  Meyer  v.  Wegener,  114 
la.  74;  86  N.  W.  49;  Beacon  Trust 
Co.  V.  Souther,  183  Mass.  413;  67 
N.  E.  345;  Thatcher  v.  Pray,  113 
Mass.  291;  18  Am.  Rep.  480;  Combs 
V.  Scott,  12  AIL  (Mass.)  493;  Leon- 
ardson  v.  Troy  Tp.,  125  Mich.  209; 
84  N.  W.  63 ;  Godfrey  v.  Ins.  Co..  70 
Minn.  224;  73  N.  W.  1;  Hunt  v. 
Agricultural  Works,  69  Minn.  539; 
72  N.  W.  813;  Prentiss  v.  Nelson, 
69  Minn.  496;   72  N.  W.  831;   Bul- 


lard  V.  DeGraff,  59  Neb.  783;  82 
N.  W.  4;  Henry,  etc.,  Co.  v.  Halter, 
58  Neb.  685;  79  N.  W.  616;  Cram  v. 
Sickel,  51  Neb.  828;  66  Am.  St. 
Rep.  478;  71  N.  W,  724;  Bierman 
V.  Mills  Co.,  151  N.  Y.  482 ;  56  Am. 
St.  Rep.  636;  37  L.  R.  A.  799;  45 
N.  E.  856;  Stock  Exchange  Bank  v. 
Williamson,  6  Okla.  348;  50  Pae. 
93;  Conser  y.  Coleman,  31  Ore.  550; 
50  Pae.  914;  American  National 
Bank  v.  Cruger,  91  Tex.  446;  44  S. 
W.  278;  Moyle  v.  Society,  16  Utah 
69 ;  50  Pae.  806 ;  Halsey  v.  Monteiro, 
92  Va.  581;  24  S.  E.  258;  Arm- 
strong V.  Oakley,  23  Wash.  122;  62 
Pae.  499;  Knapp  v.  Smith,  97  Wis. 
Ill;   72  N.  W.  349. 

2  Columbia,  etc.,  Co.  v.  Tinsle^ 
(Ky.),  60  S.  W.   10. 

3  Estrella  Vineyard  Co.  v.  Butler, 
125  Cal.  232;   57  Pae.  980. 

4  Bierman  v.  Mills  Co.,  151  N.  Y. 
482;  56  Am.  St.  Rep.  636;  37  L.  R. 
A.  799;  45  N.  E.  856,, 


AGEK'CY. 


1525 


railtoad.^  Mistake  as  to  a  collateral  contract  made  with  other 
parties  as  a  means  of  performing  the  contract  ratified,  does  not 
avoid  a  ratification.® 

§971.     Partial  ratification  impossible. 

The  principal  must  atfirm  or  disaflirm  the  contract  as  au 
entirety.  He  cannot  affirm  the  part  beneficial  to  himself  and 
disaffirm  the  rest.^  Thus  if  he  receives  and  retains  property 
thereunder  this  amounts  to  a  ratification  of  the  entire  contract, 
even  if  he  expressly  declares  his  intention  of  avoiding  his 
liability."  So  a  principal  cannot  retain  land  bought  for  her 
by  her  agent  and  avoid  liability  for  his  constructive  fraud  and 
undue  influence.^  So  a  client  who  accepts  and  retains  the  pro- 
ceeds of  a  judgment  cannot  claim  ignorance  of  the  terms  of  the 
decree  or  want  of  authority  in  the  attorney  to  enter  it  in  such 
form.*     So  a  receipt  of  part  of  the  property  to  be  delivered 


5  Bohanan  v.  E.  R.,  70  N.  H.  526 ; 
49  Atl.   103. 

6Brong  V.  Spence,  56  Xeb.  638; 
77  N.  W.  54. 

1  Rader  v.  Maddox,  150  U.  S.  128; 
Cochran  v.  Chitwood,  59  111.  53; 
Adams  Express  Co.  v.  Carnahan, 
29  Ind.  App.  606;  94  Am.  St.  Rep. 
279;  64  N.  E.  647;  63  N.  E.  245; 
Travelers  Ins.  Co.  v.  Patten,  119 
Ind.  416;  20  N.  E.  790;  Burke,  etc., 
Co.  V.  Wells  Fargo  &  Co.,  7 
Idaho  42;  60  Pae.  87;  Coolidge  v. 
Smith,  129  Mass.  554;  St.  Johns 
Mfg.  Co.  V.  Munger,  106  Mich.  90; 
58  Am.  St.  Rep.  468;  29  L.  R.  A. 
63;  64  N.  W.  3;  Dodge  v.  Tullock, 
110  Mich.  480;  68  X.  W.  239;  King 
V.  Lumber  Co.,  80  Minn.  274;  83  N. 
W.  170;  D.  M.  Osborn  Co.  v.  Jordan, 
52  Xeb.  465 ;  72  X^.  W.  479 ;  Hinman 
V.  Mfg.  Co.,  65  Xeb.  187;  90  X. 
W.  934;  Hall  v.  Hopper,  64  Xeb. 
633;  90  X\  W.  549;  German  Na- 
tional Bank  v.  Bank.  50  Xeb.  7 ;  80 
N.  W.  48;    Citizens'  State   Bank  v. 


Pence,  59  Neb.  579;  81  N.  W.  623; 
Martin  v.  Humphrey,  58  Neb.  414; 
78  N.  W.  715;  Farmer's,  etc..  Bank 
V.  Bank,  49  Xeb.  379;  68  X.  W.  488; 
Pennsylvania,  etc.,  Co.  v.  Cook,  123 
Pa.  St.  170;  16  Atl.  762;  Fort  v. 
Coker,  11  Heisk.  (Tenn.)  579;  Lane 
V.  Black,  21  W.  Va.  617;  Strasser  v. 
Conklin,  54  Wis.  102;  11  X.  W.  254. 

2  Henry  Vogt  Machine  Co.  v.  Ling- 
enfelser  (Ky.),  62  S.  W.  499; 
Boudreaux  v.  Feibleman,  105  La. 
401;  29  So.  881;  Coggins  v.  Higbie, 
83  Minn.  83;  85  X.  W.  930;  Piano 
Mfg.  Co.  V.  Xordstorm,  63  X^eb.  123; 
88  X.  W.  164;  Aultman  Co.  v.  Mc- 
Donough,  110  Wis.  263;  85  X.  W. 
980. 

3  Stephens  v.  Ozbourne,  107  Tenn. 
572;  89  Am.  St.  Rep.  957;  64  S.  W. 
902. 

4julier  V.  Julier,  62  O.  S.  90; 
78  Am.  St.  Rep.  697;  56  N.  E.  661. 
(In  this  case  the  decree  was  for 
alimony  and  barred  the  dower  of 
the  innocent  and  prevailing  plaintiff 


1526  PAGE    0]Sr    CONTRACTS. 

under  a  contract  is  a  ratification  of  the  entire  contract,^  So 
lie  cannot  enforce  a  note  for  an  insurance  policy  taken  bj  his 
agent  and  repudiate  the  agreement  for  rescission  at  the  ojDtion 
of  the  maker  under  which  such  note  Avas  giveu.'^  So  the  princi- 
pal cannot  enforce  a  loan  and  repudiate  liability  for  usury/ 
So  a  principal  cannot  retain  property  taken  by  his  agent  in 
payment  of  a  debt  due  the  principal  and  repudiate  the  contract 
under  which  it  was  given.*  But  if  the  agent  has  made  two  or 
more  independent  contracts,  the  principal  may  affirm  one  and 
disaffirm  the  other.^ 

§972.     Necessity  of  acting  as  agent. 

The  doctrine  of  ratification  in  agency  applies  only  to  the 
contracts  of  one  who  is  an  agent  or  who  claims  to  act  as  agent. 
A  contract  made  by  one  who  is  not  an  agent  and  does  not. 
claim  to  act  as  agent  cannot  be  ratified.^  Therefore,  by  the 
better  reasoning  a  forgery  cannot  be  ratified,^  though  there  is 
authority  to  the  contrary.^  If  the  party  whose  name  is  forged 
to  a  contract  receives  money  thereunder  he  is  estopped  to  deny 
his  liability.*  However,  if  an  agent  forges  his  principal's 
signature  to  a  certificate  of  stock,  receives  the  money  therefor, 
deposits  it  to  his  principal's  account,   and  then  embezzles  it, 

in  return  for  which  she  received  a  Sterns,  59  0.  S.  28;  51  N.  E.  439; 
larger  allowance  of  alimony.)  Backhaus   v.    Buells,    43    Ore.    558; 

5  Daniels  v.  Brodie,  54  Ark.  216;       73  Pac.  342, 

11  L.  R.  A.  81;  15  S.  W.  467.  2  Henry  v.  Heeb,  114  Ind.  275;  5 

6  Andrews  v.  Robertson,  111  Wis.  Am.  St.  Rep.  613;  16  N.  E.  606: 
334;  54  L.  R.  A.  673;  87  N.  W.  190.  Owsley  v.  Philips,   78  Ky.   517;    39 

7  Robinson  v.  Blaker,  85  Minn.  Am.  Rep.  258;  Workman  v.  Wright, 
242;  89  Am.  St.  Rep.  541;  88  N.  33  O.  S.  405;  31  Am.  Rep.  546; 
W.  845.  Shisler  v.  Vandike,  92  Pa.  St.  447; 

8  Daniels  v.  Brodie,  54  Ark.  216;  37  Am.  Rep.  702. 

11  L.  R.  A.  81;  15  S.  W.  467.  3  Hefner  v.  Vandolah,  62  111.  483; 

»Schollay  v.   Drug  Co.,   17   Colo.  14  Am.  Rep.  106;  Bartlett  v.  Tucker- 

App.   126;    67   Pac.   182.  104    Mass.    336;    6    Am.    Rep.    240; 

iKeighley     v.     Durant      (1901),  Central  National  Bank  v.  Copp.  184 

App.  Cas.  240;  reversing  Durant  v.  Mass.  328;   68  N.  E.  334;   Commer- 

Roberts    (1900),  1  Q.  B.  629;   Mer-  cial  Bank  v.  Warren,  15  N.  Y.  577. 

rit  V.  Kewanee,  175  111.  537 ;   51  N.  *  Campbell  v.   Campbell,   133   Cai. 

E.  867;  Rawlings  v.  Neal,  126  N.  C.  33;  65  Pac.  134  (forgery  of  a  note). 
271;     35    S.    E.    597;    Williams    v. 


AGENCY.  1527 

such  receipt  of  money  is  not  a  ratification  by  the  principal.^ 
A  principal  who  accepts  the  benefits  of  a  contract  made  for  him 
by  a  duly  authorized  agent  does  not  incur  liability  for  the  rep- 
resentations of  a  third  person  made  to  the  adversary  party  with- 
out the  knowledge  of  the  agent. ^  If  an  agent  does  not  disclose 
the  fact  of  his  agency  to  the  person  with  whom  he  deals,  the- 
principal  may  nevertheless  enforce  the  contract/  or  may  be  held 
liable  thereon.^  So  if  one  who  is  really  an  agent  does  not 
disclose  the  fact  of  his  agency  and  exceeds  his  authority  his 
principal  may  ratify  such  contract." 

§973.    Effect  of  ratification. — ■  Adversary  party. 

Whether  the  lorincipal's  ratification  of  an  unauthorized  act 
of  one  acting  or  claiming  to  act  as  his  agent  can  make  the  con- 
tract enforceable  as  against  the  adversary  party,  is  a  question 
upon  which  there  is  a  divergence  of  authority.  If  the  adversary 
party  has  received  a  thing  of  value  under  the  contract  which 
he  retains,  it  seems  to  be  generally  held  that  the  principal  can 
affirm  and  hold  the  adversary  party  to  his  executory  contract. 
Thus  where  unauthorized  loans  have  been  made  by  state  agents 
evidenced  by  notes,  it  has  been  held  that  the  state  may  affirm  the 
loan  and  enforce  the  notes.^  If  the  adversary  party  has  not 
received  anything  of  value  under  the  contract,  some  jurisdictions 
hold  that  the  principal  can  affirm  and  thus  make  the  contract 
valid,  even  if  the  adversary  party  attempts  to  repudiate  it.^ 
Thus  where  an  insurance  agent  inserted  unauthorized  clauses 
in  the  policy,  it  was  held  that  if  the  insurance  company  ratified 
the  contract  the  other  party  could  not  avoid  it.^     In  other  juris- 

5  Fay  V.  Slaughter,  194  111,  157;  i  State  v.  Shaw,  28  la.  67;  State 
88  Am.  St.  Rep.  148;  56  L.  R.  A.  v.  Torinus,  26  Minn.  1;  37  Am.  Rep. 
564;   62  N.  E.  592.  395;  49  N.  W.  259. 

6  Tecumseh  v.  Banking  House,  63  2  Tiedeman  v.  Ledermann  Freres 
Neb.   163;   57  L.  R.  A.  811;   88  N.  (1899),  2  Q.  B.  66. 

W.  186.  3  Andrews  v.    Ins.   Co.,    92   N".   Y. 

7  See  §§   606,   1236.  596.     "  So  long  as  the  condition  of 

8  See  §§  606,  607.  the  parties  is  unchanged,  he  cannot 

9  Hay  ward  v.  Langmaid,  181  Mfiss.  be  prevented  from  such  adoption  be- 
426;   63  N.  E.  912.  cause   the   other   party   to   the   con- 


1528  PAGE    ON    CONTRACTS. 

dictions  it  is  held  that  as  such  contract  is  not  binding  on  the 
principal  it  is  not  binding  on  the  adversary  party,  and  the 
principal's  ratification  cannot  increase  the  liability  of  such 
adversary  party.*  The  view  entertained  of  such  transaction 
by  the  Wisconsin  courts  seems  to  be  that  it  does  not  even  amount 
to  an  offer  by  the  adversary  party  to  the  principal;  but  unless 
he  ratifies  and  the  adversary  party  then  assents  to  such  contract, 
no  liability  exists.  Where  this  view  is  correct,  ratification  by 
the  principal  before  the  adversary  party  dissents  does  not  make 
the  contract  valid.  If  the  principal  ratifies  after  the  adversary 
party  repudiates  the  contract  it  has  been  held  that  no  liability 
attaches.  Where  the  principal,  A,  had  given  oral  authority  to 
an  agent  B,  to  sell  realty,  which  under  the  local  statute  was 
invalid  because  not  in  writing,  and  B  makes  a  contract  for  the 
sale  of  such  realty  to  X,  X  may  disaffirm  before  A  ratifies, 
and  in  such  case  he  will  not  be  bound  even  if  A  subsequently 
attempts  to  ratify  such  contract.^  Of  course  if  the  principal 
does  not  ratify,  no  liability  attaches  to  the  adversary  party.® 
If  the  adversary  party  acquiesces  in  the  principal's  ratification 
the  contract  is  binding  upon  both.'  Since  the  adversary  can 
hold  the  agent,  who  exceeds  his  authority  only  on  the  theory 
that  he  has  been  damaged  in  not  obtaining  the  liability  of  the 
principal  which  he  had  contracted  for,  the  principal's  ratification 
relieves  the  agent  from  liability  to  the  adversary  party,^  except 
where  the  agent  has  so  contracted  as  to  incur  personal  liability 
in  any  event. 

tract  may  for  any  reason  prefer  to  Bartholomew,    69    \Yis.    43 ;    5    Am. 

treat  the  contract  as  invalid."    An-  St.  Rep.  103;  33  N.  W.  110;  Dodge 

drews   v.    Ins.    Co.,    92    N.    Y.    596,  v.  Hopkins,  14  Wis.  630. 

604.     In   this   case   ratification   was  5  Baldwin    v.    Schiappacasse,    109 

made  as  soon  as  the  clause  in  ques-  Mich.  170;   66  X.  W.  1091. 

tion  was  called  to  the  attention  of  6  Davis  v.  Walker,   131  Ala.  204; 

the    company;    but    such    attention  31   So.  554;   Shuttleworth  v.  Devel- 

■was  called  thereto  by  the  adversary  opment  Co.   (Ky.),  61  S.  W.  1012. 

party's   attempt   to    avoid    the    eon-  ^  Soames  v.  Spencer,  1  Dowl.  &  R. 

tract.  32. 

4  Townsend  v.  Corning,  23  Wend.  s  Bowen  v.  Morris,  2  Taunt.  374 ; 

(X.  Y.)    435.      (A  case  of  a   sealed  Hale  Elevator  Co.  v.  Hale,  201   111. 

instrument,  however;   signed  by  the  131;  66  X.  E.  249;  affirming  98  111. 

name  of  the  agent  alone.)     Atlee  v.  App.   430;    Roby  v.   Cossitt,   78   111. 


AGENCY. 


1529 


§974.    Effect  of  ratification. —  Third  persons. 

Eatification  cannot  destroy  intervening  rights  of  third  per- 
sons.^ Thus  ratification  cannot  avoid  an  intervening  chattel 
mortgage^  or  attachment.^  So,  an  unauthorized  assignment  was 
made ;  the  alleged  assignee  sued  on  the  claim ;  and  subse- 
quently such  assignment  was  ratified.  It  was  held  that  such 
ratification  could  not  avail  the  assignee  in  that  action.* 


§975.     Liability  of  agent. 

An  agent  acting  within  the  scope  of  his  authority  is  not  liable 
to  third  persons  upon  a  contract  made  by  him  as  agent  for  a 
principal  whom  he  discloses,  which  does  not  by  its  terms  purport 
to  bind  the  agent  personally,^  as  for  the  sale  of  a  forged  note,^ 
or  for  receiving  money  which  he  has  not  paid  over  to  his 
principal,^  or  for  money  which  he  has  paid  over  to  his  principal.* 

The  known  agent  of  a  corporation  who  is  authorized  by  it  to 


638;  Ballou  v.  Talbot,  16  Mass. 
461;  8  Am.  Dec.  146;  Lingenf elder 
V.  Leschen,  134  Mo.  55;  34  S.  W. 
1089;  Hopkins  v.  Eveily,  150  Pa. 
St.  117;  24  Atl.  624. 

iRead  v.  Buffuiu,  79  Cal.  77;  12 
Am.  St.  Rep.  131;  21  Pac.  555 
Wittenbrock  v.  Bellmer,  57  Cal.  12 
Lampson  v.  Arnold,  19  la.  479 
Clendenning  v.  Hawk,  10  N.  D.  90 
86  N.  W.  114. 

2  Clendenning  v.  Hawk,  10  N.  D. 
90;   86  N.  VV.  114. 

3  Pollock  V.  Cohen,  32  0.  S.   514. 

4  Read  v.  Buffum,  79,  Cal.  77;  12 
Am.  St.  Rep.  131;  21  Pac.  555. 

1  Baldwin  v.  Bank,  119  U.  S.  643; 
Whitney  v.  Wyman,  101  U.  S.  392; 
Monticello  Bank  v.  Bostwiek,  71 
Fed.  641;  Gulf,  etc.,  Co.  v.  R.  R. 
Co.,  121  Ala.  621;  25  So.  579;  An- 
derson  v.  Timberlake,  114  Ala.  377; 
62  Am.  St.  Rep.  105;  22  So.  431; 
Tevis  V.  Savage,  130  Cal.  411;  62 
Pac.    611;    Merrill   v,   Williams,   63 


Cal.  70;  Stevenson  v.  Mathers,  67 
111,  123;  Lewis  v.  Harris,  4  Met. 
(Ky.)  353;  Worthington  v.  Cowles, 
112  Mass.  30;  Huston  v.  Tyler,  140 
Mo.  252;  41  S.  W.  795;  36  S.  W. 
654 ;  Sleeper  v.  Weymouth,  26  N.  H. 
34;  American  National  Bank  v. 
Wheelock,  82  N.  Y.  118;  Hall  v. 
Lauderdale,  46  N.  Y.  70;  Ivurzaw- 
ski  V.  Schneider,  179  Pa.  St.  500; 
36  Atl.  319;  Wilson  v.  Wold,  21 
Wash.  398;  75  Am.  St.  Rep.  846; 
58  Pac.  223;  Johnson  v.  Welch,  42 
W.  Va.  18;  24  S.  E.  585;  Moody, 
etc.,  Co.  V.  Church,  99  Wis.  49;  sub 
nomine,    Moody,    etc.,    Co.    v.    Leek, 

74  N.  W.  572. 

2  Bailey  v.  Galbreath,  100  Tenn. 
599;  47  S.  W.  84. 

3  Huffman  v.  Newman,  55  Neb. 
713;  76  N.  W.  409.  (The  third 
person  suing  to  recover  it.) 

4  Wilson  V.  Wold,  21  Wash.  398; 

75  Am.  St.  Rep.  846;  58  Pac.  223. 


1530 


PAGE    ON    CONTRACTS. 


make  ultra  vires  contracts  incurs  no  personal  liability  thereby.'' 
So  if  the  agent  discloses  his  lack  of  authority  and  signs  the  name 
of  his  principal  he  is  not  liable.''  One  who  purports  to  contract 
as  agent  is  liable  if  he  contracts  in  excess  of  his  authority,  and 
thereby  induces  the  party  contracting  with  him  to  believe  that 
he  possesses  such  authority.^ 

While  some  courts  try  to  limit  this  rule  to  cases  in  which 
the  agent  acted  in  bad  faith  or  carelessly,^  the  weight  of  au- 
thority as  shown  by  the  cases  cited  is  to  ignore  such  distinction. 
Thus  an  agent  with  authority  only  to  arbitrate  disputes  about 
insurance  policies  issued  by  the  principal,  who  submits  other 
disputes  to  arbitration  is  personally  liable  for  the  amount  of 
the  award.^  The  chief  exception  to  the  rule  is  in  cases  where 
the  agent  once  possessed  full  authority  to  act,  and  subsequent 
events,  unknown  to  him,  and  which  could  not  have  been  ascer- 
tained with  due  diligence,  such  as  the  death  of  his  principal,^" 
have  revoked  such  authority.  The  agent  is  personally  liable 
where  he  fails  to  disclose  the  fact  of  his  agency,"  or  the  identity 


sThilmany  v.  Bag  Co.,  108  la. 
357;  75  Am.  St.  Rep.  259;  79  N.  W. 
261. 

6  Kansas  National  Bank  v.  Bay, 
62  Kan.  692;  54  L.  R.  A.  408;  64 
Pac.  596. 

7  Frankland  v.  Johnson,  147  111. 
520;  37  Am.  St.  Rep.  234;  35  N.  E. 
480;  Terwilliger  v.  Murphy,  104 
Ind.  32;  3  N.  E.  404;  Duffy  v.  Mal- 
linkrodt,  81  Mo.  App.  449;  Patter- 
son V.  Lippincott,  47  N.  J.  L.  457; 
54  Am.  Rep.  178;  1  Atl.  506;  Arger- 
singer  v.  Macnaughton,  114  N.  Y. 
535;  11  Am.  St.  Rep.  687;  21  N.  E. 
1022;  (Farmers',  etc.,  Co.)  Trust 
Co.  V.  Floyd,  47  0.  S.  525;  21  Am. 
St.  Rep.  846;  12  L.  R.  A.  346;  26 
N.  E.  110;  Rosendorf  v.  Poling,  48 
W.  Va.  621;  37  S.  E.  555. 

s  Xewman  v.  Sylvester,  42  Ind. 
106. 

sMacdonald  v.  Bond.  195  111.  122; 
62  N.  E.  881. 


10  Jenkins  v.  Atkins,  1  Humph. 
(Tenn.)  294;  34  Am.  Dec.  648. 

11  Murphy  v.  Helmrich,  66  Cal. 
69;  4  Pac.  958;  Nelson  Morris  & 
Co.,  V.  Malone,  200  111.  132;  93  Am. 
St.  Rep.  180;  65  N.  E.  704;  Bick- 
ford  V.  Bank,  42  111.  238;  89  Am. 
Dee.  436 ;  Scaling  v.  Knollin,  94  111. 
App.  443;  Fritz  v.  Kennedy,  119  la. 
628;  93  N.  W.  603;  Thompson  v. 
Investment  Co.,  114  la.  481;  87  N. 
W.  438;  Lull  v.  Anamosa  National 
Bank,  110  la.  537;  81  N.  W.  784; 
Blackmore  v.  Fairbanks,  79  la.  282; 
44  N.  W.  548;  Stevenson  v.  Polk,  71 
la.  278;  32  N.  W.  340;  Jones  v. 
Johnson,  86  Ky.  530;  6  S.  W.  582; 
Jutt  V.  Brown,  5  Litt.  (Ky.)  1;  15 
Am.  Dec.  33 ;  Nolan  v.  Clark,  91  Me. 
38;  39  Atl.  344;  Brighan  v.  Her- 
rick,  173  Mass.  460;  53  N.  E.  906; 
Bartlett  v.  Raymond,  139  Mass. 
275 ;  30  N.  E.  91 ;  Mitchell  v.  Beck, 
88  Mich.  342;  50  N.  W.  305;  Amans 


AGEXCY. 


1531 


of  his  principal. ^^  But  the  agent  of  an  originally  undisclosed 
principal  is  not  personally  liable  on  contracts  made  after  his 
principal  is  disclosed.^^ 

One  who  purports  to  contract  as  agent  for  a  principal  who 
has  no  legal  existence  or  status  is  personally  liable  thereon/* 
except  where  there  is  an  express  agreement  against  personal 
liability.^^  Thus  a  personal  liability  rests  upon  a  committee  of 
citizens  who  have  charge  of  constructing  a  highway  as  agents  of 
a  citizens'  meeting/^  or  on  an  agent  of  an  unincorporated  mili- 
tary company/"  Special  illustrations  of  this  doctrine  are  given 
elsewhere/^  The  nature  of  the  agent's  liability  in  the  fore- 
going cases  is  a  question  of  some  difficulty.  If  he  has  so  con- 
tracted as  to  bind  himself  personally  he  can  be  held  on  the 
contract  in  any  event,  and  the  additional  fact  that  he  acted 


V.  Campbell,  70  Minn.  493;  68  Am. 
St.  Eep.  547;  73  N.  W.  506;  Porter 
V.  Merrill,  138  Mo.  555;  39  S.  W. 
798;  Jackson  v.  McNatt  (Neb.),  93 
N.  W.  425 ;  Elliott  v.  Bodine,  59  N. 
J.  L.  567;  36  Atl.  1038;  McClure  v. 
Trust  Co.,  165  N.  Y.  108;  53  L.  R. 
A.  153;  58  N.  E.  777;  De  Remer  v. 
Brown,  165  N.  Y.  410;  59  X.  E. 
129;  Argersinger  v.  Macnaughton, 
114  N.  Y.  535;  11  Am.  St.  Rep.  687; 
21  N.  E.  1022;  Keokuk,  etc.,  Co.  v. 
Mfg.  Co.,  5  Okla.  32;  47  Pae.  484; 
Lindsay  v.  Pettigrew,  5  S.  D.  500; 
59  N.  W.  726;  Royce  v.  Allen,  28 
Vt.  234 ;  Poole  v.  Rice,  9  W.  Va.  73 ; 
Morris  v.  Grocery  Co.,  46  W.  Va. 
197;  32  S.  E.  997. 

12  Welch  V.  Goodwin,  123  Mass. 
71;  25  Am.  Rep.  24;  William  Lin- 
deke  Land  Co.  v.  Levy,  76  Minn. 
364;  79  N.  W.  314;  (overruling, 
Rowell  V.  Oleson,  32  Minn.  288;  20 
N.  W.  227)  ;  Long  v.  McKissick,  50 
S.  C.  218;  27  S.  E.  636;  Hughes  v. 
Settle  (Tenn.  Ch.  App.),  36  S.  W. 
577;  Hoge  v.  Turner,  96  Va.  624; 
32  S.  E.  291. 

13  Brackenridge    v.    Claridge,    91 


Tex.  527;  43  L.  R.  A.  593;  44  S.  W, 
819;  reversing,  42  S.  W.  1005. 
Some  authorities  tend  to  restrict  the 
liability  of  one  who  discloses  his 
agency  but  conceals  the  identity  of 
his  principal  to  cases  where  the  con- 
tract shows  the  intention  of  the 
agent  to  bind  himself,  a  distinction 
however,  generally  repudiated. 

14  Lewis  V.  Tilton,  64  la.  220;  52 
Am.  Rep.  436;  19  N.  W.  911; 
Blakely  v.  Bennecke,  59  Mo.  193; 
Codding  v.  Munson,  52  Neb.  580; 
66  Am.  St.  Rep.  524 ;  72  N.  W.  846 ; 
Winona  Lumber  Co.  v.  Church,  6  S. 
D.  498;  62  N.  W.  107;  Steele  v.  Me- 
Elroy,   1  Sneed   (Tenn.)   341. 

15  Codding  v.  ]\Iunson,  52  Neb. 
580;  66  Am.  St.  Rep.  524;  72  N.  W. 
846;  Comfort  v.  Graham,  87  la. 
295 ;  54  N.  W.  242 ;  Heath  v.  Goslin, 
80  Mo.  310;  50  Am.  Rep.  505;  But- 
ton v.  Winslow,  52  Vt.  430. 

16  Learn  v.  Upstill,  52  Neb.  271; 
72  N.  W.  213. 

17  Blakely  v.  Bennecke,  59  Mo. 
193. 

18  See  Executors.  Guardians.  Sur- 
viving Partners,  Trustees,  Receivers. 


1532 


PAGE    ON    CONTKACTS. 


without  authority  should  not  relieve  him  from  liability.^"  If 
the  contract  does  not  purport  to  bind  the  agent  personally,  the 
logical  view,  entertained  by  a  majority  of  the  courts  is  that 
his  liability  is  not  on  thr.  contract  as  a  principal  in  violation 
of  its  terms,  but  on  the  breach  of  the  implied  warranty  of  his 
authority,  or  in  tort  for  his  fraud  and  deceit.^"  Some  authori- 
ties hold  that  the  remedy  is  exclusively  on  the  breach  of  war- 
ranty of  authority,^^  while  others  insist  on  the  liability  in  tort." 
Even  if  the  agent  discloses  the  fact  of  his  agency  and  the 
identity  of  his  principal  he  may  nevertheless  so  contract  as  to 
bind  himself  individually.^^ 

§976.    Rights  of  principal  on  contract. 

A  principal  may,  as  a  rule,^  enforce  by  action  in  his  own  name 
contracts  entered  into  for  him  by  his  agent,^  even  if  the  identity 
of  the  principal,^  or  the  fact  of  the  agency"*  were  not  disclosed 


19  Terwilliger  v.  Murphy,  104  Ind. 
32;  3  N.  E.  404;  Andrews  v.  Ted- 
ford,  37  la.  314;  Solomon  v.  Pen- 
oyar,  89  Mich.  11;  50  X.  W.  644; 
Walker  v.  Bank.  9  X.  Y.  582. 

20  Wallace  v.  Bently,  77  Cal.  19 
11  Am.  St.  Rep.  231;  18  Pac.  788 
Hancock  v.  Yunker,  83  111.  208 
Duncan  v.  Xiles,  32  111.  532 ;  83  Am. 
Dec.  293;  Bartlett  v.  Tucker,  104 
Mass.  336;  6  Am.  Rep.  240;  Brong 
V.  Spence,  56  Neb.  638;  77  N.  W. 
54;  Cole  v.  O'Brien,  34  Neb.  68;  33 
Am.  St.  Rep.  616;  51  N.  W.  316; 
Patterson  v.  Lippincott,  47  N.  J.  L. 
457;  54  Am.  Rep.  178;  1  All.  506; 
Whitt  V.  Madison,  26  N.  Y.  117; 
(Farmers',  etc.,  Co.)  Trust  Co.  v. 
Floyd,  47  O.  S.  525;  21  Am.  St, 
Hep.  846;  12  L.  R.  A.  346;  26  N, 
E.  110. 

21  Taylor  v.  Nostrand,  134  N.  Y. 
108;  31  N.  E.  346;  Cochran  v. 
Baker,  34  Or.  555;  56  Pac.  641;  52 
Pac,  520;  Kroeger  v,  Pitcairn,  101 
Pa.  St.  311;  47  Am.  Rep.  718. 


22  Hancock  v.  Yunker,  83  111.  208; 
Jefts  V.  York,  10  Cush.  (Mass.) 
392;  Cole  v.  O'Brien,  34  Neb,  68; 
33  Am,  St.  Rep.  616;  51  N.  W.  316; 
McCurdy  v,  Rogers,  21  Wis.  199; 
91  Am.  Dec.  468. 

23Dockarty  v.  Tillotson,  64  Neb. 
432;  89  X.  W.  1050. 

1  For  the  exceptions  see  §  761. 

2  Sullivan  v.  Shailor,  70  Conn. 
733;  40  Atl.  1054;  Sharp  v.  Jones, 
18  Ind.  314;  81  Am.  Dec,  359; 
Donahoe  v.  McDonald,  92  Ky,  123; 

17  S.  W.  195;  Foster  v.  Graham,  166 
Mass.  202;  44  N.  E.   129. 

3  Manker  v.  Telegraph  Co.,  137 
Ala.  292;  34  So.  839;  Powell  v. 
Wade,  109  Ala.  95;  55  Am.  St.  Rep. 
915;  19  So.  500;  Central  of  Georgia 
Ry.  V.  James,  117  Ga.  832;  45  S.  E. 
223;  Kelly  v.  Thuey.  143  Mo.  422; 
45  S.  W.  300;  reA'ersing  in  banc,  37 
S.  W.  516;  Jones  v.  Mfg.  Co..  32 
Wash.  375;   73  Pac.  359. 

4  Sullivan    v.    Shailor.     70    Conn. 
733;  40  Atl.  1054;  Conklin  v.  Leeds, 


AGENCY. 


1533 


when  the  contract  was  entered  into.     The  adversary  party  can- 
not treat  such  non-disclosure  as  fraud.^ 

The  undisclosed  principal  is  subject  to  such  defenses,  counter- 
claims and  set-offs  as  would  be  valid  against  the  agent,"  though 
notice  before  payment,  of  a  principal  previously  undisclosed, 
binds  the  adversary  party  from  that  time/  This  right  does 
not  exist  where  the  property  is  not  in  the  agent's  possession.^ 
Thus,  where  the  agent  had  not  possession  of  the  goods,  he 
cannot  agree  that  his  debt  shall  be  set  off  on  the  purchase  price.* 


58  111.  178;  Ilsley  v.  Merriam,  7 
Cush.  (Mass.)  242;  54  Am.  Dec. 
721;  National  Life  Ins.  Co.  v.  Al- 
len, 116  Mass.  398;  Foster  v.  Gra- 
ham, 166  Mass.  202;  44  N.  E.  129; 
Ludwig  V.  Gillespie,  105  N.  Y.  653; 
11  N.  E.  835;  King  v.  Batterson,  13 
R.  I.  117;  43  Am.  Rep.  13;  Foster  v. 
Smith,  2  Coldw.  (Tenn.)  474;  88 
Am.  Dec.  604. 

5  Cowan  V.  Fairbrother,  118  N.  C. 
406;  54  Am.  St.  Rep.  733;  32  L.  R. 
A.  829;  24  S.  E.  212. 

6  Ruiz  V.  Norton,  4  Cal.  355;  60 
Am.  Dec.  618;  McConnell  v.  Land 
Co.,  100  Ga.  129;   28  S.  E.  80;  Al- 


lison V.  Sutlive,  99  Ga.  151;  25  S. 
E.  11;  Stinson  v.  Gould,  74  111.  80; 
Tutt  V.  Brown,  5  Litt.  (Ky.)  1;  15 
Am.  Dee.  33;  Baxter  v.  Sherman, 
73  Minn.  434;  72  Am.  St.  Rep.  631; 
76  N.  W.  211;  Bernshouse  v.  Ab- 
bott, 45  N.  J.  L.  531;  46  Am.  Rep. 
789;  Miller  v.  Sullivan,  39  0.  S. 
79;  Belfield  v.  Supply  Co.,  189  Pa. 
St.  189;  69  Am.  St.  Rep.  799;  42 
Atl.  131. 

7  Rice,  etc.,  Co.  v.  Bank,  185  IlL 
422;  56  N.  E.  1062. 

8  Crosby  v.  Hill,  39  0.  S.  100. 
sBertoii  v.  Smith,  69  Vt.  425;  38 

Atl.  76. 


1534  PAGE    ON    CONTRACTS. 


CHAPTER  XLIV. 

AGENTS  OF  CORPORATIONS. 
I.     Agents  of  Private  Corporations. 

§977.    General  principles  of  agency  applicable  to  private  corpora- 
tions. 

The  principles  which  control  the  power  of  an  agent  or  officer 
of  a  corporation  to  bind  the  corporation,  are  in  general  those 
which  are  applicable  to  other  forms  of  agency.  The  chief 
peculiarities  of  this  branch  of  the  subject  are  as  follows: 

1.  A  corporation,  being  an  artificial  person,  can  act  only 
through  its  agents.  Accordingly,  every  contract  entered  into 
by  a  corporation  must  present  in  some  form  the  question  of 
agency.  If  the  contract  is  within  the  scope  of  the  agent's 
authority  the  corporation  is  bound  thereby.^  If  the  contract  is 
within  the  scope  of  the  agent's  authority  and  the  adversary  party 
acts  in  good  faith,  the  fact  that  the  agent  misappropriates  the 
proceeds  does  not  prevent  the  contract  from  being  binding  on 
the  corporation.^  On  the  other  hand,  if  the  contract  is  beyond 
the  powers  of  the  agent  of  the  corporation  and  no  considerations 
of  estoppel  exist,  no  recovery  can  be  had  against  the  corpora- 
tion.^ 

2.  All  who  deal  with  a  corporation  are,  as  is  said  elsewhere,* 
bound  to  take  notice  of  its  charter.  This  may  include  the  gen- 
eral laws  concerning  corporations.  If  the  power  of  certain 
classes  of  agents  of  corporations  is  specified   in   the   charter, 

1  Bank  v.  Griffin,  66  111.  App.  577;  3  Sullivan  v.  Ry.,  128  Ala.  77;  30 
Nichols  V.  R.  R.,  24  Utah  83;  91  So.  528;  Savannah,  etc.,  Ry.  v. 
Am.  St.  Rep.  778;  66  Pac.  768.  Humphreys,   114  Ga.  681;   40  S.  E. 

2  Reagan  v.  Bank,  157  Ind.  623;  711;  Bristol  Savings  Bank  v.  Judd, 
62  N.  E.  701;  61  N.  E.  575;  Havens  116  la.  26;   89  N.  W.  93. 

V.  Bank,  132  N.  C.  214;  95  Am.  St.  4  See  §   1065  et  seq. 

Rep.  627;  43  S.  E.  639. 


AGENTS  OF  CORPORATIONS.  1539 

persons  dealing  with  the  corporation  are  bound  to  take  notice 
of  such  powers.^  If  the  power  of  the  agent  depends  on  the 
construction  of  the  articles  of  incorporation  the  question  of  his 
authority  is  one  of  law,  for  the  court.®  Strangers  are  not 
charged  with  presumptive  knowledge  of  the  by-laws  of  a  cor- 
poration, either  of  a  foreign^  or  of  a  domestic  corporation.^ 
Accordingly  by-laws  of  a  corporation,  not  in  fact  known  to  a 
person  dealing  with  such  corporation  cannot  limit  the  apparent 
authority  of  an  agent  of  such  corporation.^  A  member  of  a 
corporation,  such  as  a  beneficial  organization,^^  is  charged  with 
knowledge  of  the  by-laws.  Thus  a  member  of  a  benevolent 
association  is  bound  to  know  that  the  secretary  cannot  waive  a 
constitutional  requirement  and  excuse  such  member  from  pay- 
ing assessments  on  a  benefit  certificate  issued  in  favor  of  such 
member  on  her  husband's  life,  while  she  does  not  know  whether 
such  husband,  being  absent,  is  alive  or  dead."  Secret  limi- 
tations on  the  apparent  authority  of  an  agent  cannot  affect  a 
contract  entered  into  by  a  stranger  with  the  corporation  in 
reliance  on  the  apparent  authority  of  such  agent.^' 

3.  The  general  business  of  most  corporations  is  managed 
in  about  the  same  general  way.  Accordingly,  custom  and  usage 
have  annexed  incidents  to  particular  forms  of  corporate  agency. 
These  customs  and  usages  have  in  some  cases  become  so  well 
established  as  to  be  recognized  by  the  law.     In  such  cases  the 

sEelfe  V.  Rundle,  103  U.  S.  222;  — ;     99    N.    W.     128;     Rathbun    v. 

Groeltz  v.  Real  Estate  Co..   115   la.  Snow,   123  N.  Y.   343;    10  L.  R.  A. 

602;   89  N.  W.  21;   Bocock  v.  Iron  355;    25   K   E.   379;   Moyer  v.   Ter- 

Co.,    82    Va.    913;    3   Am.    St.    Rep.  minal  Co.,  41  S.  C.  300;  44  Am.  St. 

128;  1  S.  E.  325.  Rep.  709;  25  L.  R.  A.  48;   19  S.  E. 

6  Groeltz  v.  Real  Estate  Co.,   115  651. 

la.  602;  89  N.  W.  21.  lo  Kocher    v.    Benevolent    Legion, 

7  Union  Mutual  Life  Ins.  Co.  v.  65  N.  J.  L.  649;  86  Am.  St.  Rep. 
White,  106  111.  67.  687;  52  L.  R.  A.  861;  48  Atl.  544. 

8  Ashley    Wire    Co.    v.    Steel    Co.,  n  Kocher    v.    Benevolent    Legion, 
164  111.  149;   56  Am.  St.  Rep.  187;  65   N.  J.   L.   649;    86  Am.   St.   Rep. 
45  N.   E.  410;    Smith  v.   Smith.   62  687;  52  L.  R.  A.  861;  48  Atl.  544. 
111.493.  12  Domestic    Building    Association 

9  Domestic  Building  Association  v.  Guadiano.  195  III.  222;  63  N.  E. 
V.  Guadiano,  195  111.  222;  63  N.  E.  98;  Heinze  v.  Dock  Co.,  109  Wis. 
98;    Groeltz    v.    Armstrong,    —    la.  99;   85  N.  W.  145. 


1536  PAGE    ON    CONTRACTS. 

incidental  powers  of  certain  classes  of  agents  are  defined  with 
greater  accuracy  as  matters  of  law  than  they  are  in  ordinary 
classes  of  agents, 

§978.     Stockholders. 

The  stockholders  of  a  corporation  represent  the  corporation 
at  a  regular  stockholders'  meeting,  or,  as  modern  authorities 
put  it,  constitute  the  corporation.^  Ordinarily,  whatever  all 
the  stockholders  may  do,  a  majority  of  them  at  a  lawful  meeting 
may  do.  However  a  solvent  and  going  corix)ration  cannot  sell 
out  its  business  with  the  consent  of  less  than  all  its  stockholders.^ 
This  power  of  the  stockholders  to  bind  the  corporation  is  limited 
to  their  action  at  a  regular  meeting,  however,  A  single  stock- 
holder, acting  as  an  individual,  has  as  such  no  implied  power 
whatever  to  bind  the  corjjoration.^  This  is  true  even  if  he  is  the 
chief  stockholder.* 

§979.     Directors. 

The  board  of  directors,  acting  at  lawful  meetings,  is  the  chief 
agency  for  directing  and  controlling  the  business  of  the  cor- 
poration.^ The  acts  of  such  board  at  a  lawful  meeting  bind 
the  corporation  though  no  formal  resolution  to  make  the  con- 
tract in  question  is  adopted.^  The  fact  that  no  written  record 
of  the  proceedings  of  the  board  of  directors  is  kept  does  not 

iCrossette    v.    Jordan,    —    Mich.  Colo.  App.  — ;  67  Pac.  28  j  Eastern 

— ;   92  N.  W.  782;   Burke  v.  Sidra  R.   R.  v.  R.   R.,   Ill   Mass.   125;    15 

Bay  Co.,    116   Wis.   137;    92   N.   W.  Am.   Rep.    13;    Trephagen  v.   South 

568.  Omaha,  —  Xeb.  — ;   96  N.  W.  248; 

2Elyton  Land  Co.  v.  Dowdell,  113  Beveridge  v.  R.  R.,   112  N.  Y.   1;   2 

Ala.   177;   59  Am.  St.  Rep.   105;   20  L.  R.  A.  648;    19  N.  E.  489;   Brad- 

So.  981.  ford  Belting  Co.  v.  Gibson,  68  O.  S. 

3  Nebraska,  etc.,  Bank  v.  Fergu-  442;  67  N.  E.  888;  Columbia,  etc., 
son,  49  Neb.  109;  59  Am.  St.  Rep.  Co.  v.  Transportation  Co.,  32  Or. 
522;  68  N.  W.  370.  532;    52   Pac.   513;    Wright   v.   Lee, 

4  Jones   V.   Williams,   139   Mo.    1 ;  2  S.  D.  596;  51  N.  W.  706;  Murray 
61   Am.   St.  Rep.  436;   37  L.  R.  A.  v.  Beal.  23  Utah  548;  65  Pac.  726. 
6?2;  39  S.  W.  486;  40  S.  W.  353.  2  Salem    Iron    Co.   v.    Iron   Mines, 

iMahoney  Mining  Co.  v.  Bank,  112  Fed.  239;  50  C.  C.  A.  213;  Co- 
104  U.  S.  192;  Aliunde  Consoli-  lumbia,  etc.,  Co.  v.  Transportation 
dated    Mining    Co.    v.    Arnold,    —      Co.,  32  Or.  532;  52  Pac.  513, 


AGENTS   OF  COEPOKATIOKS. 


U37 


prevent  their  conduct  from  binding  the  corporation.'*  This 
power  must,  however,  be  exercised  at  lawful  meetings.  A  single 
member  of  the  board  of  directors  has  not  as  such  any  implied 
power  to  bind  the  corporation  ;*  nor  have  any  number  of  mem- 
bers acting  individually,^  even  if  they  amount  to  a  majority  of 
the  board, **  The  board  of  directors  is  necessarily  a  body  meet- 
ing only  occasionally,  and  accordingly  it  has  been  held  that  it 
may  delegate  its  power  to  a  smaller  committee  of  its  own  mem- 
bers, often  known  as  the  "  executive  committee.'" 

§980.     President. 

The  original  view  of  the  position  of  the  president  was  that 
he  was  merely  the  presiding  officer  of  the  board  of  directors. 
As  such,  he  would  not  have  any  greater  power  to  bind  the  cor- 
poration by  his  individual  acts  than  any  single  director.^  Thus 
if  the  articles  of  incorporation  provide  that  the  directors  shall 
conduct  the  affairs  of  the  corporation,  and  that  they  shall  elect 
from  their  own  number  a  president  who  shall  have  such  duties 


3  Jones  V.  Stoddart,  —  Ida.  — ; 
67  Pac.  650;  Murray  v.  Beal,  23 
Utah  548;  65  Pac.  726. 

4  New  Haven,  etc.,  Co.  v.  Hayden, 
107  Mass.  525 ;  Sias  v.  Lighting  Co., 
73  Vt.  35;    50  Atl.   554. 

5  Nevada  Nickel  Syndicate  v. 
Nickel  Co.,  96  Fed.  133;  Kansas 
City,  etc.,  Co.  v.  Devol,  72  Fed. 
717;  Alta  Silver  Co.  v.  Mining  Co., 
78  Cal.  629;  21  Pac.  373;  Gash- 
wiler  V.  Willis,  33  Cal.  11;  91  Am. 
Dec.  607;  Morrison  v.  Gas  Co.,  91 
Me.  492;  64  Am.  St.  Rep.  257;  40 
Atl.  542;  England  v.  Dearborn,  141 
Mass.  590;  6  N.  E.  837;  Calumet 
Paper  Co.  v.  Printing  Co.,  144  Mo. 
331;  66  Am.  St.  Rep.  425;  45  S.  W. 
1115;  Edwards  v.  Water  Co..  21 
Nev.  469;  34  Pac.  381;  Columbia 
Bank  v.  Church,  127  N.  Y.  361 ;  28 
N.  E.  29;  People's  Bank  v.  Church, 
109  N.  Y.  512;  17  N.  E.  408;  State 
v.   Ben.   Association,   42   O.   S.   579; 

97 


Limer  v.  Traders'  Co.,  44  W.  Va. 
175;   28  S.  E.  730. 

6  Thompson  v.  West,  59  Neb.  677; 
49  L.  R.  A.  337;  82  N.  W.  13. 

T  Union  Pacific  Ry.  v.  Ry.,  163  U. 
S.  597;  Andres  v.  Fry,  113  Cal.  124; 
45  Pac.  534;  Leavitt  v.  Mining  Co., 
3  Utah  265;  1  Pac.  356.  Contra, 
Tempel  v.  Dodge,  89  Tex.  68;  32  S. 
W.  514;  33  S.  W.  222. 

iCity  Electric  Street  Ry.  v. 
Bank,  62  Ark.  33;  54  Am.  St.  Rep. 
282;  31  L.  R.  A.  535;  34  S.  W.  89; 
Groeltz  v.  Real  Estate  Co.,  115  la. 
602;  89  N.  W.  21;  Titus  v.  R.  R., 
37  N.  J.  L.  98;  Bangor,  etc.,  Ry.  v. 
Slate  Co.,  203  Pa.  St.  6;  52  Atl.  40; 
Lyndon  Mill  Co.  v.  Institution,  63 
Vt.  581;  25  Am.  St.  Rep.  783;  22 
Atl.  575;  St.  Clair  v.  Rutledge.  115 
Wis.  583;  95  Am.  St.  Rep.  964;  92 
N.  W.  234;  Consolidated  Water- 
Power  Co.  v.  Nash,  109  Wis.  490; 
85  N.  W.  485. 


1538  PAGE    ON    CONTEACTS. 

as  shall  be  prescribed  bj  the  by-laws,  the  president  has,  as  such, 
no  authority  to  bind  the  corporation  in  the  absence  of  by-laws 
authorizing  him  to  contract.^  Under  this  view  he  cannot  bind 
the  corporation  by  signing  its  name  to  a  note.^  The  practical 
workings  of  modern  corporations  have  in  most  cases  necessitated 
a  departure  from  this  original  view.  The  president  is  the 
chief  executive  officer  of  the  corporation,  in  many  cases  by 
a  special  grant  of  such  power  to  him.*  In  other  cases,  without 
express  grant  of  such  power,  he  has  in  fact  exercised  such  power 
with  the  acquiescence  and  approval  of  the  corporation  that  the 
corporation  is  bound  by  his  acts  on  the  theory  that  it  has  held 
him  out  to  the  world  as  possessing  such  authority.^  This  view 
of  the  power  of  the  president  is  especially  clear  where  the 
president,  either  by  express  authority  or  by  the  acquiescence 
of  the  corporation,  assumes  the  powers  of  the  general  manager.* 
Thus  the  president  and  manager  can  agree  that  the  corporation 
will  not  plead  the  statute  of  limitations  in  consideration  of 
delay/  or  may  give  a  note,  even  if  he  is  the  payee,  as  long  as  the 
note  is  given  for  the  benefit  of  the  corporation,^  or  employ  a 
superintendent,^  or  a  cook  for  a  mining  camp.^°  So  a  president 
who  by  acquiescence  of  the  corporation  has  executed  all  the 
corporate  instruments  for  years  has  implied  power  to  bind  the 

sGroeltz  v.  Real  Estate  Co.,   115  v.  Emight,  127  Cal.  669;  49  L.  R. 

la.  602;  89  N.  W.  21.    '  A.  647;  60  Pac.  439;  Ceeder  v.  Lum- 

3  City  Electric  Street  Ry.  v.  Bank,  ber  Co.,  86  Mich.  541 ;    24  Am.   St. 

62  Ark.  33;   54  Am.   St.  Rep.  282;  Rep.   134;   49  N.  W.  575;  Africa  v. 

31  L.  R.  A.  535;  34  S.  W.  89.  Tribune  Co.,  82  Minn.  283;  83  Am. 

4McCormick   v.    R.    R.,    130    Cal.  St.  Rep.  424;  84  N.  W.  1019;  Sand- 

100;    62    Pac.    267;    National    State  berg  v.  Mining  Co.,  24  Utah  1;   66 

Bank  V.  Bank,  141  Ind.  352;  50  Am,  Pac.   360;    Meating  v.   Lumber   Co., 

St.  Rep.  330;  40  N.  E.  799.  113  Wis.  379;  89  N.  W.  152. 

5  State    National    Bank    v.    Bank,  '^  Wells  Fargo  Co.  v.  Enright,  127 

168  111.  519;  48  N.  E.  82;  National  Cal.  669;  49  L.  R.  A.  647;  60  Pae. 

State  Bank  v.  Tool  Co.,  157  Ind.  10;  439. 

60   N.   E.   699;    White   v.   Creamery  s  Africa  v.  Tribune  Co.,  82  Minn. 

Co.,    108    la.    522;    79    N.    W.   283;  283;  83  Am.  St.  Rep.  424;  84  N.  W. 

Jones   V.   Williams,    139   Mo.    1;    61  1019. 

Am.  St.  Rep.  436;  37  L.  R.  A.  682;  »  Sandberg  v.  Minijig  Co.,  24  Utah 

39  S.  W.  486;  40  S.  W.  353.  1;  66  Pac.  360. 

fi  Pettibone  v.  Town  Co.,  134  Cal.  lo  Meating    v.    Lumber    Co.,    113 

227;  66  Pac.  218;  Wells  Fargo  Co.  Wis.  379;  89  N.  W.  152. 


AGENTS  OF  COEPORATIOlSrS.  1539 

corporation  by  a  mortgage/^  The  president  has  implied  power 
to  indorse  negotiable  paper  owned  by  the  corporation/^  The 
president  may  bind  the  corporation  by  his  acquiescence  in  a 
bill  of  sale  executed  by  the  manager/^  Unusual  contracts  in 
whole  or  in  part  outside  the  business  of  the  corporation  are 
without  the  implied  authority  of  the  president.  Thus  if  with- 
out the  usual  business  of  the  corporation  he  cannot  sell  property 
of  the  corporation,^*  nor  can  he  buy  property  for  the  corpora- 
tion outside  of  its  usual  business/^  The  president  and  actuary 
of  an  insurance  company  cannot  employ  a  medical  examiner 
for  life/''  The  president  has  no  implied  power  to  bind  the 
corporation  the  benefits  of  which  are  to  enure  to  him  person- 
ally/^ or  to  another  corporation  in  which  he  is  interested  as 
stockholder/® 

§981.    Vice  president. 

The  vice  president  as  such  has  no  implied  authority  to  bind 
the  corporation  if  the  president  is  capable  of  acting.^  In  cases 
of  the  absence  of  the  president,  or  his  incapacity  to  act,  the  vice 
president,  acting  as  president,  may  exercise  such  powers  or- 
dinarily as  the  president  might  exercise."  In  many  corporations 
a  special  grant  of  power  is  made  to  one  or  more  vice  presidents. 
In  such  cases  they  may  bind  the  corporation  within  the  j)ower 
thus  granted  to  them.  Without  any  express  grant  of  power, 
the  corporation  may  acquiesce  in  the  assumption  of  the  vice 

11  National    State    Bank    v.    Tool      Jones,    74    Conn.    149;    50   Atl.    41; 
Co.,  157  Ind.  10;  60  N.  E.  699.  Wallace   v.    Packing   Co.,   25    Wash. 

12  Jones  V.  Stoddart,  —  Ida.  — ;      143;   64  Pac.  938. 

67  Pac.  650.  is  Bloch  Queensware  Co.  v.  Metz- 

13  Trent  v.  Sherlock,  26  Mont.  85 ;  ger,  70  Ark.  232 ;  65  S.  W.  929 
66  Pac.  700.  (even  if  the  two  corporations  have 

1*  Mott  V.  Danville  Seminary,  129  substantially    the    same    stockhold- 

111.    403;    21    N.    E.    927;    Asher   v.  ers). 
Sutton,  31  Kan.  286;   1  Pac.  535.  i  Shavalier    v.    Lumber    Co.,     128 

isBlen    v.    Mining    Co.,    20    Cal.  Mich.  230;   87  N.  W.  212. 
602;  81  Am.  Dec.  132.  2  American      Exchange      National 

"Carney  v.  Ins.  Co.,   162  N.  Y.  Bank  v.  Ward,  111  Fed.  782;  55  L, 

453;  76  Am.  St.  Rep.  347;  49  L.  R.  R.  A.  356;  49  C.  C.  A.  611;  Fernald 

A.  471;  57  N.  E.  78.  v.  Telegraph  Co.,  31  Wash.  672;   72 

17  Bowditch      Furniture      Co.      v.  Pac.  462. 


1540  PAGE    ON    CONTRACTS. 

president  of  certain  powers,  so  that  they  are  bound  by  his  con« 
tracts  made  within  the  limits  of  these  powers. 

§982.     Secretary,  treasurer  and  cashier. 

The  secretary  of  a  corporation  has  in  the  absence  of  special 
authority,  no  general  power  by  virtue  of  his  office,  to  bind 
the  corporation.^  The  treasurer  of  a  corporation  has  ordinarily 
authority  to  receive  payments  made  to  the  corporation,  and  to 
pay  out  money  subject  to  the  instruction  of  his  superior  officers. 
If  the  corporation  acquiesces  in  his  assuming  other  duties,  such 
as  those  of  manager,"  it  is  bound  by  his  contracts  within  the 
scope  of  such  power.  The  cashier  of  a  bank  has  no  authority 
to  draw  a  draft  in  the  name  of  his  principal  in  payment  of  his 
own  debt.^  He  cannot  bind  the  bank  by  representations  as  to 
the  solvency  of  a  third  person  in  a  transaction  in  which  the  bank 
is  not  concerned.* 

§983.     General  manager. 

The  general  manager  of  a  corporation  has  power  to  bind  the 
corporation  by  such  contracts  as  are  an  appropriate  means  of 
carrying  on  the  ordinary  business  of  the  corporation.^  Thus 
the  manager  of  a  newspaper  may  charter  a  yacht,  as  a  means 
for  obtaining  news  during  war.^  The  general  manager  of  a 
corporation  may  employ  an  attorney,  where  such  employment 
is  a  proper  means  of  carrying  on  the  business  of  the  corporation.^ 
He  has  no  authority  to  indorse  a  check  given  to  the  corporation,* 

iRead  v.  Buffum,  79  Cal.  77;   12  65  Kan.  68;  68  Pac.  1099;  Frost  v. 

Am.  St.  Rep.  131;   21  Pac.  555.  Machine  Co.,  133  Mass.  563. 

2  Magowan  v.  Groneweg,  14  S.  D.  2  Sun,   etc.,   Association  v.  Moore, 
543;  86  N.  W.  626.  183   U.   S.   642;   affirming,   101   Fed. 

3  Campbell  v.   Bank,   67   N.  J.   L.  591;  41  C.  C.  A.  506. 

301;   91  Am.  St.  Rep.  438;   51  Atl.  3  General    manager    of    insurance 

497.  company,  Fidelity,  etc.,  Co.  v.  FielO 

4  Taylor  v.  Bank,  174  N.  Y.  181;  (Neb.),   89   N.   W.  249    (even  if   i» 
95  Am.  St.  Rep.  564;  66  N.  E.  726.  A-iolation  of  his   actual  instructioni 

1  Sun,   etc..  Association  v.  Moore,  from  the  corporation ) . 

183  U.   S.  642;    affirming,   101   Fed.  4  Jackson  Paper  Co.  v.  Bank,  J'J9 

591;   41   C.  C.  A.  506;   Baird  Lum-  111.    151;   93   Am.   St.   Rep.   113;    69 

ber  Co.  v.  Devlin,  124  Ala.  245;  27  L.  R.  A.  657;  65  N.  E.  136. 
So.   425;    Kansas   City   v.   Cullinan, 


AGENTS  OF  CORPORATIONS.  1541 

nor  to  borrow  money  for  the  corporation/  nor  has  he  authority 
to  bind  the  corporation  by  a  bill  of  sale  of  the  corporate  prop- 
erty.*' A  manager  with  general  powers  cannot  bind  the  cor- 
poration by  an  agreement  to  pay  the  hospital  bills  of  one  injured 
through  the  fault  of  the  corporation.^  The  forewoman  of  a 
laundry  cannot  employ  a  physician  for  an  injured  employee,* 
nor  can  a  foreman  in  charge  of  carpenter  work.®  There  is  some 
difference  of  opinion  on  this  question,  however.  Agents  much 
lower  in  rank  than  general  manager  have  been  held  to  have 
authority  to  employ  medical  assistance  in  emergencies.  A 
conductor  may,  in  the  absence  of  a  higher  official,  employ  a 
physician  to  render  services  to  an  employee  injured  in  the  com- 
pany's business.^''  A  conductor  cannot  employ  additional  sur- 
geons if  the  first  is  competent  and  able  to  attend  to  the  needs 
of  the  injured. ^^  So  one  under  direction  to  get  the  company's 
surgeon,  cannot  employ  additional  physicians.^^  Even  a  gen- 
eral manager  cannot  employ  a  physician  to  attend  to  an  em- 
ployee injured  outside  the  scope  of  his  employment;"  and  a 
conductor  has  no  authority  from  the  railroad  corporation  to 
employ  a  physician  to  attend  to  a  trespasser.^* 

§984.     Ratification. 

A  contract  made  by  an  agent  of  a  corporation  in  excess  of 
his  authority,  may  be  ratified  by  some  higher  agent  who  has 

5  Breed  v.  Bank,  4  Colo.  481.  111.   295;    Terre   Haute,   etc.,   Co.   v. 

6  Trent  v.  Sherlock,  26  Mont.  85 ;  McMurray,  98  Ind.  358 ;  49  Am. 
66  Pac.  700.  Rep.  752;   Terre  Haute,  etc.,  Co.  v. 

7  King  V.  Mfg.  Co.,  183  Mass.  Stockwell,  118  Ind.  98;  20  N.  E, 
301;  67  N.  E.  330;  Spelman  v.  650.  Contra,  Sevier  v.  Ry.  Co.,  92 
Milling  Co.,  26  Mont.  76;  91  Am.  St.  Ala.  258;  9  So.  405;  Tucker  v.  Ry., 
Rep.  402;  55  L.  R.  A.  640;  66  Pac.  Co.,  54  Mo.  177. 

597.  11  Louisville,    etc.,    Co.    v.    Smith, 

8  Holmes  v.  McAllister,  123  Mich.  121  Ind.  353;  6  L.  R.  A.  320;  22 
493;    48    L.   R.    A.    396;    82   N.   W.      N.  B.  775. 

220.  12  Smith  v.  Ry.  Co.,  104  la.   147 

sGodshaw  V.  Struck,  109  Ky.  285;  73   N".   W.   581. 
51  L.  R.  A.  668;  58  S.  W.  781.  is  Chase   v.    Swift,    60   Neb.    696 

10  Arkansas,    etc.,    Co.    v.    Lough-  83  Am.  St.  Rep.  552;  84  N.  W.  86. 
ridge,  65  Ark.  300;   45  S.  W.  907;  i4  Adams  v.  Ry.,   125   N.   C.  565 

Indianapolis,  etc.,  Co.  v.  Morris,  67  34   S.  E.  642. 


1542 


PAGE    ON    CONTRACTS. 


authority  to  make  such  a  contract/  Thus  the  stockholders  of 
a  corporation  at  a  lawful  meeting,  may  ratify  the  acts  of  the 
board  of  directors  in  excess  of  their  authority.'  The  directors 
may  ratify  the  acts  of  some  inferior  agent  of  the  corporation.^ 
Eatification  has  substantially  the  same  meaning  in  this  branch 
of  the  law  as  in  the  ordinary  law  of  agency. 

§985.     What  amounts  to  ratification. 

An  express  approval  of  a  contract,  and  an  adoption  of  it, 
is  of  course  a  ratification.  Acquiescence  in  the  contract  with 
full  knowledge  of  the  facts,  amounts  to  ratification  if  the  ad- 
versary party  is  thereby  induced  to  perform  the  contract  or 
otherwise  alter  his  position  in  reliance  upon  such  apparent 
ratification./  Retaining  the  benefits  of  the  unauthorized  con- 
tract with  full  knowledge  of  the  material  facts  is  a  ratification ; 
as  where  the  corporation  receives  and  retains  property^  or  ac- 


1  Smith  V.  Water- Works,  73  Conn. 
626 ;  48  Atl.  754 ;  National,  etc.,  As- 
sociation V.  Bank,  181  111.  35;  72 
Am.  St.  Rep.  245;  54  N.  E.  619; 
Germania,  etc.,  Co.'s  Assignee  v. 
Hargis  (Ky.),  64  S.  W.  516;  Cad- 
illac State  Bank  v.  Heading  Co., 
129  Mich.  15;  88  N.  W.  67;  Sey- 
mour V.  Association,  144  N.  Y.  333 ; 
26  L.  R.  A.  859;  39  N.  E.  365; 
North  Point,  etc.,  Co.  v.  Utah,  etc., 
Co.,  16  Utah  246;  67  Am.  St.  Rep. 
607;  40  L.  R.  A.  851;  52  Pac.  168. 

2  Citizens'  Gaslight  Co.  v.  Wake- 
field, 161  Mass.  432;  31  L.  R.  A. 
457;   37  N.  E.  444. 

3  Salem  Iron  Co.  v.  Iron  Mines, 
112  Fed.  239;  50  C.  C.  A.  213;  Ger- 
mania, etc.,  Co.'s  Assignee  v.  Har- 
gis (Ky.),  64  S.  W.  516;  Cadillac 
State  Bank  v.  Heading  Co.,  129 
Mich.  15;  88  N.  W.  67;  Webster 
V.  Whitworth  (Tenn.  Ch.  App.),  63 
S.  W.  290. 

1  Domenico  v.  Packers'  Associa- 
tion,   112   Fed.   554;    Newport,  etc.. 


Co.  V.  Lunyon,  69  Ark.  287;  62  S. 
W.  1047;  Blood  v.  Water  Co.,  134 
Cal.  361;  66  Pac.  317;  Mills  v.  Min- 
ing  Co.,  132  Cal.  95;  64  Pac.  122; 
Illinois,  etc..  Bank  v.  Ry.,  117  Cal. 
332 ;  49  Pac.  197 ;  Streeten  v.  Robin- 
son, 102  Cal.  542;  36  Pac.  946; 
Smith  V.  Water-Works,  73  Conn. 
626;  48  Atl.  754;  Marion  Trust  Co. 
V.  Investment  Co.,  27  Ind.  App. 
451;  87  Am.  St.  Rep.  257;  61  N.  E. 
688;  Neosho  Valley  Investment  Co= 
V.  Hannum.  63  Kan.  621;  66  Pav. 
631 ;  Herring  v.  Turnpike-Road  Co. 
(Ky.),  63  S.  W.  576;  Nebraska,  etc., 
Bank  v.  Ferguson,  49  Neb.  109;  59 
Am.  St.  Rep.  522;  68  N.  W.  370; 
Murray  v.  Beal,  23  Utah  548;  65 
Pac.  726. 

2  Mills  V.  Mining  Co.,  132  Cai.95; 
64  Pac.  122;  Marion  Trust  Co.  v. 
Investment  Co.,  27  Ind.  App.  451 ; 
87  Am.  St.  Rep.  257;  61  N.  E.  688; 
Neosho  Valley  Investment  Co.  v. 
Hannum,  63  Kan.  621;  66  Pac.  631; 
Herring      v.       Turnpike-Road      Co. 


AGENTiJ  OF  CORPORATIONS.  1543 

cepts  services^  rendered  thereunder.  So  allowing  a  default 
judgment  to  be  taken  on  the  unauthorized  contract/  or  giving 
a  note  in  renewal  of  an  unauthorized  note,"'^  amounts  to  a  rati- 
fication thereof.  The  burden  of  showing  a  ratification  of  an 
unauthorized  contract  is  on  the  party  alleging  it.°  Conduct 
on  the  part  of  a  corporation  without  full  knowledge  of  the  facts 
does  not  amount  to  ratification,  even  if  such  conduct  is  of  a 
character  which  would  amount  to  ratification  if  full  knowledge 
existed.^  Thus  an  unauthorized  agreement  by  the  secretary 
and  treasurer  to  pay  a  commission  if  he  secured  a  purchaser 
for  certain  property  of  the  corporation  is  not  ratified  by  the  fact 
that  the  president  of  the  corporation,  without  knowledge  of 
such  contract,  joins  with  the  assignee  for  the  benefit  of  creditors 
in  petitioning  the  court  for  a  sale  to  a  purchaser  secured  under 
such  contract. *  So  an  unauthorized  contract  to  pay  the  house 
rent  of  an  employe,  as  well  as  his  wages,  is  not  ratified  by  pay- 
ment of  such  wages  if  the  corporation  does  not  know  of  the 
agreement  to  pay  house  rent.®  Partial  ratification  is  impos- 
sible.^" 

§986.    Effect  of  ratification. 

On  ratification  the  contract  is  as  binding  upon  the  corpora- 
tion as  if  it  had  been  originally  within  the  scope  of  the  agent's 
authority.^  However,  the  corporation  cannot,  by  ratification 
of  an  unauthorized  contract,  destroy  intervening  rights.     Thus 

(Ky.),    63    S.    W.    576;    Murray   v.  28   Colo.  237;   64  Pac.   198;    Savan- 

Beal,  23  Utah  548;   65  Pac.  726.  nah,  etc.,  Ry.  v.  Humphrey,  114  Ga. 

3  Domenico    v.    Packers'    Associa-  681;  40  S.  E.  711;  Spelman  v.  Mill 
tion,    112    Fed.    554;    Newport,   etc.,  Co.,  26  Mont.  76;   91  Am.  St.  Rep. 
Co.  V.  Lunyon,  69  Ark.  287;   62  S.  402;  55  L.  R.  A.  640;  66  Pac.  597. 
W.  1047;   Streeten  v.  Robinson,  102  s  Extension,   etc.,    Co.   v.   Skinner, 
Cal.  542;   36  Pac.  946.  28  Colo.  237;   64  Pac.   198. 

4  Nebraska,   etc..    Bank   v.   Fergu-  » Savannah,     etc.,     Co.     v.     Hum- 
son,  49  Neb.  109;   59  Am.  St.  Rep.  phreys,  114  Ga.  681;  40  S.  E.  711. 
?22;   68  N.  W.  370.  lo  Fremont   Carriage   Mfg.    Co.   v 

5  Smith  V.  Water- Works,  73  Conn.  Thomsen,   65    Neb.    370;    91    N.   W 
626;   48  Atl.  754.  376; 

6  Alabama      National      Bank      v.  i  Citizens'  Gaslight  Co.  v.  Wake- 
O'Neil,   128  Ala.  192;   29  So.  688.  field.    161    Mass.   432;    31   L.   R.   A. 

■?  Extension,   etc.,   Co.   v.    Skinner,      457;  37  N.  E.  444. 


1544  PAGE    ON    CONTRACTS. 

an  unauthorized  assignment  cannot  be  ratified  after  the  assignee 
has  commenced  action  thereon  so  as  to  prevent  the  defendant 
from  setting  up  the  invalidity  of  the  assignment,"  So  ratifi- 
cation of  an  unauthorized  assignment  for  the  benefit  of  creditors 
cannot  defeat  the  intei"vening  lien  of  an  execution,^  nor  can  rati- 
fication of  an  imauthorized  bill  of  sale  defeat  the  intervening 
lien  of  an  attachment*  If  a  corporation,  upon  learning  that 
an  unauthorized  contract  has  been  made,  repudiates  it,  it  must 
restore  whatever  it  has  received  under  such  contract.  It  is 
error  to  give  the  corporation  two  years  and  six  months  to  repay 
the  purchase  money  when  it  avoids  an  unauthorized  sale  of  land, 
made  by  its  president.^ 

II.     Agents  of  Public  Coepokations. 

§987.     Agents  of  public  corporations. 

Contracts  entered  into  on  behalf  of  the  government  or  a  pub- 
lic corporation  by  some  one  who  claims  to  act  as  an  officer  or 
agent  thereof  presents  some  marked  points  of  contrast  to  ordi- 
nary contracts  of  private  agents.  If,  as  is  usually  the  case, 
the  powers  and  duties  of  the  public  agent  are  prescribed  by  law, 
all  who  deal  with  such  agent  are  charged  with  knowledge  of 
his  powers,  whether  they  have  such  knowledge  in  fact  or  not.^ 
There  can,  therefore,  be  no  agency  by  estoppel  in  such  cases.  ^ 
No  liability,  therefore,  is  imposed  upon  a  government  or  public 

2  Read  v.  Buffum,  79  Cal.  77;  12  Caslin  v.  State,  99  Ind.  428;  Jewell 
Am.  St.  Rep.  131;  21  Pac.  555.  Belting    Co.    v.    Bertha,    —    Minn. 

3  Friedman  v.  Lesher,  198  111.  21;  — ;  97  N.  W.  424;  Lincoln  v.  Me- 
92  Am.  St.  Rep.  255;  64  N.  E.  736  Neal,  60  Neb.  613;  83  N.  W.  847; 
(given  by  the  vice-president,  the  Smith  v.  Epping,  69  N.  H.  558;  45 
president  being  dead).  Atl.    416;    Day,    etc.,    Co.   v.    State, 

4  Trent  v.  Sherlock,  26  Mont.  85 ;  68  Tex.  526 ;  4  S.  W.  865. 

66  Pac.   700    (given  by   the  general  2  Mullan  v.   State,    114   Cal.   578 

manager).  34    L.    R.    A.    262;    46    Pac.    670 

5  Fitzhugh   V.   Land   Co.,    81    Tex.  Wormstead  v.  Lynn,  184  Mass.  425 
306;   16  S.  W.  1078.  68  N.  E.  841;   Dube  v.  Peck,  22  R. 

1  Madison    v.    Newsome,    39    Fla.  I.   443,   467;   48  Atl.  477;   Carolina 

149;  22  So.  270;  Fries  v.  Porch,  49  National    Bank   v.    State,    60    S.    C. 

la.   351;   Marshall  County  v.   Cook,  465;    85   Am.   St.   Rep.   865;    38    S. 

38   111.   44;    87   Am.   Dec.   282;    Mc-  E.  629. 


AGEXTS   OF  CORPORATIONS.  15-i5 

'  corporation  by  reason  of  a  contract  entered  into  on  its  behalf  by 
an  agent  acting  in  excess  of  the  authority  conferred  upon  him 
by  the  law.^  Hence  if  a  council  has  no  authority  to  let  con- 
tracts, an  ordinance  directing  to  whom  a  contract  for  printing 
shall  be  let  is  void.*  A  statute  providing  that  selectmen  shall 
have  their  expenses  when  engaged  in  public  business  gives  them 
no  power  to  bind  the  city  by  a  contract  for  their  meals. ^  So 
a  contract  entered  into  by  a  mayor  without  authority  does  not 
bind  the  city.^  Power  to  collect  convict  hire  is  not  power  to 
accept  notes  therefor  and  then  to  bind  the  state  by  indorsing 
them  over.'^  If  a  clerk  is  authorized  to  indorse  on  mortgage 
bonds  issued  by  a  water-works  company  the  statement  that  the 
city  will  pay  interest  on  such  bonds  in  lieu  of  hydrant  rentals 
up  to  the  amount  of  three  thousand  dollars,  the  amount  of 
rentals  contracted  for,  his  certificate  that  the  city  will  pay 
interest  as  it  matures  does  not  impose  any  liability  on  the  city.^ 
If  a  board  or  other  corporate  body  has  power  to  bind  the  public 
corporation  it  must  do  so  by  action  as  a  board.  Hence  a  mem- 
ber of  a  council  has  no  authority  to  retain  an  attorney  for  the 
city.®  So  knowledge  of  a  member  of  a  school  board  that  a 
given  surety  has  signed  the  treasurer's  bond  to  take  effect  only 
if  other  sureties  sign  is  not  notice  to  the  board  of  that  fact, 
where  such  member  acquired  such  knowledge  while  acting  in  a 
private  capacity  to  secure  sureties  for  such  bond.^"     The  govern- 

aMulnix  v.  Ins.  Co.,  23  Colo.  71;  s  Heublein     v.     New     Haven,     75 

33  L.  R.  A.  827;  46  Pae.  123;  Dris-  Conn.  545;   54  Atl.  298. 

coll  V.  New  Haven,  75  Conn.  92 ;  52  6  Indiana    Road  -  Machine    Co.    v. 

Atl.    618;    Fairplay    School    Town-  Sulphur   Springs    (Tex.  Civ.  App.), 

ship  V.  O'Neal,   127  Ind.  95;   26  N.  63   S.   W.   908;    (City   of)    Tyler  v. 

E.    686;     Goddard    v.    Lowell,    179  Adams    (Tex.  Civ.  App.),  62  S.  W. 

Mass.  496;   61   N.  E.  53;   Board  of  119. 


Education  v.  Robinson,  81  Minn 
305;  83  Am.  St.  Rep.  374;  84  N.  W 
105;  Carolina  National  Bank  v, 
State,  60  S.  C.  465 ;  85  Am.  St.  Rep 
865;  38  S.  E.  629;  Nash  v.  Knox 
ville,  108  Tenn.  68;  64  S.  W.  1062 


7  Carolina  National  Bank  v.  State, 
60  S.  C.  465;  85  Am.  St.  Rep.  865; 
38  S.  E.  629. 

8  Painter  v.  Norfolk,  62  Neb.  330; 
87  N.  W.  31. 

9  Root  V.  Topeka,  63  Kan.  129;  65 


McCurdy  v.  Rogers,  21  Wis.  197;  91  Pac.  233. 

Am.  Dec.  468.  lo  Board    of    Education   v.    Robin- 

4  Goddard    v.    Lowell,    179    Mass.  son,  81  Minn.  305;  83  Am.  St.  Rep. 

496;  61  N.  E.  53.  374;   84  N.  W.  105. 


1546  PAGE    ON    CONTKACTS. 

meut  or  municipality  may  be  liable  for  the  benefits  received  by 
reason  of  the  unauthorized  contract,  which  it  would  not  ]>ave 
received  otherwise.  A  board  empowered  to  take  charge  of 
some  municipal  work  and  pay  for  the  same  out  of  certain  funds 
has  no  power  to  bind  the  city  generally  by  its  contracts  for 
machinery  and  the  like,  but  it  may  make  valid  charges  against 
such  funds.^^  There  is  no  liability  for  benefits  which  are  no 
greater  than  those  which  would  have  been  received  had  the 
officer  done  his  duty.  Thus  an  agent  who  w^as  authorized  to 
collect  convict-hire  in  money  accepted  notes  therefor,  payable 
to  the  state,  and  indorsed  them,  depositing  the  money  thus  re- 
ceived to  the  credit  of  the  state.  It  was  held  that  on  non 
payment  of  the  notes  the  state  was  not  liable  as  indorser,  sincfi 
the  agent  had  no  authority  so  to  indorse ;  nor  was  it  liable  in 
quasi-contract  for  money  had  and  received.^^  The  rule  that 
a  contract  by  an  unauthorized  officer  has  no  binding  eifect  op- 
erates against  the  municipality  as  well  as  for  it.  If  a  contract 
is  tendered  which  is  not  approved  by  the  council  as  required  by 
statute,  such  contract  has  no  validity.  Therefore  if  a  bidder 
refuses  to  accept  such  contract  he  does  not  thereby  forfeit  a 
deposit  made  by  him  to  secure  his  bid.^^  Since  all  who  deal 
with  public  agents  are  charged  with  knowledge  of  their  au- 
thority, the  agent  is  not  personally  liable  if,  acting  in  good 
faith,  he  exceeds  his  authority.  Thus  certain  bonds  were  issued 
under  a  statute  which  was  subsequently  held  unconstitutional. 
It  was  held  that  no  liability  attached  personally  to  the  public 
agents  who  sold  such  bonds,  received  the  money  therefor,  and 
applied  it  as  provided  for  by  such  statute.^*  A  contract  entered 
into  by  a  de  facto  public  officer  is  as  valid  as  if  he  were  also  an 
officer  de  jure.^^ 

11  Kerr  v.  Bellefontaine,  59  O.  S.      City,  129  Mich.  65;  87  X.  W.  1032. 
446;   52  N.  E.  1024.  i4  Powell    v.    Heisler,    45    Minn. 

12  Carolina      National      Bank      v.      ,549;  48  N.  W.  411. 

State,    00    S.    C.    465;    85    Am.    St.  is  Waite  v.  Santa  Cruz,  184  U.  S. 

Rep.  865;  38  S.  E.  629.  302;  Lake  Charles,  etc.,  Co.  v.  Lake 

13  Chicago,  etc.,  Co.  v.  West  Bay      Charles,  106  La.  65;  30  So.  289. 


CONTEACTS  OF  FIDUCIAKIES.  1547 


CHAPTER    XLV. 

CONTRACTS    OF    PERSONS     ACTING     IN     FIDUCIARY 

CAPACITY. 

I.     Trustees. 

§988.     Trustee  cannot  bind  beneficiary  personally. 

A  trustee  is  one  in  whom  is  vested  the  legal  title  to  property, 
the  equitable  interest  in  which  belongs  to  another.^  A  trustee 
has  as  such  no  power  to  bind  a  cestui  que  trust  personally." 
Thus  a  cestui  que  trust  is  not  liable  personally  to  an  attorney 
employed  by  a  trustee.^  If  the  beneficiaries  authorize  the  trus- 
tee to  contract  on  their  behalf  they  are  personally  liable  on  his 
contract.*  This  liability  exists,  however,  by  reason  of  his 
character  of  agent  and  not  by  reason  of  his  character  of  trustee. 
Thus  trustees  of  a  dry  trust  cannot  bind  their  beneficiaries 
by  assuming  a  mortgage,  so  as  to  recover  from  them  for  money 
paid  on  such  mortgage.^ 

§989.     Power  to  bind  trust  estate. 

A  trustee  has  no  power  to  bind  the  estate  by  his  contracts, 
if  such  power  is  not  given  to  him  by  the  instrument  creating 
the  trust.^     So  a  trustee  cannot  bind  the  estate  by  a  judgment 

1 "  A  trustee  may  be  defined  gen-  3  Truesdale    v.    Philadelphia,    etc., 

erally   as   a   person   in   whom    some  Co.,  63  Minn.  49;  65  N.  W.  133. 

estate,   interest  or   power   in   or   af-  *  Hanover  •   National      Bank      v. 

fecting   property   is   vested    for    the  Cocke,  127  N.  C.  467;  37  S.  E.  507. 

benefit  of  another."     Ogden  Ry.  Co.  5  Winslow  v.  Young,  94  Me.   145; 

V.  Wright,  31  Or.  150-153;   49  Pac.  47  Atl.  149. 

975.  1  Taylor  v.  Davis,  110  U.  S.  330; 

2  Hartley  v.  Phillips,   198  Pa.  St.  Sanders  v.  Warehouse  Co.,   107   Ga. 

9;  47  Atl.  929.  49;  32  S.  E.  610;  Flournoy  V.  John- 


1548 


PAGE    ON    CONTKACTS. 


bond  given  in  a  matter  outside  the  estate.^  This  rule  is  some- 
times said  not  to  apply  to  cases  where  the  consideration  is  oi 
such  a.  nature  as  to  render  the  estate  liable.^  If  power  to 
bind  the  estate  is  given  to  the  trustee  by  the  instrument  creating 
the  trust,  his  contracts  made  by  virtue  of  such  provision  will 
bind  the  estate.*  Power  to  a  trustee  by  will  to  carry  on  business 
is  power  to  bind  the  estate  by  debts  thus  incurred.^  Power  to 
mortgage  authorizes  the  trustee  to  bind  the  estate  by  a  build- 
ing and  loan  association  contract.^ 

§990.     Personal  liability  of  trustee. 

Unless  a  trustee  clearly  provides  against  it,  he  is  personally 
liable  on  contracts  made  by  him  as  trustee,^  even  if  he  refers 


son,  7  B.  Mod.  (Ky.)  693;  Hines  v. 
Potts,  56  Miss.  346;  New  v.  Nicoll, 
73  N.  Y.  127;  29  Am.  Rep.  111. 
"  The  general  rule  undoubtedly  is 
that  a  trustee  cannot  charge  the 
trust  estate  by  his  executory  con- 
tracts unless  authorized  to  do  so  by 
the  terms  of  the  instrument  creat- 
ing the  trust.  Upon  such  contracts 
he  is  personally  liable  and  the  rem- 
edy is  against  him  personally."  New 
V.  Nicoll,  73  N.  Y.  127,  130;  79  Am. 
Rep. 111. 

2  Williams  V.  Tozer,  185  Pa.  St. 
302;  64  Am.  St.  Rep.  650;  39  Atl. 
947. 

3  Sanders  v.  Warehouse  Co.,  107 
Ga.  49;  32  S.  E.  610. 

4Wagnon  v.  Pease,  104  Ga.  417; 
30  S.  E.  895;  Riggins  v.  Adair,  105 
Ga.  727;  31  S.  E.  743;  Bailie  v. 
Loan  Association,  100  Ga.  20;  28 
S.  E,  274;  Judge  v.  Pfaflf,  171  Mass. 
195;  50  N.  E.  524;  Packard  v.  King- 
man, 109  Mich.  497;  67  N.  W.  551; 
United  States  Trust  Co.  v.  Roche, 
116  N.  Y.  120;  22  N.  E.  265. 

5  Wadsworth  v.  Arnold.  24  R.  1. 
32;   51  Atl.  1041. 

6  Cottingham  v.  Loan  Association, 


114  Ga.  940,  944;  41  S.  E.  72,  74. 

1  Taylor  v.  Davis,  110  U.  S.  330; 
Hewitt  V.  Phelps,  105  U.  S.  393; 
Duvall  V.  Craig,  2  Wheat.  (U.  S.) 
45;  Bloom  v.  Wolfe,  50  la.  286; 
Farmers'  and  Traders'  Bank  v.  De- 
posit Co.,  108  Ky.  384;  56  S.  W. 
671;  Gill  V.  Carmine,  55  Md.  339; 
Odd  Fellows  Hall  Association  v. 
McAllister,  153  Mass.  292;  11  L. 
R.  A.  172;  26  N.  E.  862;  Mayo  v. 
Moritz,  151  Mass.  481;  24  N.  E. 
1083;  Mitchell  v.  Whitlock,  121  N. 
C.  166;  28  S.  E.  292;  Wells-Stone 
Mercantile  Co.  v.  Grover,  7  N.  D. 
460;  41  L.  R.  A.  252;  75  N.  W. 
911;  Ogden  Ry.  Co.  v.  Wright,  31 
Or.  150;  49  Pac.  975;  Fehlinger  v. 
Wood,  134  Pa.  St.  517;  19  Atl.  746; 
McDowall  V.  Reed,  28  S.  C.  466;  6 
S.  E.  300;  Mclntyre  v.  Williamson, 
72  Vt.  183;  82  Am.  St.  Rep.  929; 
47  Atl.  786.  "  When  a  trustee  con- 
tracts as  such,  unless  he  is  bound, 
no  one  else  is  bound,  for  he  has  no 
principal.  The  trust  estate  cannot 
promise.  The  contract  is  therefore 
the  personal  undertaking  of  the 
trustee."  Taylor  v.  Davis,  110  U. 
S.      330,      335;      quoted     Germania 


CONTRACTS  OF  FIDUCIAKIES,  1549 

to  himself  in  the  contract  as  trustee^  or  adds  "  trustee  "  to  his 
signature.'  Thus  a  trustee  is  personally  liable  on  his  indorse- 
ment of  negotiable  paper  payable  to  himself  as  trustee.*  Thus 
if  one  covenants  in  his  own  name,  adding  "  as  trustee,"  he  is 
personally  liable.^  An  assignee  for  the  benefit  of  creditors  is 
personally  bound  on  contracts  in  which  he  refers  to  himself  as 
trustee,  unless  there  is  an  express  provision  to  the  contrary.* 
Even  if  the  instrument  creating  the  trust  gives  the  trustee 
power  to  bind  the  estate,  he  is  personally  liable  on  such  con- 
tracts unless  he  contracts  for  exemption  from  personal  liabil- 
ity;^ and  this  principle  has  been  applied  even  where  there  is  a 
provision  in  the  instrument  creating  the  trust  that  the  trustee 
is  to  be  free  from  personal  liability.®  He  may  contract  for 
freedom  from  personal  liability,^  but  such  immunity  must  be 
contracted  for  when  the  original  liability  is  incurred.  A  subse- 
quent promise  not  to  hold  the  receiver  liable  personally  is  unen- 
forceable as  without  consideration.^''  A  trustee  is  not  person- 
ally responsible  for  debts  incurred  by  his  predecessor  for  the 
benefit  of  the  estate.^^ 

Bank    v.    Michaud,    62    Minn.    459,  6  Gibson    v.    Gray,    17    Tex.    Civ. 

465;    54   Am.    St.   Rep.    653;    30   L.  App.  646;  43  S.  W.  922. 

R.  A.  286;  65  N,  W.  70.  t  Connally  v.  Lyons,  82  Tex.  664; 

2  Gibson  v.  Gray,  17  Tex.  Civ.  27  Am.  St.  Rep.  935;  18  S.  W. 
App.  646;   43  S.  W.  922.  799. 

3  Ogden  Ry.  Co.  v.  Wright,  31  Or.  s  American,  etc.,  Co.  v.  Converse, 
150;  49  Pac.  975;  Mclntyre  v.  Wil-  175  Mass.  449;  56  N.  E.  594.  But 
liamson,  72  Vt.  183;  82  Am.  St.  where  the  deed  authorizes  trustee  to 
Rep.  929 ;  47  Atl.  786.  Contra,  no  borrow  money,  a  covenant  by  trus- 
personal  liability  was  held  to  exist  tee  to  pay  the  mortgage  debt  does 
where  the  trustee  gave  his  note  for  not  bind  him  personally.  Glenn  v. 
money     borrowed     for     the     estate  Allison,  58  Md.  527. 

signed  "A,  trustee  for  B."    Printup  o  Xew  v.  Nicoll.  73  N.  Y.  127;  79 

V.  Trammel,  25  Ga.  240.  Am.  Rep.  111. 

4  Tradesmen's  National  Bank  v.  lo  New  v.  Nicoll,  73  N.  Y.  127;  79 
Looney,   99   Tenn.  278;   63  Am.   St.  Am.  Rep.   111. 

Rep.  830;  38  L.  R.  A.  837;  42  S.  W.  n  Baxter  v.  McDonnell,  155  N.  Y. 

149    (even  if  he  adds  "trustee"  to  83;   40  L.  R.  A.  670;  49  N.  E.  667 

his  signature).  (a    bishop    received    trust    property 

5  Duvall  V.   Craig,  2   Wheat.    (U.  from  his  predecessor). 
S.)  45. 


1550  PAGE    ON     CONTRACTS. 

§991.     Liability  of  estate  for  benefits  received. 

While  a  trustee  cannot  create  debts  against  the  trust,  the 
creditors  can  subject  the  rents  and  profits  of  the  trust  estate 
to  their  claims  as  far  as  their  loans  were  advantageous  to  such 
trust  estate/  or  they  may  be  remitted  by  subrogation  to  the 
trustee's  claim  against  the  estate,"  especially  if  he  is  insolvent' 
or  a  non-resident.*  In  settling  accounts  the  trustee  will  be  al- 
lowed his  reasonable  expenses  incurred  in  managing  the  trust," 
or  incurred  with  the  consent  of  the  beneficiaries,*^  and  it  is 
■  held  that  he  has  a  lien  therefor.^ 

II.       EXECUTOES   AND  ADMINISTRATORS. 

§992.     General  want  of  power  to  bind  estate. 

Executors  and  administrators  are  ofiicers  of  the  court  ap- 
pointed for  the  purpose  of  settling  decedent's  estates.  In  the 
absence  of  statutory  provision  or  of  authority  given  by  will  they 
have,  in  general,  no  power  to  bind  the  estates  of  their  decedents 
by  their  own  contracts  so  as  to  change  any  pre-existing  liability 
which  might  have  been  enforced  without  such  contract,  or  to 
incur  additional  liability,^  even  if  for  the  benefit  of  such  estate. 


iNeal  V.  Bleckley,  51  S.  C.   506;  Marks  v.  Semple,   111  Ala.  637;   20 

29  S.  E.  249.     To  the  same  effect  is  So.   791. 

Sanders  v.  Warehouse  Co.,   107  Ga.  6  Casey  v.  Lockwood,  24  R.  I.  72; 

49;    32    S.    E.    610;    Kupferman    v.  52  Atl.   803    (where  the  remainder- 

McGehee,  63  Ga.  250.  men   authorized   the  trustee  to   pay 

2  Mosely  v.  Norman,  74  Ala.  422 ;  the  funeral  expenses  of  the  life- 
Steele  v.  Steele,  64  Ala.  438;  38  Am.  tenant). 

Rep.   15.  TKofold  v.  Gordon,  122  Cal.  314; 

3  Clapton    V.    Gholson,    53    Miss.  54  Pac.   1115. 

466.  1  Taylor  v.   Crook,   136  Ala.   354; 

4  Norton  v.  Phelps,  54  Miss.  467.  96   Am.    St.    Rep.    26;    34   So.   905; 

5  A  trustee  may  deduct  reasonable  Pike  v.  Thomas,  62  Ark.  223 ;  54 
expenses  for  a  foreclosure  suit  and  Am.  St.  Rep.  292;  35  S.  W.  212; 
for  investigating  the  title  to  prop-  Tucker  v.  Grace,  61  Ark.  410;  33 
erty.  Wordin's  Appeal,  71  Conn.  S.  W.  530;  Sterrett  v.  Barker,  119 
531;  71  Am.  St.  Rep.  219;  42  Atl.  Cal.  492;  51  Pac.  695;  Schlicker  v. 
659.  A  trustee  cannot  be  paid  for  Hemenway,  110  Cal.  579;  52  Am. 
legal   services   rendered   by   himself.  St.  Rep.  116;  42  Pac.  1063;  Taylor 


CONTEACTS  OF  FIDUCIARIES. 


1551 


Where  no  authority  to  contract  on  behalf  of  the  estate  exists, 
the  order  of  the  court  is  ineffectual  to  create  such  power."  Thus 
executors  cannot  create  debts  against  the  estate/  even  by  borrow- 
ing money  to  pay  the  debts  of  the  estate,  or  by  giving  their  notes 
therefor/  or  by  indorsing  notes  of  the  estate/  or  by  accepting 
a  draft/  or  by  giving  a  note  for  a  debt  barred  by  limitations 
in  the  life  of  decedent.^  The  executor  cannot  bind  the  estate 
by  a  contract  for  legal  services/  as  by  a  contract  to  pay  a  con- 


V.  Mygatt,  26  Conn,  184;  Wilson 
V.  Mason,  158  111.  304;  49  Am.  St. 
Rep.  162;  42  N.  E.  134;  Clark  v. 
Ross,  96  la.  402;  65  N.  W.  340; 
Chicago  Lumber  Co.  v.  Tomlinson, 
54  Kan.  770;  39  Pac.  694;  Baker 
V.  Moor,  63  Me.  443;  Davis  v. 
French,  20  Me.  21;  37  Am.  Dec.  36; 
Durkin  v.  Langley,  167  Mass.  577; 
46  N.  E.  119;  Kingman  v.  Soule,  132 
Mass.  285;  Luscomb  v.  Ballard,  5 
Gray  (Mass.)  403;  66  Am.  Dec. 
374;  Smith  gv.  Brennan,  62  Mich. 
349;  4  Am.  St.  Rep.  867;  28  N.  W. 
892;  Brown  v.  Farnham,  55  Minn. 
27 ;  56  N.  W.  352 ;  Stirling  v.  Win- 
ter, 80  Mo.  141;  Richardson  v.  Pal- 
mer, 24  Mo.  App.  480;  Doolittle  v. 
Willet,  57  N.  J.  L.  398;  31  Atl. 
385 ;  Schmittler  v.  Simon,  101  N.  Y. 
554;  54  Am.  Rep.  737;  5  N.  E.  452; 
Austin  V.  Munro,  47  N.  Y.  360; 
Ferrin  v.  Myrick,  41  N.  Y.  315; 
Lucht  V.  Behrens,  28  O.  S.  231;  22 
Am.  Rep.  378;  Patterson  v.  Craig, 
1  Baxt.  (Tenn.)  291;  Fine  v.  Free- 
man, 83  Tex.  529;  17  S.  W.  783; 
18  S.  W.  963;  Rich  v.  Sowles,  64 
Vt.  408;  15  L.  R.  A.  850;  28  Atl. 
723;  Adams  v,  Adams,  16  Vt.  228; 
Fitzhugh  V.  Fitzhugh,  11  Gratt. 
(Va.)   300;  62  Am.  Dec.  653. 

2  Valley  National  Bank  v.  Crosby, 
108  la.  651;  79  N.  W.  383. 

3  Germania  Bank  v.  Michaud,  62 
Minn.  459;  54  Am.  St.  Rep.  653; 
30  L.  R.  A.  286;  65  N.  W,  70;  Cur- 


tis V.  Bank,  39  O.  S.  570;  McGrath 
V.  Barnes,  13  S.  C.  328;  36  Am. 
Rep.  687;  Rich  v.  Sowles,  64  Vt. 
408;  15  L.  R.  A.  850;  23  Atl. 
723. 

4  Christian  v.  Morris,  50  Ala.  585; 
Sterrett  v.  Barker,  119  Cal.  492;  51 
Pac.  695;  Cornthwaite  v.  Bank,"  57 
Ind.  268;  Valley  National  Bank  v. 
Crosby,  108  la.  651;  79  N.  W.  383; 
Rice  V.  Strange  (Ky.),  72  S.  W. 
756;  Ellis  v.  Merriman,  5  B.  Mon. 
(Ky. ),  297;  Rittenhouse  v.  Ammer- 
man,  64  Mo.  197;  27  Am.  Rep.  215; 
First  National  Bank  v.  Collins,  lY 
Mont.  433;  -52  Am.  St.  Rep.  695; 
43  Pac.  499;  Morehead  Banlcing  Co. 
V.  Morehead,  122  N.  C.  318;  30  S.  E. 
331;  Smith  v.  Hayward,  5  Ohio  N. 
P.  501;  Boyd  v.  Johnston,  89  Tenn. 
284;  14  S.  W,  804;  Gregory  v. 
Leigh,  33  Tex.  813;  Robertson  v. 
Breckenridge,  98  Va.  569;  37  S. 
E.  8. 

5  Johnston  v.  Bank,  37  Miss,  526. 

6  Perry  v.  Cunningham,  40  Ark. 
185. 

TClaghorn's  Estate,  181  Pa.  St. 
600;  59  Am,  St.  Rep,  680;  37  Atl. 
918. 

8  Pike  V.  Thomas,  62  Ark.  223; 
54  Am.  St.  Rep.  292;  35  S.  W. 
212;  Tucker  v,  Grace,  61  Ark,  410; 
33  S.  W.  530;  Argo  v.  Blondel,  100 
la.  353;  69  N.  W.  534;  Wait  v. 
Holt,  58  N.  H.  467;  Parker  v.  Day, 
155    N.    Y.    383;    49    N.    E.    1046 j 


1552 


PAGE    ON    CONTRACTS. 


tingent  fee  in  the  event  of  the  recovery  for  the  death  of  the 
decedent.''  Accordingly  the  court  cannot  fix  the  amount  which 
an  administrator  must  pay  for  legal  services.^" 

Some  courts  seem  to  hold  that  an  executor  may  bind  the  estate 
by  a  reasonable  contract  for  attorney  fees,"  as  to  pay  a  reason- 
able contingent  fee  for  recovery  for  the  death  of  decedent/^  or 
to  pay  one-third  of  the  amount  recovered  of  a  claim  against  a 
foreign  government. ^^ 

The  estate  is  not  liable  for  the  price  of  property  bought  for 
the  estate/*  as  on  a  contract  to  buy  realty  f^  nor  on  a  contract 
by  the  executrix  to  refund  money  received  by  her  on  a  sale 
of  her  decedent's  realty  which  she  could  not  complete  f^  nor 
on  a  warranty  of  property  sold  ;^^  nor  on  a  contract  to  sell 
realty,  not  made  as  provided  by  statute  ;^^  nor  on  a  contract 
for  services  for  the  estate.^*     An  executor  cannot  create  debt 


Piatt  V.  Piatt,  105  N.  Y.  488;  12 
N.  E.  22;  McBride  v.  Brucker,  5 
Ohio  C.  C.  12;  3  Ohio  C.  D.  7 ;  Mel- 
len  V.  West,  5  Ohio  C.  C.  89;  3 
Ohio  C.  D.  46;  Miller  v,  Tracy,  86 
Wis.  330;  56  N.  W.  866. 

9  Tucker  v.  Grace,  61  Ark.  410; 
33  S.  W.  530;  Rickel  v.  Ry.  Co., 
112  la.  148;  83  N.  W.  957;  Thomas 
V.  Moore,  52  O.  S.  200;  39  N.  E. 
803. 

10  State  V.  District  Court,  25  Mont. 
33;  63  Pac.  717.  A  note  by  brothers 
of  the  decedent  to  an  attorney  to 
prosecute  the  murderer  of  decedent 
is  not  a  charge  against  the  estate. 
Alexander  v.  Alexander,  120  N.  C. 
472;  27  S.  E.  121. 

11  Alexander  v.  Bates,  127  Ala. 
328;  28  So.  415;  Mclntire  v.  Mc- 
Intire,  14  App.  D.  C.  337;  Gairdner 
V.  Tate,  110  Ga.  456;  35  S.  E. 
697. 

12  Lee  V.  Van  Voorhis,  78  Hun 
(X.  Y.)  575;  In  re  McCulloiigh's 
Estate,  31  Or.  86;  49  Pac.  886. 

13  Mackie  v.  Howland,  3  App.  D. 
C.  461. 


14  Daily  v.  Daily,  66  Ala.  266 
(food  for  stock  of  estate)  ;  Yarbor- 
ough  V.  Ward,  34  Ark.  204;  Wilsou 
V.  Mason,  158  111.  304;  49  Am.  St. 
Rep.  162;  42  N.  E.  134;  Durkin  v. 
Langley,  167  Mass.  577;  46  N.  E. 
119;  West  v.  Dean,  15  Ohio  C.  C. 
261. 

15  Wilson  V.  Mason,  158  111.  304; 
49  Am.  St.  Rep.  162;  42  N.  E. 
134. 

16  Hall  V.  Wilkinson,  35  W.  Va. 
167;  12  S.  E.  1118. 

17  Bauerle  v.  Long,  187  111.  475; 
52  L.  R.  A.  643;  58  N.  E.  458; 
Huffman  v.  Hendry,  9  Ind.  App. 
324;  53  Am.  St.  Rep.  351;  36  N.  E. 
727;  Dunlap  v.  Robinson,  12  O.  S» 
530;  Lockwood  v.  Gilson,  12  O.  S. 
526;  Arnold  v.  Donaldson,  46  O.  S. 
73 ;   18  N.  E.  540. 

isBauerle  v.  Long,  187  111.  475; 
52  L.  R.  A.  643;  58  N.  E.  458. 

19  7n  re  Page,  57  Cal.  238;  Dod« 
son  V.  ?^evitt,  5  Mont.  518;  6  Pac 
358:  Daingerfield  v.  Smith,  83  Va^ 
81;    IS.   E.   599. 


CONTKACTS  OF   FIDUCIAKIES.  1553 

against  the  estaie  by  accepting  a  deed  to  his  decedent.^"  The 
beneficiaries  of  decedent's  estate  cannot,  however,  affirm  the 
contract  of  the  administrator  in  part  and  avoid  it  in  part.  Thus 
where  an  administrator  without  order  of  the  court  lent  money 
of  the  estate  to  a  corporation,  the  beneficiaries  could  not,  in 
the  absence  of  fraud  or  collusion,  hold  the  directors  of  such 
corporation  personally  liable  for  such  money  as  trustees."^ 

§993.     Statutory  power  to  bind  estate. 

While  some  courts  use  language  which  seems  to  admit  of  a 
considerably  greater  power  of  executors  to  bind  the  estate  than 
the  preceding  authorities  recognize,^  the  cases  where  the  con- 
tract of  the  executor  is  of  any  force  against  the  estate  may  be 
reduced  to  two  classes.  Pirst,  he  may  contract  as  far  as  the 
statute  gives  him  power  to  contract  expressly  or  impliedly.^  He 
may  compromise  claims  f  he  may  bind  the  estate  by  a  consent 
judgment  on  a  just  claim  ;*  he  may  extend  the  time  for  paying 
off  a  mortgage  f  he  may  ratify  an  indorsement  made  for  de- 
cedent by  his  wife  where  the  proceeds  were  part  of  the  estate 
before  the  death  of  decedent;®  and  as  the  estate  is  liable  for 
breach  of  a  contract  made  by  decedent,^  he  may  complete  a 
contract  for  the  erection  of  a  building  and  thereby  incur  ex- 
penses.^ So,  by  statutory  provision,  he  may  employ  an  attorney 
to  defend  the  will  in  contest,^  or  may  without^**  or  with  leave  of 

2oShives    v.    Johnson     (Ky.),    38  3  Mulville   v.    Ins.    Co.,    19   Mont. 

S.  W.  694.  95;  47  Pac.  650. 

21  Wilson  V.  Stevens,  129  Ala.  630;  4  Shelden    v.    Warner,     59    Mich. 

87  Am.  St.  Rep.  86 ;  29  So.  678.  444 ;  26  N.  W.  667. 

1  Mackie  v.   Rowland,   3   App.   D.  5  Campbell    v.    Linder,    50    S.    C. 

C.   461;    Scott  V.  Meadows,   16   Lea  169;    27   S.   E.  648    (though  a  deed 

(Tenn.)   290;  Jack  v.  Cassin,  9  Tex.  in  form). 

Civ.  App.  228 ;  28  S.  W.  832 ;  Wil-  6  Seaver    v.    Weston,     163    Mass. 

liams  V.  Howard,  10  Tex.  Civ.  App.  202;  39  N.  E.  1013. 

527;    31   S.   W.   835.  7  Parker  v.   Barlow,   93   Ga.   700; 

sWilburn    v.    McCalley,    63    Ala.  21  S.  E.  213. 

436 ;   Brown  v.  Eggleston,  53  Conn.  8  Bambrick  v.  Church  Association, 

110;    2    Atl.    321;    Brown   v.   Earn-  53  Mo.  App.  225. 

ham,  55  Minn.  27;    56  N.  W.  352;  9  Penner   v.   McCan,   49   La.   Ann. 

Price  V.   Mclver,   25    Tex.    769;    78  600;   21   So.  768. 

Am.  Dec.  558.  lo  Baker    v.    Cauthorn,     23     Ind. 
98 


1554 


PAGE    ON"    CONTRACTS. 


court^^  employ  an  attorney ;  he  may  on  order  of  court  borrow 
money  on  mortgage  to  pay  debts  and  legacies  ;^^  or  may  take  a 
note  and  mortgage  on  realty  sold  by  him/^  In  view  of  his 
general  power  to  sell  personalty  of  the  estate,  he  may  pledge 
personalty  for  a  loan  advanced  by  one  who,  in  good  faith, 
believes  that  the  loan  is  obtained  for  the  benefit  of  the  estate/* 
In  short,  wherever  his  promise  is  co-extensive  with  his  liability 
in  his  official  capacity,  his  promise  is  enforceable  against  the 
estate.^^ 

§994.     Power  created  by  will  to  bind  estate. 

Second,  the  will  may  confer  power  to  bind  the  estate  by 
contract;^  as  to  borrow  money  to  carry  on  business.^  Power  to 
carry  on  a  plantation,^  to  keep  an  estate  together,*  to  manage  a 
mine,^  or  to  raise  money,^  or  to  defer  the  sale  of  a  business  for 


App.  611;  77  Am.  St.  Rep.  443;  55 
N.  E.  963;  Jackson  v.  Leech,  113 
Mich.  391;  71  N.  W.  846.  By  stat- 
ute in  West  Virginia  attorney  fees 
are  "  as  binding  on  the  estate  as  a 
debt  created  by  the  decedent  in  life 
—  more  so."  Crim  v.  England,  46 
W.  Va.  480,  484;  76  Am.  St.  Rep. 
826;  33  S.  E.  31o!  And  giving 
notes  therefor  signed  as  "  adminis- 
trator of  the  estate "  of  decedent 
does  not  discharge  this  liability. 

11  Wassell  V.  Armstrong,  35  Ark. 
247. 

12  Hart  V.  Allen,  166  Mass.  78; 
44  N.  E.   116. 

isjelke  V.  Goldsmith,  52  O.  S. 
499;  49  Am.  St.  Rep.  730;  40  N.  E. 
167. 

"Smith  V.  Ayer,  101  U.  S.  320; 
Carter  v.  Bank,  71  Me.  448;  36  Am. 
Rep.  338;  Gottberg  v.  Bank,  131 
N.  Y.  595;  30  N.  E.  41;  Hemmy 
V.  Hawkins,  102  Wis.  56;  72  Am. 
St.  Rep.  863;  78  N.  \\.  177. 

isAshby  v.  Ashby,  7  Barn.  &  C 
444;    Haynes   v.   Forshaw,    11   Hare 


93;    Brown   v.   Farnham,    55   Minn. 
27;  56  N.  W.  352. 

1  Ames  V.  Holderbaum,  44  Fed. 
224. 

2  Whitman's  Estate,  195  Pa.  St. 
144;   45  Atl.  673. 

3  Primm  v.  Mensing,  14  Tex.  Civ. 
App.  395;   38  S.  W.  382. 

4Brannon  v.  Ober,  106  Ga.  168; 
32  S.  E.  16. 

5  He  may  sink  a  shaft,  though  it 
results  in  loss.  Waddell's  Estate, 
196  Pa.  St.  294;   46  Atl.  304. 

6  Fletcher  v.  Banking  Co.,  Ill  Ga. 
300;  78  Am.  St.  Rep.  164;  36  S.  E. 
767.  Under  a  power  by  will  "  to 
raise  a  sufficient  amount  of  money 
for  this  purpose  in  such  way  as 
seems  best  to  him,"  he  can  borrow 
and  give  a  mortgage,  even  though 
the  amount  thus  borrowed  exceeds 
the  debts,  and  can  bind  the  estate 
by  a  promise  to  pay  attorney  fees. 
Fletcher  v.  Banking  Co.,  Ill  Ga. 
300;  78  Am.  St.  Rep.  164;  36  S.  E. 
767. 


CONTRACTS  OF   FIDUCIARIES. 


1555 


n  certain  time^  each  confers  power  to  borrow  or  create  debts. 
Where  power  is  given  to  carry  on  business  it  has  been  held  that 
trade  debts  bind  only  the  money  in  the  business ;  not  the  estate 
in  general  f  and  power  by  will  to  use  the  corpus  of  the  prop- 
erty, is  not  power  to  borrow."  However,  a  power  given  by  will 
to  an  executrix  "  to  conduct  for  such  time  as  she  may  see  fit  the 
business  in  which  I  may  be  engaged  at  my  death,"  has  been 
held  to  confer  power  to  subject  the  entire  estate  to  debts  con- 
tracted for  the  purpose  of  continuing  such  business.^*  A  power 
to  the  executor  to  sell  is  not  power  to  warrant.^^ 

§995.     Personal  liability  of  executors. 

Executors  are  liable  personally  upon  contracts  which  they 
attempt  to  make  in  their  official  capacity  when  they  cannot 
bind  the  estate,  unless  they  specifically  contract  against  a  per- 
sonal liability.^     They  are   liable  personally  on  their  notes,^ 


■^  In  re  Crowther  (1895),  2  Ch. 
56. 

sFrey  v.  Eisenhardt,  116  Mich. 
160;  74  N.  W.  501;  citing  Althei- 
mer  V.  Hunter,  56  Ark.  159;  19  S. 
W.  496;  Laible  v.  Ferry,  32  N.  J. 
Eq,  791 ;  Lucht  v.  Behrens,  28  O.  S. 
231;  22  Am.  Rep.  378. 

9  McMillan  v.  Cox,  109  Ga.  42; 
34  S.  E.  341. 

loFurst  V.  Armstrong,  202  Pa. 
St.  348;  90  Am.  St.  Rep.  653;  51 
Atl.  996. 

iiBauerle  v.  Long.  187  111.  475; 
52  L.  R.  A.  643;  58  N.  E.  458. 

1  Tucker  v.  Grace,  61  Ark.  410; 
33  S.  W.  530;  Melone  v.  Ruffino, 
129  Cal.  514;  79  Am.  St.  Rep.  127; 
62  Pae.  93;  In  re  Page,  57  Cal.  238; 
Mitchell  V.  Hazen,  4  Conn.  495;  10 
Am.  Dec.  169;  De  Coudres  v.  Trust 
Co.,  25  Ind.  App.  271;  81  Am.  St. 
Rep.  95;  58  N.  E.  90;  Mills  v.  Kuy- 
kendall,  2  Blackf.  (Ind.)  47;  Lus- 
comb  V.  Ballard,  5  Gray  (Mass.) 
403;    66   Am.   Dec.   374;    Sumner   v. 


Williams,  8  Mass.  162;  5  Am.  Dec. 
83;  Germania  Bank  v.  Michaud,  62 
Minn.  459;  54  Am.  St.  Rep.  653; 
30  L.  R.  A.  286;  65  N.  W.  70;  First 
National  Bank  v.  Collins,  17  Mont. 
433;  52  Am.  St.  Rep.  695;  43  Pac. 
499;  Doolittle  v.  Willet,  57  N.  J. 
L.  398;  31  Atl.  385;  Parker  v.  Day, 
155  N.  Y.  383;  49  N.  E.  1046; 
Moorehead  Banking  Co.  v.  Moore- 
head,  122  N.  C.  318;  30  S.  E.  331; 
Thomas  v.  Moore,  52  O.  S.  200; 
39  N.  E.  803;  West  v.  Dean,  15  Ohio 
C.  C.  261;  Hall  v.  Wilkinson,  35  W. 
Va.   167;    12   S.   E.   1118. 

2  Lynch  v.  Kirby,  65  Ga.  279; 
Dunne  v.  Deery,  40  la.  251;  WMnter 
V.  Hite,  3  la.  142;  White  v.  Thomp- 
son; 79  Me.  207;  9  Atl.  118;  Ger- 
mania Bank  v.  Michaud.  62  Minn. 
459;  54  Am.  St.  Rep.  653;  30  L.  R. 
A.  286;  65  N.  W.  70;  First  Na- 
tional Bank  v.  Collins,  17  Mont. 
433;  52  Am.  St.  Rep.  695;  43  Pac 
499. 


1556 


PAGE    ON    CONTRACTS. 


even  if  they  sign  in  their  official  capacity,^  as  by  signing  "  as 
execntor,"*  or  by  signing  "  The  Estate  of  E.  Langevin  by 
Achille  Michaud,  Administrator,"^  or  by  accepting  a  draft,  "  ac- 
cepted to  be  i^aid  when  funds  are  received  for  the  estate.  C. 
Carter,  Administrator.'"'  The  executor  or  administrator  is 
liable  personally,  even  if  the  note  signed  by  him  as  executor 
and  the  like  is  given  to  take  up  a  debt  of  the  decedent.^  So  an 
executor  is  personally  liable  on  his  acceptance  of  an  order 
drawn  on  him  payable  out  of  the  rentals  of  the  estate.*  So 
where  A,  as  administrator  of  B's  estate,  bought  a  team  to 
operate  B's  farm,  and  A  signed  the  letter  whereby  the  contract 
of  sale  was  made,  "  A,  administrator,"  A  was  held  liable  per- 
sonally.^ If  they  secure  the  note  by  mortgaging  part  of  the 
estate  they  are  personally  liable  for  a  deficiency  after  fore- 
closure, this  not  being  a  waiver  of  personal  liability.^"  Where 
they  sign  as  executors,  "  but  not  personally,"^^  or  where  there 
is  no  new  consideration  and  the  note  is  in  the  hands  of  the 
payee,^"  there  is  no  personal  liability  on  the  contract,  if  the 
estate  is  properly  administered.  As  to  payee  the  executor  may 
be  relieved  on  a  note  in  settlement  of  his  decedent's  claim  by 
showing  a  deficiency  in  decedent's  estate.^^  An  executor 
is    liable    for    commission    on    a    loan    which    was    not    con- 


3  Dunne  v.  Deery,  40  la.  251 ; 
Boyd  V.  Johnston,  89  Tenn.  284;  14 
S.  W.  804. 

4  Hopson  V.  Johnson,  110  Ga 
283;  34  S.  E.  848;  Morehead  Bank 
ing  Co.  V.  Morehead,  116  N.  C.  410 
21  S.  E.  190;  In  re  Claghorn's  Es 
tate,  181  Pa.  St.  600;  59  Am.  St 
Eep.  680;  37  Atl.  918;  Boyd  v 
Johnston,  89  Tenn.  284;  14  S.  W 
804. 

5  Gerniania  Bank  v.  Michaud,  62 
Minn.  4,59;  54  Am.  St.  Rep.  653; 
30  L.  R.  A.  286;  65  N.  W.  70. 

6  Carter  v.  Thomas,  3  Ind.  213. 

"!■  Cornthwaite  v.  Bank,  57  Ind. 
268;  In  re  Claghorn's  Estate,  181 
Pa.  St.  600;  59  Am.  St,  Rep.  680; 
37  Atl.  918. 


8  Perry  v.  Cunningham,  40  Ark. 
185. 

9  Rich  V.  Sowles,  64  Vt.  408;  15  L. 
R.  A.  850;    23  Atl.   723. 

10  De  Coudres  v.  Trust  Co.,  25 
Ind.  i^pp.  27i;  81  Am.  St.  Rep. 
95;   58  N.  E.  90. 

iiM(rehead  Banking  Co.  v.  More- 
head,  116  N.  C.  413;  21  S.  E.  191. 

12  Gerniania  Bank  v.  Michaud,  62 
Minn.  459;  54  Am.  St.  Rep.  653;  30 
L.  R.  A.  286;  65  N.  W.  70. 

i3McGrath  v.  Barnes,  13  S.  C. 
328;  36  Am.  Rep.  687;  Boyd  v. 
Johnston,  89  Tenn.  284;  14  S.  W. 
804;  East  Tennessee,  etc.,  Co.  v. 
Gaskell,  2  Lea    (Tenn.)   742. 


CONTRACTS  OF  FIDUCIAEIES. 


1557 


flmmated  because  the  executor  could  not  get  a  proper  order 
c.f  court  to  mortgage  the  realty/*  An  executor  who  carries 
on  decedent's  business  is  personally  liable  for  new  debts  thus 
incurred/^  He  is  personally  liable  on  his  contract  for  sawing 
decedent's  lumber."  In  some  cases  the  personal  liability  of 
the  executor  may  exist  even  if  the  executor  is  authorized  by 
will  to  carry  on  a  business  and  to  incur  debts.  Even  if  the 
will  authorizes  the  executor  to  carry  on  "  some  legitimate  busi- 
ness/' the  executor  is  personally  liable  for  debts  incurred  in. 
such  business. ^'^  The  executor  is  not,  however,  personally 
liablfc  unless  the  contract  purports  to  have  been  made  with  him. 
If  an  executor  signs  in  his  official  capacity  in  indorsing  a  note 
owned  by  decedent,  which  note  the  executor  is  transferring  to 
a  vendee  thereof  under  authority  of  law,  he  incurs  no  personal 
liability. ^^  By  statute  an  executor  may  be  free  from  certain 
kinds  of  liability  imposed  on  him.^" 

§996.     Liability  of  estate  for  benefits  received. 

The  i-ule  that  an  executor  cannot  bind  the  estate  by  his  con- 
tract is  intended  for  the  protection  of  the  estate.  It  is  not 
intended  to  operate  as  a  confiscation  of  anything  of  value  which 
the  estate  may  receive  under  such  contract.  In  an  accounting 
with  the  estate  the  executor  must  be  credited  with  the  value 
which  has  actually  enured  to  the  estate  under  such  contract. 
The  executors  may  reimburse  themselves  for  debts  of  the  estate 
paid  by  them.^  Thus,  if  executors  who  might  have  sold  realty 
of  their  decedent  to  pay  his  debts  which  exceed  his  personalty, 
pay  such  debts  out  of  their  own  funds  they  may  be  reimbursed 

14MOXOI1   V.   Jones,    128    Cal.   77;  303;    43    L.    R.    A.    831;    52   N.    E. 

60  Pac.  316.  1067. 

15  Alsop  V.  Mather,  8  Conn.  584 ;  i9  As  for  costs :  Bruning  v.  Gol- 
21  Am.  Dec.  703;  Wild  v.  Daven-  den,  159  Ind.  199;  64  N.  E.  657; 
port,  48  N.  J.  L.  129;  57  Am.  Rep.  Moise's  Succession,  107  La.  717;  31 
552;   7  Atl.  295.  So.  990. 

16  Botts  V.  Barr,  95  Ind.  243.  i  Peter  v.  Beverly,  10  Pet.  (U.  S.) 
"Willis  V.  Sharp,  113  N.  Y.  586;      532;    Bolton    v.    Myers,    146    N.    Y. 

4  L.  R.  A.  493;  21  N.  E.  705.  257;    40    N.    E.    737;    affirming    83. 

18  Grafton  Savings  Bank  V.  Wing,      Hun     (N.    Y.)     259. 
172   Mass.    513;    70    Am.    St.    Rep. 


1558  '  PAGE    ON    CONTRACTS. 

thereafter  out  of  tlie  proceeds  of  the  realty."  So  an  executor 
who  pays  a  judgment  against  decedent  out  of  his  own  funds 
may  be  reimbursed  out  of  the  estate.^  So  an  executor  who 
has  given  his  own  note  for  a  debt  of  his  decedent  may  be  reim- 
bursed out  of  the  estate  for  the  amount  paid  by  him  on  suck 
note.*  This  right,  however,  is  not  an  indirect  means  of  enforc- 
ing the  contract.  The  measure  of  recovery  is  the  benefit  to 
the  estate;  and  not  the  contract  itself.  Thus  executors  cannot 
recover  interest  on  money  borrowed  by  them  to  pay  debts  ot 
the  estate  before  they  were  due,  which  did  not  draw  interest.^ 
If  the  property  or  services  furnished  by  the  adversary  party 
has  in  fact  enured  to  the  benefit  of  the  estate,  there  is  some 
authority  for  holding  that  the  creditor  of  the  executor  may 
apply  to  the  court  of  probate  powers  for  an  order  to  the  execu- 
tor to  pay  the  claim  out  of  the  estate,  which  application  will, 
in  a  proper  case,  be  allowed  ;*'  and  more  for  holding  that  equity 
may  enforce  payment  out  of  the  estate,  not  strictly  speaking 
on  the  contract,  but  for  a  reasonable  compensation  for  the 
value  of  the  services  to  the  estate,  or  the  property  received  by 
it.^  Thus  if  the  executor  borrows  money,  giving  a  note  signed 
with  his  own  name  "  as  executor  for  "  the  decedent  and  uses 
such  money  to  pay  debts  of  the  estate,  the  creditor  may  recover 
from  the  estate  in  such  amount  as  has  actually  been  expended 
to  pay  the  debts  of  the  estate. *  Since  the  amount  recovered 
by  the  creditor  is  not  credited  to  the  executor  this  is  in  effect 

2  Bolton  V.  Myers,  146  N.  Y,  257;  35  S.  W.  212   (overruling  Turner  v. 

40  N.  E.  737.  Tapscott,  30  Ark.  312;   Yarborough 

sPursel   V.   Pursel,    14   N.   J.   Eq.  v.   Ward,   34   Ark.   204);    Ferrin   v. 

514.  Mvrick,  41  N.  Y.  315. 

4  Peter  v.  Beverly,  10  Pet.  (U.S.)  7  Hewitt  v.  Phelps,  105  U.  S.  393; 
532;  Douglas  v.  Eraser,  2  McCord  Mosely  v.  Norman,  74  Ala.  422; 
Eq.     (S.    C.)     105.  Pike   v.   Thomas,    65   Ark.    437;    47 

5  Nicholson  v.  Whitlock,  57  S.  C.  S.  W.  110;  Norton  v.  Phelps,  54 
36;  35  S.  E.  412.  Miss.   467;    Thompson  v.   Smith,   64 

6Kasson's    Estate,    119   Cal.   489;  X.   H.  412;    13   Atl.  639;    Leible  v. 

51   Pac.   706;   Long  v.   Rodman,   58  Ferry,   32  N.  J.  Eq.  791;' Willis  v. 

Ind.  58;  Baker  v.  Cauthorn,  23  Ind.  Sharp,   113   N.  Y.   586;   4  L.  E.   A. 

App.  611;  77  Am.  St.  Rep.  443;   55  493;  21  N.  E.  705. 

N.  E.  963.     Contra,  Pike  v.  Thomas,  s  Dunne  v.  Deery,  40  la.  251. 
62  Ark.  223;  54  Am.  St.  Rep.  292; 


CONTRACTS  OF   FIDUCIARIES.  1559 

a  method  of  subjecting  whatever  claim  the  executor  may  have 
against  the  estate  to  the  payment  of  such  claim.  This  right 
usually  exists  only  when  the  executor  is  personally  insolvent. 

III.     Guardians. 

§997.     Contracts  of  guardians. 

Guardians  are  officers  of  the  court  for  the  purpose  of  man- 
aging the  estates  of  persons  who  are  in  law  considered  incap- 
able of  managing  their  own  property.  In  the  absence  of  statu- 
tory authority  they  have  no  power  to  bind  such  estates  by  their 
contracts  so  as  to  modify  pre-existing  liability,  which  may  be 
enforced  against  such  estate  irrespective  of  such  contract^  A 
guardian  cannot  charge  the  estate  by  carrying  on  business  on 
his  ward's  capital  and  credit,"  or  form  a  corporation  on  behalf 
of  his  ward  out  of  a  partnership  in  which  the  ward  had  an 
interest,^  or  bind  the  estate  by  a  covenant  of  quiet  enjoyment,* 
or  subject  the  estate  of  the  ward  to  a  lien  for  labor  or  ma- 
terials,^ or  borrow  money  on  the  credit  of  the  estate,"  even  to 

1  Chestnut  v.  Tyson,  105  Ala.  149 ;  Jones,  52  N.  C.  14 ;  75  Am.  Dee. 
53  Am.  St.  Rep.  101;  16  So.  723;  445;  Shepard  v.  Hanson,  9  N.  D. 
Fish  V.  McCarthy,  96  Cal.  484;  31  249;  83  N.  W.  20.  Contra,  Robin- 
Am.  St.  Rep.  237;  31  Pac.  529;  son,  v.  Hersey,  60  Me.  225;  Price's 
Morse  v.  Hinckley,  124  Cal.  154;  Appeal,  116  Pa.  St.  410;  9  Atl. 
56  Pac.  896;   Wright  v.  Byrne,   129  856. 

Cal.    614;    62   Pac.    176;    Brown    v.  2  Warren  v.  Bank.  157  N.  Y.  259; 

Eggleston,    53    Conn.     110;    2    Atl.  68  Am.   St.  Rep.   777;   43  L.   R.  A. 

231;    Baird    v.    Steadman,    39    Fla.  256;  51  N.  E.  1036. 

40;  21  So.  572;  Nichols  v.  Sargent,  3  Weld  v.  Mfg.  Co.,  86  Wis.  549; 

125   111.   309;   8   Am.  St.  Rep.   378;  86  Wis.  552;   57  N.  W.  378;   57  N. 

17   N.   E.  475;    Sperry  v.    Fanning,  W.   374. 

80   111.   371;    Lewis  v.  Edwards,   44  4  Chestnut    v.     Tyson.     105     Ala. 

Ind.    333;    Lindsay    v.    Stevens,    5  149;    53   Am.   St.   Rep.   101;    16   So. 

Dana      (Ky.)      104;     Massachusetts  723. 

General  Hospital  v.  Fairbanks,   132  5  Fish  v.  McCarthy,  96  Cal.  484; 

Mass.    414;    Rollins   v.   Marsh,    128  31  Am.  St.  Rep.  237;  31  Pac.  529. 

Mass:  116;  Wood  v.  Truax,  39  Mich.  6  Wright  v.  Byrne,   129  Cal.  614; 

628;  Reading  V.  Wilson,  38  N.  J.  Eq.  62  Pac.   176    (the  ward   is  not  per- 

446;  Hardy  v.  Bank,  61  N.  H.  34;  .  sonally  liable  therefor);   Buie's  Es- 

Warren   v.    Bank.    157    N.    Y.    259;  tate  v.  White,  94  Mo.  App.  367;  68 

68  Am.   St.  Rep.   777;   43  L.  R.  A.  S.  W.  101. 

256;    51   N.   E.    1036;    Fessenden  v. 


1560  PAGE    ON    CONTKACTS. 

take  up  debts  of  the  estate/  nor  can  he  bind  the  ward's  estate 
by  a  contract  to  pay  attorneys'  fees.^  If  the  statute  does  not 
authorize  such  contract  to  employ  an  attorney  the  order  of  the 
court  cannot  validate  it.°  So  money  borrowed  by  a  guardian 
and  expended  for  his  ward  is  not  a  consideration  for  a  note 
given  by  the  succeeding  guardian/"  The  contract  of  one  not 
a  guardian  is,  of  course,  not  binding  on  the  estate.^^  So  a 
general  judgment  against  the  guardian  cannot  be  enforced  out 
of  the  ward's  property/"  An  attorney  who  acts  as  guardian 
ad  litem  cannot  have  any  greater  compensation  than  the  allow- 
ance made  to  him  by  the  court  having  jurisdiction  of  the  case 
in  which  such  services  were  rendered/^  One  who  is  employed 
as  attorney  by  a  guardian  ad  litem  may  have  such  compensa- 
tion as  the  court  before  which  such  case  is  tried  may  allow  if 
reasonable  in  amount/*  The  guardian  is  personally  liable  in 
such  contracts/^  unless  he  has  expressly  relieved  himself  from 
personal  liability  by  the  terms  of  the  contract,^^  though  in  a 
proper  case  he  may  be  reimbursed  out  of  the  estate  for  such 

TAndrus    v.    Blazzard,    23    Utah  190   Pa.  St.  558;    190  Pa.   St.   577; 

233;   54  L.  R.  A.  354;   63  Pac.  888  42  Atl.   1094;   42  Atl.   1117. 

(the  note  was  signed  "John  Blaz-  12  Baird  v.  Steadman,  39  Fla.  40; 

zard  by  Joseph  H.  Hurd,  his  general  21  So.  572. 

guardian").  i3  Englebert    v.    Troxell,    40    Neb. 

8  Morse  v.  Hinckley,  124  Cal.  195;  42  Am.  St.  Rep.  665;  26  L.  R. 
154;   56  Pac.  896;   Cole  v.  Superior  A.  177;  58  N.  W.  852. 

Court,  63  Cal,  86;  49  Am.  Rep.  78;  i*  Richardson  v.  Tyson,   110  Wis, 

Glassgow  V.  McKinnon,  79  Tex.  116;  572;  84  Am.  St.  Rep.  937;  86  N,  W. 

14  S.  W.  1050;  Richardson  v.  Tyson,  250. 

110  ^Yis.  572;  84  Am.  St.  Rep.  937;  is  Chestnut    v.    Tyson,    105    Ala, 

86  N.   W.   250.      (For   other  phases  149;    53   Am.   St.  Rep.   101;    16   So. 

of  this  litigation,  see  Tyson  v.  Rich-  723;    Hunt   v.   Maldonada,    89    Cal, 

ardson,    103    Wis.    397;    79    N.    W,  636;  27  Pac.  56;  Sperry  v.  Fanning, 

439;   Tyson  v.  Tyson,  94  Wis.  225;  80   111.   371;    Rollins  v.   Marsh,   128 

68  N,  W.  1015.)  Mass.     116;     Forster    v.    Fuller,    6 

9  Glassgow  V.  McKinnon,  79  Tex.  Mass.  58;  4  Am.  Dec.  87;  Hardy  v. 
116;  14  S.  W.  1050;  Andrus  v.  Bank,  61  N,  H.  34 ;  Shepard  v.  Han- 
Blazzard,  23  Utah  233;  54  L.  R.  A.  son,  9  N,  D.  249;  83  K  w.  20;  An- 
354;  63  Pac.  888.  drus  v.  Blazzard,  23  Utah  233;   54 

10  Wright  V.  Byrne,  129  Cal.  614;       L.  R.  A.  354;   63  Pac.  888. 

62   Pac.    176.  le  Morse    v.    Hinckley,     124    Cal. 

"Columbia,    etc.,    Co.    v.    Lewis,      154:  56  Pac.  896. 


CONTRACTS  OF  FIDUCIARIES. 


1561 


expense/^  and  he  lias  an  equitable  lien  on  the  estate  for  such 
expenses/®  Even  if  the  guardian  designates  himself  in  the 
contract  "  as  guardian  "  he  is  personally  liable.^"  A  guardian 
may,  however,  provide  for  freedom  from  personal  liability  and 
full  effect  must  be  given  to  such  stipulation.^" 

Conversely  the  interest  of  a  guardian  in  a  contract  which 
he  has  made  in  his  own  name  is  a  personal  interest  and  not  an 
interest  as  guardian."^  Thus  he  can  sue  in  his  own  name  on  a 
note  payable  to  himself,  the  consideration  of  which  was  prop- 
erty of  the  ward,^^  can  release  a  guarantor  on  a  note  payable 
to  himself,^^  and  the  ward  cannot  bring  suit  thereon.^*  But  in 
some  states  the  ward  may  avoid  the  entire  contract  and  hold 
the  person  who  borrows  money  of  the  estate  from  the  guardian 
with  knowledge  of  the  facts,  as  trustee.^^  A  guardian  is  not 
liable  on  a  contract  made  by  the  infant  even  for  necessaries.^® 

StJ»tutoiy  provisions  may  confer  upon  a  guardian  power  to 
bind  the  estate  by  his  contracts  with  reference  thereto.^^  He 
can  contract  for  the  location  of  a  land  certificate,  the  locator 


17  Curran  v.  Abbott,  141  Ind. 
492;  60  Am.  St.  Rep.  337;  40  N.  E. 
1091 J  (insurance)  Sims  v.  Billing- 
ton,  60  La.  Ann.  968;  24  So.  637; 
(money)  Merkel's  Estate,  154  Pa. 
St.  285 ;  26  Atl.  428. 

isCurran  v.  Abbott,  141  Ind.  492; 
50  Am.  St.  Rep.  337;  40  X.  E.  1091. 

laSperry  v.  Fanning,  80  111.  371; 
Forster  v.  Fuller,  6  Mass.  58 ;  4  Am. 
Dec.  87;  Andrus  v.  Blazzard,  23 
Utah  233;  54  L.  R.  A.  354;  63  Pac. 
888. 

20  Nichols  V.  Sargent,  125  III.  309; 
8  Am.  St.  Rep.  378;  17  N.  E.  475. 

21  Thompson  v.  Duncan,  85  Ga. 
542;  11  S.  E.  860.  Contra,  that  the 
guardian  cannot  sell  notes  payable 
to  himself  or  bearer  as  guardian, 
without  an  order  of  the  court.  See 
Gillespie  v.  Crawford  (Tex.  Civ. 
App.),  42  S.  W.  621;  Strong  v. 
Strauss,  40  0.  S.  87. 


22  McLean  v.  Dean,  66  Minn.  369; 
69  X.  W.  140. 

23  Ditmar  v.  West,  7  Ind.  App. 
637;  35  X.  E.  47. 

21  Brewster  v.  Seeger,  173  Mass. 
281;  53  X.  E.  814  (citing  Hippee 
V.  Pond,  77  la.  235;  42  X.  W.  192; 
Gard  v.  Xeff,  39  0.  S.  607.  (Prop- 
osition of  text  not  passed  upon  in 
this  case.)  Chitwood  v.  Cromwell, 
12  Heisk.  (Tenn.)  658;  Zachary  v. 
Gregory,  32  Tex.  452), 

25  Easton  v.  Somerville,  111  la. 
164 ;  82  Am.  St.  Rep.  502 ;  82  X.  W. 
475. 

26  Overton  v.  Beavers,  19  Ark. 
623;  70  Am.  Dec.  610;  Baird  v. 
Steadman.  39  Fla.  40;  21  So.  572; 
McXabb  v.  Clipp,  5  Ind.  App.  204; 
31  X.  E.  858;  Spring  v.  Woodworth, 
4  All.  (Mass.)  326;  Pendexter  v. 
Cole,  66  X.  H.  556 ;  22  Atl.  560. 

2"  L'nited  States  Mortgage  Co.  v. 
Sperry,  138  U.  S.  313. 


1562  PAGE    ON    CONTKACTS. 

to  be  paid  a  part  of  the  land,"^  or  can  lease,""  or  borrow  money 
to  discharge  liens  on  order  of  the  court.^°  The  general  power 
of  a  guardian  over  personalty,  together  with  the  provisions 
found  in  most  statutes  empower  a  guardian  to  compromise 
clainis,^^  though  an  order  of  court  may  be  necessary.'^^  A 
guardian's  contract  with  the  stockholders  of  an  insolvent 
national  bank  in  which  the  ward  holds  stock  for  raising  funds 
to  pay  the  debts  of  the  bank  with  as  little  expense  as  possible,^^ 
and  his  surrender  of  a  life  insurance  policy,"*  have  been  held 
valid.  He  cannot  arbitrate  where  his  interest  is  adverse  to  his 
ward's.^^  In  some  cases  the  guardian  has  been  allowed  to 
bind  the  estate  of  his  Avard  without  an  order  of  court ;  as  where 
a  guardian  employed  a  doctor  to  save  the  ward's  life.^® 

If  the  property  has  been  applied  to  the  use  of  the  estate 
equity  may  enforce  at  least  a  reasonable  compensation  therefor 
out  of  the  estate,^"  but  this  relief  will  not  be  given  if  the  prop- 
erty was  not  applied  to  the  use  of  the  estate.^^  So  attorneys 
employed  by  the  guardian  may  receive  a  reasonable  compensa- 
tion for  the  benefits  which  have  resulted  to  the  estate  from 
such  services.^® 

IV.     Receivers. 

§998.     Contracts  under  order  of  court. 

A  receiver  is  an  officer  of  the  court,  especially  appointed,  to 
whom  is  committed  the  control  and  management  of  property 

28  Ellis  V.  Stone,  4  Tex.  Civ.  App.  3*  ]Maclay  v.  Assurance  Society, 
157;  23  S.  W.  405.  152  U.  S.  499. 

29  Windon  v.  Stewart,  43  W.  Va.  35  Fortune  v.  Killebrew,  86  Tex. 
711;  28  S.  E.  776.  172;  23  S.  W.  976. 

30  Ray  V.  McGinnis,  81  Ind.  451.  3g  Williams    v.    Bonner,    79    Miss. 
siManion  v.  Ry.  Co.,  99  Ky.  504;       664;  31  So.  207. 

36     S.     W.     530;     Worthington     v.  37  James   v.   Lane,    33    N.    J.    Eq. 

Worthington   (Ky.),  35  S.  W.  1039.  30. 

32  Johnson's     Appeal,      71     Conn.  38  Xoble  v.  Runyon,  85  111.  618. 
590;  42  Atl.  662;  Davis  v.  Beall.  21  39  Caldwell     v.     Young,     21     Tex. 
Tex.  Civ.  App.  183;  50  S.  W.  1086.  800.     Contra,  Reading  v.  Wilson,  38 

33  Hanover      National      Bank      v.  X,  J.  Eq.  446. 
Cocke,  127  N.  C.  467 ;  37  S.  E.  507. 


CONTRACTS  OF  FIDUCIARIES.  1563 

which  is  in  the  custody  of  the  law.  As  he  is  not  the  agent  of 
either  party  he  cannot  bind  either  personally  by  his  contracts/ 
nor  can  his  acts  amount  to  ratification  by  them.^  The  only 
question  then,  is  as  to  his  right  to  make  contracts  which  will 
be  a  lien  on  the  trust  funds  in  his  charge,  and  will  not  bind 
him  personally.  Contracts  made  by  a  receiver  in  his  official 
capacity  and  under  order  of  court,  are  "  sui  generis/'^  Under 
proper  circumstances  a  receiver  acting  under  order  of  the  court 
may  incur  debts,  which  will  not  bind  him.  personally  but  will 
be  a  lien  upon  the  fund.*  If  no  rights  of  lien-holders  inter- 
vene, the  receiver  of  a  private  corporation  may  be  authorized 
to  borrow  money  and  make  such  debt  a  first  lien  upon  certain 
trust  property ;  as  by  pledging  collateral  to  secure  a  loan.^  So 
the  court  may  by  its  order  make  a  debt  incurred  by  the  receiver 
a  lien  upon  the  product  manufactured  by  the  receiver,^  The 
assent  of  creditors  to  the  appointment  of  a  receiver  and  to  the 
powers  conferred  upon  him  may  prevent  them  from  attacking 
the  validity  of  contracts  made  by  him  under  such  powers.  If 
the  court  when  having  power  to  act,  has  authorized  a  receiver 
to  make  certain  contracts  and  has  properly  made  the  debt  aris- 
ing from  such  contract  a  lien  upon  certain  property,  the  court 
cannot  revoke  such  power  after  such  contract  has  been  made. 
"  Contracts  of  a  receiver  made  with  express  or  implied  au- 
thority cannot  be  annulled  at  the  pleasure  of  the  court.'"  If 
the  receiver  of  a  going  concern  enters  inter  a  contract  with  a 
bank  for  borrowing  money  and  depositing  collateral  security, 
and  such  contract  is  made  under  order  of  court  and  with  con- 

1  Farmers'  Loan  Co.  v.  R.  R.  Co.,  N.  J.  Eq.  669;  12  Atl.  188;  State 
31  Or.  237;  65  Am.  St.  Rep.  822;  Bank  v.  Machine  Co.,  99  Va.  411; 
38  L.  R.  A.  424;  48  Pac,  706.  86  Am.  St.  Rep.  891;  39  S.  K  141. 

2  Groveland  Improvement  Co.  v.  5  Clarke  v.  Banking  Co.,  54  Fed. 
Supply  Co.,  25  Wash.  344;  87  Am.  556;  State  Bank  v.  Machine  Co.,  99 
St.  Rep.  755;  65  Pac.  529  (especial-  Va.  411;  86  Am.  St.  Rep.  891;  39 
ly  if  the  receiver  is  ignorant  of  the  S.  E.  141. 

facts   giving  the   party   a    right   to  6  American,   etc.,   Co.   v.    German, 

avoid).            »  126  Ala.  194;   85  Am.  St.  Rep.  21; 

sVanderbilt   v.   R.    R.,   43    N.    J.  28  So.  603. 

Eq.  669;  12  Atl.  188.  7  State  Bank   v.  Machine  Co.,   99 

4Girard,   etc.,   Co.   v.    Cooper,    51  Va.  411,  417;  86  Am.  St.  Rep.  891; 

Fed.   332;    Vanderbilt  v.   R.   R.,   43  39  S.  K  141. 


15G4  PAGE    ON    CONTKACTS. 

sent  of  the  creditors,  the  court  must  on  the  final  settlement 
allow  the  hank  priority  as  to  such  collateral.^  Xo  personal 
liahility  exists  against  the  receiver  while  acting  under  order 
of  the  court.®  Thus  if  the  receiver  employs  an  attorney  in 
his  official  capacity,  and  the  court  sanctions  such  employment 
and  fixes  the  compensation  of  the  attorney,  the  latter  cannot 
maintain  an  action  against  the  receiver  personally.^"  The  com- 
pensation of  an  attorney  thus  employed  is  to  be  fixed  by  the 
court.^^  If  a  corporation  is  dissolved  the  receiver  may,  under 
order  of  the  court,  complete  a  contract  entered  into  by  such 
corporation  and  collect  compensation  therefor  under  the  con- 
tract.^^  The  receiver  of  a  corporation  is  not  liable  officially 
on  a  lease  made  by  the  corporation  unless  he  adopts  such  lease.^* 
If  he  takes  possession  of  the  leased  premsies  he  is  liable  for  a 
reasonable  compensation,  but  not  on  the  covenants  of  the  lease 
as  an  assignee  of  the  term."  A  creditor  who  wrongfully  pro- 
cures the  appointment  of  a  receiver  and  prolongs  the  receiver- 
ship unreasonably  may  be  required,  if  he  has  received  all  the 
funds  collected  by  the  receiver,  to  pay  the  rent  of  premises 
used  by  the  receiver.^^ 

§999.     Power  to  displace  prior  liens. —  Receiver  of  private  corpo- 
ration. 

Wliere  the  receiver  is  authorized  by  the  court  to  make  con- 
tracts and  to  charge  them  upon  the  trust  fund,  the  question 
is  often  presented:  Can  debts  incurred  by  a  receiver  under 
order  of  the  court  displace  specific  prior  liens  upon  part  or  all 

8  state  Bank  v.  Machine  Co..  99  i3  Tradesmen's  Publishing  Co.  v. 
Va.  411;  86  Am.  St.  Rep.  891;  39  Car- Wheel  Co.,  95  Tenn.  634;  49 
S.  E.  141.  Am.  St.  Rep.  943;  31  L.  R.  A.  593; 

9  Vanderbilt  v.   R.   R.,   43   N.  J.  32  S.  W.  1097. 

Eq.  669;  12  Atl.  188.  i4  Bell  v.  Protective  League,  163 

10  Walsh  V.  Raymond,  58  •  Conn.  Mass.  558 ;  47  Am.  St.  Rep.  481 ;  28 
251;   18  Am.  St.  Rep.  264;   20  Atl.      L.  R.  A.  452;  40  N.  E.  857. 

464.  15  Link    Belt    Machinery    Co.    v. 

"Stuart  V.  Boulware,   133  U.  S.  Hughes,   195   111.  413;   59   L.   R.   A. 

78.  673;    63    N.    E.    186;    affirming,   95 

12  Florence,    etc.,    Co.    v.    Hanby,  III.  App.  323. 
101  Ala.  15;   13  So.  343. 


CONTEACTS  OF  FIDUCIARIES. 


1565 


of  the  property  held  by  the  receiver.  If  the  corporation  is  a 
private  corporation  the  court  cannot  authorize  the  receiver  to 
incur  debts  which  shall  displace  existing  liens  unless  the  lien- 
holder  consents  thereto.^  So  if  the  lien-holder  objects  to  the 
authority  given  to  the  receiver  to  carry  on  business,"  or  if  he 
is  not  a  party  to  the  suit  in  which  the  receiver  is  appointed/ 
his  lien  has  priority  over  debts  incurred  by  the  receiver.  A 
j)rior  mortgage  if  duly  recorded/  or  a  vendor's  lien/  have 
•under  these  circumstances  been  given  priority  over  the  debts 
incurred  by  the  receiver.  ^Neither  his  certificates/  nor  his 
simple  contract  debts/  can  be  preferred  to  such  prior  liens. 
The  court  cannot  authorize  a  receiver  of  a  private  corporation 
to  carry  on  a  business  and  incur  debts  which  displace  prior 
liens.  Thus  the  court  cannot  so  authorize  the  receiver  to  carry 
on  the  hotel  business.^  This  power  has,  however,  been  exer- 
cised when  it  is  advantageous  to  all  parties  concerned  to  sell 


iDoe  V.  Transportation  Co.,  78 
Fed.  62;  Hanna  v.  Trust  Co.,  70 
Fed.  2;  30  L.  R.  A.  201;  Fidelity, 
etc.,  Co.  V.  Iron  Co.,  68  Fed.  623; 
Farmers',  etc.,  Co.  v.  Coal  Co.,  50 
Fed.  481;  16  L.  R.  A.  603;  Belknap 
Savings  Bank  v.  Land  Co.,  28  Colo. 
326;  64  Pac.  212;  Lamar,  etc.,  Co. 
V.  Bank,  28  Colo.  344;  64  Pac.  210; 
International  Trust  Co.  v.  Coal  Co., 
27  Colo.  246;  83  Am.  St.  Rep.  59; 
60  Pac.  621;  Hooper  v.  Trust  Co., 
81  Md.  559;  29  L.  R.  A.  262;  32 
Atl.  505;  Farmers',  etc.,  Co.  v.  Tele- 
graph Co.,  148  N.  Y.  315;  51  Am. 
St.  Rep.  690;  31  L.  R.  A.  403;  42 
N.  E.  707;  Raht  v.  Attrill,  106  N. 
Y.  423;  60  Am.  Rep.  456;  13  N.  E. 
282;  United  States  Investment  Cor- 
poration V.  Portland  Hospital,  40 
Or.  523;  56  L.  R.  A.  627;  64  Pac. 
644;  67  Pac.  194;  Merriam  v.  Min- 
ing Co.,  37  Or.  321;  56  Pac.  75;  58 
Pac.  37;  60  Pac.  997. 

2  Hanna  v.  Trust  Co.,  70  Fed.  2; 
30  L.  R.  A.  201. 

3  International  Trust  Co.  v.  Coal 


Co.,  27  Colo.  246;  83  Am.  St.  Rep. 
59;  60  Pac.  621. 

4  Hanna  v.  Trust  Co.,  70  Fed.  2; 
30  L.  R.  A.  201 ;  Farmers',  etc.,  Co. 
V.  Coal  Co.,  50  Fed.  481;  16  L.  R. 
A.  603;  International  Trust  Co.  v. 
Coal  Co.,  27  Colo.  246;  83  Am.  St. 
Rep.  59;  60  Pac.  621;  United  States 
Investment  Corporation  v.  Portland 
Hospital,  40  Or.  523;  56  L.  R.  A. 
627;  64  Pac.  644;  67  Pac.  194. 

5  Hooper  v.  Trust  Co.,  81  Md. 
559;  29  L.  R.  A.  262;  32  Atl.  505. 

6  Metropolitan  Trust  Co.  v.  Ry,, 
100  Fed.  897;  Hanna  v.  Trust  Co., 
70  Fed.  2;  30  L.  R.  A.  201;  Farm- 
ers', etc.,  Co.  V.  Coal  Co.,  50  Fed. 
481;  16  L.  R.  A.  603;  International 
Trust  Co.  V.  Coal  Co.,  27  Colo.  246; 
83  Am.  St.  Rep.  59;  60  Pac.  621; 
Hooper  v.  Trust  Co.,  81  Md.  559; 
29  L.  R.  A.  262;  32  Atl.  505. 

7  United  States  Investment  Cor- 
poration V.  Portland  Hospital,  40 
Or.  523;  56  L.  R.  A.  627;  64  Pac. 
644;  67  Pac.  194. 

sMaKeel    v.    Hotchkiss,    190    111. 


1566  PAGE    ON    CONTRACTS. 

the  business  as  a  going  concern."  Even  in  case  of  private  cor- 
porations it  seems  to  be  iield  that  expenses  incurred  by  the 
receiver  in  preserving  the  property  may  be  given  priority  over 
pre-existing  liens."  However,  if  certain  employees  who  have 
not  been  paid,  threaten  to  burn  property  of  which  the  receiver 
has  charge,  and  he  thereupon  issues  certificates  for  a  loan  with 
which  he  pays  such  employees,  this  is  not  an  expense  for  pre- 
serving the  property,  in  the  projDer  sense  of  the  term,  since  the 
receiver  should  invoke  the  protection  of  the  law.^^  On  the 
other  hand,  if  the  receiver  is  appointed  at  the  instance  of  a  lien- 
holder,  proper  expenses  of  the  receivership  have  priority  over 
such  lien.^^  So  if  the  lienor  consents  that  the  debts  of  the 
receivership  shall  have  priority  over  his  lien,  effect  will  be 
given  to  such  agreement.^^  Since  contracts  of  the  receiver  of 
a  private  corporation  cannot  affect  the  rights  of  a  prior  lien- 
holder  who  does  not  acquiesce  in  the  receivership,  it  follows 
that  such  creditor  cannot  take  advantage  of  such  contract.  So 
where  a  receiver  took  out  insurance  on  certain  property  and 
collected  such  insurance  when  such  property  was  burned,  it 
was  held  that  a  creditor  who  had  levied  on  such  property  and 
had  never  acquiesced  in  the  receivership  or  authorized  such 
insurance,  cannot  have  the  insurance  money  subjected  to  his 
claim  as  a  prior  lien  thereon.^* 


311;  83  Am.  St.  Rep.  131;  60  N.  E.  Makeel  v.  Hotchkiss,   190   111.   311; 

524;  Lane  v.  Hotel  Co.,  190  Pa.  St.  83  Am.  St.  Rep.  131;  60  N.  E.  524 

230;  42  Atl.  697.  (obiter)  ;  Karn  v.  Iron  Co.,  SG  Va, 

9  Knickerbocker    v.    Mining    Co.,  754;   11  S.  E.  431. 

172  111.  535;   64  Am.  St.  Rep.   54;  "  Rabt  v.  Attrill,  106  N.  Y.  423; 

50  N.   E.  330;    Ellis  v.  Water  Co.,  60  Am.  Rep.  456;  13  N    E.  282. 

86  Tex.  109;  23  S.  W.  858.     Hotel.  12  Shelburn    Coal    Miring    Co.    v. 

Cake    V.    Mohun,    164    U.    S.    311;  Delashmutt,   21    Ind.   App.   257;    52 

Thornton  v.  R.  R.,  94  Ala.  353;   10  N.   E.    102;    Gallagher   v.   Gingrich, 

So.     442.     Manufacturing     corpora-  105  la,  237;  74  N.  W.  763;  Ellis  v. 

tion.     Blythe  v.   Gibbons,   141    Ind.  Water  Co.,  86  Tex.  109;   P3  S.  W. 

332;    35    N.    E.    557;    Grainger    v.  858. 

Paper  Co.,  105  Ky,  683;   49  S.  W.  i3  Reinhard  v.  Investment  Co.,  94 

477.  Fed.  901. 

10 Cake  V.  Mohun,  164  U.  S.  311;  "McLaughlin  v.   Bank,   23   Utah 

Beckwith    v.    Carroll,   66   Ala.    12;  473:  54  L.  R.  A.  343;  03  Pac    5i»a 


CONTRACTS  OF  FIDUCIAKIES.  1567 

§1000.     Receiver  of  quasi-public  corporation. 

The  receiver  of  a  quasi-public  corporation  may,  if  acting 
imder  order  of  a  court  having  jurisdiction,  incur  debts  in  order 
to  carry  on  the  business,  which  debts  may  be  given  priority 
over  prior  liens.  This  principle  is  most  frequently  applied  to 
debts  created  by  receivers  of  railway  companies.^  Thus  acting 
under  order  of  the  court  he  may  issue  certificates,  and  the 
debts  thus  evidenced  may  be  made  a  first  lien  on  the  trust  prop- 
erty displacing  prior  liens  thereon.^  Under  special  circum- 
stances the  expenses  of  completing  a  road  may  be  made  a  lien 
prior  to  a  pre-existing  mortgage.^  The  receiver  should  be 
given  authority  to  issue  certificates  which  displace  prior  liens 
only  in  case  the  lienor  is  a  party  to  the  suit,*  and  is  given 
notice  of  the  application.^  While  this  is  undoubtedly  the  safer 
practice,  it  seems  that  if  those  who  furnish  money  or  property 
to  the  receiver  are  willing  to  take  the  risk  of  the  final  action 
of  the  court,  prior  notice  is  not  necessary;  it  being  suflScient 
if  notice  is  given  before  the  final  order  is  made.^  The  general 
power  of  a  receiver  of  a  railroad  to  bind  the  trust-fund  by  his 
contracts  is  limited  to  expenses  incurred  in  the  ordinary  daily 
administration  of  the  railroad.^  Thus  without  special  author- 
ity from  the  court  he  cannot  bind  the  fund  by  accepting  a 
lease  of  general  offices  for  a  term  of  years  which  extends  beyond 
the  receivership,^  nor  can  he  be  allowed  expenditures  incurred 

iKneeland    v.    Luce,    141    U,    S.  36  X.  E.  896;  Hoover  v.  Ry.,  29  N. 

491;    Morgans,    etc.,    Co.   v.    R.    E.,  J.    Eq.    4;    State   v.    R.   R.,    6   Lea 

137   U.   S.    171;    Kneeland   v   Trust  (Tenn.)    353;   Vermont,   etc.,   R.   R. 

Co.,  136  U.  S.  89;  Union  Trust  Co.  v.  R.  R.,  50  Vt.  500. 

V.  Ry.,  117  U.  S.  434;   Miltenberger  3  First  National   Bank  v.   Ewing, 

V.   Ry.,    106   U.    S.    286;    Barton   v.  103  Fed.   168. 

Barbour,  104  U.  S.  126;  Wallace  v.  4  Metropolitan   Trust   Co.   v.   Ry., 

Loomis,  97  U.  S.  146;  Vilas  v.  Page,  100  Fed.  897. 

106  N.  Y.  439;  13  N.  E.  743.  5  Osborne  v.  Colliery  Co.,   96  Va. 

2  Union  Trust  Co.  v.  Ry.,  117  U.  58;  30  S.  E.  446. 

S.  434;   Swann  v.  Clark,   110  U.  S.  e  Union  Trust  Co.  v.  Ry..  117  U. 

602;  Shaw  v.  R.  R.,  100  U.  S.  605;  S.  434. 

Browning  v.   Kelly,    124   Ala.    645;  7  Cowdrey  v.  R.  R.,  93  U.  S.  352. 

27   So.   391;    Illinois,   etc..   Bank   v.  s  Chicago    Deposit    Vault    Co.    v. 

Ry.,    115    Cal.    285;    47    Pac.    60;  McXulta,  153  U.  S.  554. 
Fletcher  v.  Waring,   137   Ind.   159; 


1568  PAGE    ON    CONTEACTS. 

in  defeating  a  jDroposed  suLsidv,  from  a  city  to  aid  m  con- 
structing a  parallel  road."  The  power  of  a  court  to  authorize 
a  receiver  to  incur  obligations  which  shall  incur  private  liens 
has  been  recognized  as  existing  in  corporations  of  a  quasi-public 
character  other  than  railroads,  such  as  electric  lighting  com- 
panies which  are  under  contract  to  furnish  light  for  the  public,^" 
or  to  telephone  and  telegraph  companies." 

§1001.     Contracts  not  under  order  of  court. 

A  receiver  is  personally  liable  upon  his  contracts  made  in  his 
oflBcial  capacity  unless  he  makes  them  under  order  of  the  court 
appointing  hrm ;  or  by  virtue  of  statutory  authority ;  or  unless 
there  is  in  his  contract  an  express  stipulation  against  personal 
liability.^  Thus  he  is  liable  on  his  notes,  though  issued  for 
the  benefit  of  the  receivership.^  Without  an  order  of  the  court 
the  receiver  cannot  make  his  contracts  a  lien  on  the  trust  fund,' 
though  if  he  is  reimbursed  therefor  his  creditors  might  un- 
doubtedly be  subrogated  to  his  rights.  While  precaution  de- 
mands that  a  receiver  have  authority  of  the  court  for  liabilities 
incurred  and  expenditures  made  by  him  before  he  acts,  no 
technical  rule  requires  confiscation  of  the  receiver's  individual 

9  Cowdrey  v.  R.  R.,  93  IT.  S.  352.      one  is  responsible.     If  the  debt  was 

10  Illinois  Trust  Co.  v.  Ey.,  89  properly  incurred,  he  will  be  al- 
Fed.  235.  lowed  the  amount  paid   out  on  his 

11  Keelyn  v.  Telegraph  Co.,  90  accounting.  Plaintiff's  right  of  ac- 
Fed.  29.  tion,   if   it   has   any,   is   on   the  de- 

1  Vilas  V.  Page,  106  N.  Y.  439;  fendant's  promise.  Like  the  execu- 
13  N.  E,  743.  tor,  the  assignee,  the  guardian  and 

2  Peoria,  etc.,  Works  v.  Hickey,  the  administrator,  he  has  no  re- 
110  la.  276;  80  Am.  St.  Rep.  296;  sponsible  principal  behind  for  whom 
81  N.  W.  473.  The  note  was  he  may  promise,  and  he  alone  is 
given  for  property  that  went  into  liable  on  the  contract."  Peoria, 
the  stock  of  which  receiver  had  con-  etc.,  Works  v.  Hickey,  110  la.  276, 
trol.  The  note  was  signed  "  Jas.  279;  80  Am.  St.  Rep.  296;  81  N. 
Hickey,      Receiver."        Reformation  W.  473. 

was     denied.     In     its    opinion     the  3  Union  Trust  Co.  v.  Midland  Co., 

court  said:     "As  the   receiver  had  117   U.   S.   434;    Cowdrey  v.  R.   R., 

no  authority  to  execute  the  notes  in  93   U.    S.   352;   Lehigh,   etc.,   Co.   v. 

suit,    he    had    no    principal    against  R.  R.,  35  N.  J.  Eq.  426;  Wyckoflf  v. 

whom    plaintiff   might  maintain   an  Scofield,    103    N.    Y.    630;    9    N.    E- 

action,  and,  unless  he  is  bound,  no  498;  Hand  v.  R.  R.,  17  S.  C.  219. 


CONTRACTS  OF   FIDUCIARIES. 


1569 


property  if  he  makes  proper  expenditures  or  incurs  proper 
liabilities  without  an  order  of  the  court.  What  the  court  could 
authorize  in  advance  it  may  subsequently  ratify  if  the  receiver 
and  those  dealing  with  him  are  willing  to  take  such  risk. 
Accordingly  the  receiver  should  be  reimbursed  out  of  the  prop- 
erty for  his  reasonable  expenses  incurred  in  such  receivership  ;* 
and  he  should  be  reimbursed  for  contract  liabilities  incurred 
by  him  on  contract  for  the  benefit  of  the  estate,  if  fair  and 
reasonable.^ 

V.     Contracts  of  Promoters. 

§1002.     Contracts  of  promoters  not  binding  on  corporation. 

There  cannot  be  a  valid  contract  without  two  parties  thereto. 
Accordingly,  a  contract  made  by  the  promoters  of  a  corporation 
before  the  corporation  is  created  cannot  bind  the  corporation.* 
So  a  contract  to  locate  the  jDlace  of  business  of  the  corporation, 


4  Knickerbocker  v.  Mining  Co., 
172  111.  535;  64  Am.  St.  Rep.  54; 
50  N.  E.  330. 

5  Chicago  Deposit  Vault  Co.  v. 
McNulta,  153  U.  S.  554;  Vanderbilt 
V.  R.  R.,  43  N.  J.  Eq.  669;  12  Atl. 
188. 

1  Winters  v.  Mining  Co.,  57  Fed. 
287;  Moore,  etc.,  Co.  v.  Hardware 
Co.,  87  Ala.  206;  13  Am.  St.  Rep. 
23;  6  So.  41;  San  Joaquin,  etc.,  Co. 
V.  West,  94  Cal.  399;  29  Pac.  785; 
Ruby,  etc.,  Co.  v.  Gurley,  17  Colo. 
199;  29  Pac.  668;  New  York,  etc., 
R.  R.  V.  Ketehum,  27  Conn.  170; 
Park  V.  Woodmen  of  America,  181 
111.  214;  54  N.  E.  932;  Western, 
etc.,  Mfg.  Co.  V.  Cousley,  72  111. 
531;  Gent  v.  Ins.  Co.,  107  111.  652; 
Smith  V.  Parker,  148  Ind.  127;  45 
N.  E.  770;  Davis,  etc.,  Co.  v.  Cream- 
ery Co.,  10  Ind.  App.  42;  37  N.  E. 
549;  Carey  v.  Mining  Co.,  81  la. 
674;  47  N.  W.  882;  Tryber  v.  Cold 
99 


Storage  Co.,  67  Kan.  489;  73  Pac. 
83;  Holyoke  Envelope  Co.  v.  En- 
velope Co.,  182  Mass.  171;  65  N.  E. 
54;  Abbott  v.  Hapgood,  150  Mass. 
248;  15  Am.  St.  Rep.  193;  5  L.  R. 
A.  586;  22  N.  E.  907;  Penn  Match 
Co.  v.  Hapgood,  141  Mass.  145;  7 
N.  E.  22;  Durgin  v.  Smith,  — 
Mich.  — ;  94  K  W.  1044;  Battelle 
v.  Pavement  Co.,  37  Minn.  89;  33  N. 
W.  327;  Hill  v.  Gould,  129  Mo.  106; 
30  S.  W.  181;  Davis  v.  Creamery 
Co.,  48  Neb.  471;  67  N.  W.  436; 
Munson  v.  R.  R.,  103  N.  Y.  58;  8 
N.  E.  355;  Tift  v.  Bank,  141  Pa. 
St.  550;  21  Atl.  660;  Weatherford, 
etc.,  Co.  V.  Granger,  86  Te.x.  350; 
40  Am.  St.  Rep.  837;  24  S.  W.  795; 
Bash  V.  Mining  Co.,  7  Wash.  122; 
34  Pac.  462;  Buffington  v.  Bardon, 
80  Wis.  635;  50  N.  W.  776;  Stand- 
ard, etc.,  Co.  V.  Publishing  Co.,  87 
Wis.  127;   58  N.  W.  238. 


1570  PAGE    ON    CONTRACTS. 

made  bj  the  promoters,"  or  to  appoint  a  custodian  of  cor- 
porate funds,^  or  to  pay  a  bonus  for  selling  stock,*  does  not  bind 
the  corporation  of  its  own  force ;  nor  can  such  a  contract  be 
enforced  by  the  corporation.^  So  an  executory  agreement  to 
take  a  certain  amount  of  the  capital  stock,"  or  a  contract  giv- 
ing a  refusal  to  the  corporation  of  all  stock  sold  by  promoters,'^ 
cannot  be  enforced  by  the  corporation,  without  further  action 
on  its  part.  So  a  contract  by  the  creditors  of  a  corporation  to 
take  in  payment  of  their  debts,  notes  to  be  issued  by  a  corpora- 
tion to  be  formed  is  without  consideration.^  If  the  promoter 
makes  a  contract  on  behalf  of  the  corporation  for  the  purchase 
of  certain  property,  and  countermands  it  subsequently ;  and 
accordingly  the  corporation  does  not  ratify  such  contract  and 
does  not  receive  anything  of  value  under  it,  the  corporation 
is  not  liable  for  such  breach." 

§1003.     Effect  of  acceptance  by  corporation. 

An  attempted  contract  made  on  behalf  of  a  corporation  to 
be  formed  subsequently,  by  a  promoter  thereof,  may  be  treated 
as  at  least  equivalent  to  a  continuing  offer,  and  if  not  revoked 
by  the  adversary  party,  and  accepted  by  the  corporation  when 
it  is  formed,  it  becomes  a  valid  contract.^     So  the  corporation's 

2  Park  V.  Woodmen  of  America,  by  the  corporation  even  if  not  in 
181  111.  214;  54  N.  E.  932.  compliance       with       the       statute. 

3  San  Joaquin,  etc.,  Co.  v.  West,  Marysville,  etc.,  Co.  v.  Johnson,  93 
94  Cal.  399;  29  Pac.  785.  Cal.  538;  27  Am.  St.  Rep.  215;  29 

4  Tift  V.  Bank,   141   Pa.  St.   550;  Pac.  126. 

21  Atl.  660;   Weatherford,  etc.,  Co.  7  Ireland  v.  Milling,  etc.,  Co.,   20 

V.  Granger,  86  Tex.  350;  40  Am.  St.  R.  I.  190;  38  L.  R.  A.  299;  38  Atl. 

Rep.  837;  24  S.  W.  795.  116. 

5  Plaquemines,  etc.,  Co.  v.  Buck,  « Providence  Albertype  Co.  v. 
52  N.  J.  Eq.  219;  27  Atl.  1094;  Kent  &  Stanley  Co.,  19  R.  I.  561; 
Ireland   v.  Reduction   Co.,   20  R.   I.  35  Atl.  152. 

190;   38  L.  R.  A.  299;   38  Atl.   116.  »  Bank    v.    Orgill,    —    Miss.    — ; 

A  deed  to  the  "  incorporators  "  doea  34  So.  325. 

not  vest  the  legal  title  in  the  cor-  i  Bridgeport,   etc.,  Co.  v.  Meader, 

poration.     McCandless   v.   Acid   Co.,  72  Fed.   115;    18   C.  C.  A.  451;   af- 

112  Ga.  291;  37  S.  E.  419.  firming,   69   Fed.   225;    15   C.  C.   A. 

0  Dayton,  etc.,   Co.  v.  Coy,   13  O.  694;    Old  Colony  Trust   Co.  v.  Du- 

S.   84.     Contra,  a    contract   of   sub-  buque,  etc.,  Co.,  89  Fed.  794;  Davis 

scription  to  stock  may  be  enforced  v.   Dexter,  etc.,  Co.,   52  Kan.  693; 


CONTRACTS  OF   FIDUCIAEIES.  1571 

taking  an  assignment  of  a  contract  for  the  purchase  of  certain 
realty,  and  issuing  stock  to  those  who  have  contributed  money 
for  the  purchase  of  such  realty  is  an  acceptance  of  the  contract." 
A  corporation  which  is  formed  to  carry  on  the  business  of  a 
partnership  and  which  does  carry  on  such  business  is  pre- 
sumed to  adopt  its  contracts.^  Thus  if  the  partnership  had 
guaranteed  certain  titles  as  part  of  its  business  of  loaning 
money  as  agent,  the  corporation  formed  to  carry  on  such  busi- 
ness cannot  make  any  charge  for  services  in  perfecting  such 
title.^  If  a  firm  incorporates  and  all  the  assets  of  the  firm  are 
turned  over  to  such  corporation,  the  latter  becomes  liable  for 
the  debts  of  the  former.^  Acceptance  may  be  made  by  conduct 
as  well  as  by  words.  Receiving  benefits  under  such  a  contract 
with  knowledge  of  its  terms  is  an  acceptance  of  the  offer  thus 
made,  if  it  is  possible  for  the  corporation  to  choose  between 
receiving  and  returning  such  benefits,*'  such  as  using  a  machine 
bought  before  incorporation  and  making  a  part  payment 
thereon,'^  or  accepting  and  using  the  proceeds  of  a  loan,^  or 
receiving  and  using  material,  labor,  and  taking  possession  of  a 
building  rented  for  the  corporation,^  or  taking  possession  of 
mining  claims  leased  to  it."  Where  property  bought  in  this 
way  is  received  a  mortgage  given  thereon  in  the  name  of  the 
corporation  is  valid  in  equity.^^     So  a  corporation  which  has 

35   Pac.   776;   Red   Wing  Hotel   Co.  Mortgage   Co.,   83   Fed.   796;    28    C. 

V.  Friedrieh,  26  Minn.  112;   IN.  W.  C.  A.  88. 

827;    Pitts    v.    Mercantile    Co.,    75  s  Andres  v.  Morgan,  62  O.  S.  236 ; 

Mo.  221;   Seymour  v.  Cemetery  As-  78  Am.  St.  Rep.  710;  56  N.  E.  875. 

sociation,  144  N.  Y.  333;   26  L.  R.  6  Huron,  etc.,   Co.  v.  Kittleson,  4 

A.    859;    39    N.    E.    365;    Oakes   v.  S.  D.  520;  57  N.  W.  233. 

Water  Co.,  143  N.  Y.  430;  26  L.  R.  7  Bridgeport,  etc.,   Co.  v.   Meader, 

A.  544;    38  N.  E.  461;    Ratlibun   v.  72   Fed.   115;    18   C.   C.  A.   451;    af- 

Snow,   123  N.  Y.  343;   10  L.   R.  A.  firming,   69   Fed.  225;    15   C.   C.   A. 

355;    25    N.    E.    379;    Schreyer    v.  694. 

Mills  Co.,  29  Or.  1;  43  Pac.  719.  »  Schreyer  v.  Mills  Co.,  29  Or.  1; 

2Esper  V.  Miller,  131  Mich.  334;  43  Pac.  719. 

91  N.  W.  613.  9Kaeppler  v.  Creamery  Co.,  12  S. 

3  North    American,    etc.,     Co.    v.  D.  483;  81  N.  W.  907. 

Mortgage   Co.,   83   Fed.   796;    28   C.  loWall  v.  Smelting  Co.,  20  Utah 

C.  A.  88.  474;   59  Pac.  399. 

4  North     American,     etc.,     Co.     v.  n  Bridgeport,  etc.,  Co.  v.  Meader, 

72  Fed.  115;  18  C.  C.  A.  451. 


1572  PAGE    ON    CONTRACTS. 

received  the  benefit  of  a  mortgage  cannot  avoid  it  on  the  ground 
that  it  was  executed  before  one  half  of  the  capital  stock  had 
been  paid  in,  contrary  to  the  requirements  of  the  statute/^  If 
the  promoters,  who  made  the  contract  for  the  corporation,  be- 
come stockholders,  directors,  and  officers,  the  corporation  is 
charged  with  their  knowledge."  Thus  a  president  of  a  cor- 
poration,^* or  a  president  and  general  manager  may  ratify  a 
contract  made  by  himself  for  the  corporation  before  it  wag 
organized. ^^  A  transaction  of  this  sort  is,  properly  speaking, 
a  new  contract,  made  by  acceptance  of  an  outstanding  offer.^* 
Thus  delivery  of  a  subscription  to  a  promoter  is  in  effect  deliv- 
ery to  the  corporation  when  subsequently  formed.^^  Accord- 
ingly since  this  is  in  effect  an  offer  until  accepted  by  the  cor- 
poration, the  adversary  party  may  withdraw  such  offer  at  any 
time  before  the  corporation  accepts  it.^^  Some  courts,  how- 
ever,  speak  of  this  as  a  ratification  of  the  contract.^^  Authori' 
ties  differ  as  to  whether  a  corporation  can  be  charged  with 
expenses  necessary  to  its  very  existence,  such  as  attorney  fees  for 
incorporating,  irrespective  of  its  own  agreement  to  pay  therefor 
after  incorporation.-*'     Even   if  the  services  necessary  to  the 

12  Wood  V.  Water  Works  Co.,  44      Co.  v.  Davis,  40  Minn.  110;   12  Am. 
Fed.  146;   12  L.  R.  A.  168.  St.  Eep.  701;  3  L.  R.  A.  796;  41  J^. 

13  Rogers  v.  Land  Co.,  134  X.  Y.      W.  1026. 

197;    32    N.    E.    27;    Kaeppler    v.  is  Consolidated    Water-Power    Co. 

Creamery  Co.,  12  S.  D.  483;   81  N.  v.   Nash,    109   Wis.  490;    85   N.   W. 

W.  907.  485. 

1*  Kaeppler  v.   Creamery  Co.,    12  i9  Davis     v.     Montgomery,     etc., 

S.  D.  483;  81  N.  W.  907.  Co.    (Ala.),  8   So.  496;    Stanton  v. 

isOakes  v.  W^ater  Co.,  143  N.  Y.  New  York,  etc.,  Co.,  59  Conn.  272; 

430;    26    L.   R.   A.    544;    38   N.   E.  21  Am.  St.  Rep.   110;   22  Atl.  300; 

461.     Contra,   the    directors    cannot  Bruner  v.  Brown,  139  Ind.  600;   38 

accept  such  a  contract  so  as  to  bind  N.   E.   318;    Oakes   v.   Cattaraugus, 

the  corporation.     Tift  v.  Bank,  141  etc.,  Co.,   143  N.  Y.   430;   26  L.  R. 

Pa.  St.  550;  21  Atl.  660.  A.  544;   38  N.  E.  461;   Seymour  v. 

leReichwald    x.    Hotel,     106    111.  Cemetery,  144  N.  Y.  333;  26  L.  R.  A. 

439;   McArthur  v.  Printing  Co.,  48  859;   39  N.  E.  365;  Pittsburg,  etc., 

Minn.  319;  31  Am,  St.  Rep.  653;  51  Co.   v.  Quintrell,  91   Tenn.   693;    20 

N.  W.  216;   Richardson  v.  Graham,  S.  W.  248, 

45  W^  Va.  134;  30  S,  E.  92;  Pratt  20  That  it  is  liable.     Freeman  Im- 

V.  Match  Co,,  89  Wis.  406;  62  N.  W.  plement  Co,  v,  Osborn,  14  Colo,  App. 

84.  488:  60  Pac,  730;  Farmers'   Bank  v. 

17  Minneapolis  Threshing  Machine  Smith,    105    Ky.    816;    88    Am.    St. 


COXTKACTS  OF   FIDUCIARIES.  1573 

formation  of  the  corporation  are  rendered  by  a  promoter,^^  and 
even  if  be  becomes  an  officer  and  director, ^^  he  can  recover  for 
special  services  outside  of  his  line  of  duty  as  such  director. 
A  note  given  by  a  corporation  for  services  rendered  in  procur- 
ing its  incorporation  is  enforceable  as  on  sufficient  considera- 
tion.^^ In  some  jurisdictions  it  is  held  that  a  corporation  can- 
not even  adopt  such  contract  or  accept  such  offer."*  The  Massa- 
chusetts cases  are  not  properly  in  point.  Pennsylvania,  etc., 
Co.  V.  Hapgood,"^  was  a  suit  by  the  corporation  against  parties 
who  had  broken  a  contract  with  promoters  of  the  corporation ; 
which  suit  failed  because  there  was  "  no  allegation  of  accept- 
ance "  on  the  part  of  the  corporation.  Abbott  v.  Hapgood^' 
was  a  suit  on  the  same  contract  by  promoters.  The  observation 
as  to  the  power  of  the  corporation  to  adopt  was  pure  dictum. 

§1004.     Personal  liability  of  promoters. 

Promoters  are  liable  personally  upon  their  contracts,^  and 
this  liability  is  said  in  some  cases  to  be  in  the  nature  of  partner- 
ship liability.^  The  promoters  are  not  relieved  of  liability  on 
their  contracts  because  the  corporation  adopts  them,  unless 
there  was  an  agreement  to  that  effect.^     Thus  where  one  in 

Eep.  341;  49  S.  W,  810;  Taussig  v.  E.   22.     "The  corporation  after  its 

R.  R.,  166  Mo.  28;  89  Am.  St.  Rep.  organization  cannot  become  a  party 

674;   65  S.  W.  969.     That  it  is  not  to  the  contract  even  by  adoption  or 

liable.     Weatherford,     etc.,     Co.     v.  ratification   of  it,"   Abbott   v.  Hap- 

Granger,  86   Tex.   350;    40  Am.   St.  good,    150  Mass.  248,  252;    15  Am. 

Rep.  837;  24  S.  W.  795;  reversing,  St.  Rep.  193;  5  L.  R.  A.  586;  22  N. 

23  S.  W.  425,  E.  907 ;  citing  Kelner  v.  Baxter,  L. 

21  Farmers',  Bank  v.  Smith,  105  R.  2  C.  P.  174;  Gunn  v.  Ins.  Co.,  12 
Ky.  816;  88  Am.  St.  Rep.  341;  49  C.  B.  (X.  S.)  694;  Melhado  v.  Ry., 
S.  W.  810.  L.   R.   9   C.  P.  503;   In  re  Empress 

22  Taussig  V.  R.  R.,   166   Mo.  28;  Engineering  Co.,  16  Ch.  D.  125. 
89  Am.  St.  Rep.  674;  65  S.  W.  969.  25  141  Mass.  145;  7  N.  E.  22. 

23  Smith  V.  Water  Works,  73  26  150  Mass.  248 ;  15  Am.  St.  Rep. 
Conn.  626;  48  Atl.  754.  193;  5  L.  R.  A.  586;  22  K  E.  907. 

24  North  Sidney,  etc.,  Co.  v.  Hig-  1  Mosier  v.  Parry,  60  O.  S.  388; 
gins  (P.  C.)    (1899).  A.  C.  263;  Ab-  54  N.  E.  364. 

bott  V.  Hapgood,  150  Mass.  248;   15  2  jjyland    v.    Hollinger,    117    Fed. 

Am.  St.  Rep.  193;  5  L.  R.  A.  586;  216:  54  C.  C.  A.  248. 

22   X.    E.   907;    Pennsylvania,   etc.,  s  Roberts,  etc.,  Mfg.  Co.  v.  Schlick, 

Co.  V.  Hapgood,  141  Mass.  145;  7  X.  62  Minn.  332;  64  X.  W.  826;  Queen 


1574  PAGE    ON    CONTKACTS. 

business  orders  goods,  and  the  business  is  then  incorporated; 
and  the  goods  are  actually  delivered  to  and  received  by  the 
corporation,  the  person  originally  ordering  the  goods  may  be 
held  liable.*  If  the  agreement  releases  the  promoters  and  pur- 
ports to  bind  the  corporation,  the  promoters  are  not  liable, 
but  the  corporation  which  they  organize  is  liable,  as  where  a 
contract  with  partners  provided  that  they  were  to  incorporate 
and  that  the  corporation  should  be  liable  on  the  contract.^  The 
promoters  may  be  reimbursed  by  the  corporation  to  the  extent 
of  their  legitimate  expenses  on  behalf  of  the  corporation.* 
Thus  promoters  of  a  college,  who  agree  to  pay  interest  on  a 
subscription  to  obtain  it  for  the  college  may  recover  the  sums 
thus  advanced.'^ 

City,  etc.,  Co.  v.  Crawford,  127  Mo.  etc.,  Co.,  106  Ga.  84;  31  S.  E.  809. 
356;  30  S.  W.  163.  6  Hayward   v.   Leeson,   176  Mass, 

4  Henderson  Woolen  Mills  v.  Ed-  310;  49  L.  R.  A.  725;  57  N.  E.  656. 
wards.  84  Mo.  App.  448,  7  Morton  v.  College,  100  Ky.  28)^^ 

5  Chicago,  etc.,  Co.  v.  Talbotton,  35  L.  R.  A.  275;  38  S.  W.  1. 


VOLUNTARY  ASSOCIATIONS. 


1575 


CHAPTER  XLVI. 

VOLUNTARY  ASSOCIATIONS. 

§1005.     Contracts  of  voluntary  associations. 

A  voluntary  association  consists  of  a  number  of  natural  per- 
sons, united  together  without  being  incorporated,  for  some  pur- 
pose other  than  carrying  on  a  profession  or  business,  or  making 
profits.^  It  usually  takes  the  form  of  internal  organization  of  a 
corporation  not  for  profit,  and  exists  for  the  same  purposes  as 
such  corporations."  The  mere  fact  of  membership  in  a  voluntary 
association  does  not  of  itself  render  each  member  liable  for  con- 
tracts entered  into  by  such  association.^  Thus  an  association  of 
pilots^  having  no  power  to  contract  for  pilot  fees  is  not  bound 
by  a  contract  of  a  member  on  their  behalf.*  Subscribers  to  a 
law  and  order  league's  guaranty  fund  are  not  personally  liable 
to  an  attorney  retained  by  its  officers  even  if  they  know  and 
approve  of  such  employment.^  A  member  is  not  liable  for 
debts  incurred  before  he  became  a  member.*'     In  order  to  hold 


1  Grand  Grove  v.  Garibaldi  Grove,  gates  of  individuals,  called,  for  eon- 
130  Cal.  116;  80  Am.  St.  Rep.  80;  venience,  like  partnerships,  by  a 
62  Pac.  486;  Lewis  v.  Tilton,  64  la.  common  name."  Grand  Grove  v. 
220;  52  Am.  Rep.  436;  19  N.  W.  Garibaldi  Grove,  130  Cal.  116,  119; 
911;  Brown  v.  Stoerkel,  74  Mich.  80  Am.  St.  Rep.  80;  62  Pac.  486. 
269;  3  L.  R.  A.  430;  41  N.  W.  921;  3  Clark  v.  O'Rourke,  111  Mich. 
Burt  v.  Lathrop,  52  Mich.  106;  17  108;  66  Am.  St.  Rep.  389;  69  N.  W. 
N.  W.  716;  Abels  v.  McKeen,  18  N.  147;  McFadden  v.  Leeka,  48  0.  S. 
J.  Eq.  462;  Ash  v.  Guie,  97  Pa.  St.  513;  28  N.  E.  874. 

493;   39  Am.  Rep.  818;  Kalbitzer  v.  4  The   City   of  Reading,   103   Fed. 

Goodhue,  52  W.  Va.  435;   44  S.  E.  696. 

264.  5  McCabe  v.  Goodfellow,  133  N.  Y. 

2  "  Associations  of   this   character  89;  17  L.  R.  A,  204;  30  N.  E.  728. 
are  not  bodies  politic  or  corporate;  6  Hornberger  v.  Orchard,  39  Neb. 
nor  are  they  recognized  by  the  law  639 ;  58  N.  W.  425. 

as  persons.     They  are  mere   aggre- 


1576  PAGE    ON    CONTRACTS. 

a  member  for  a  contract  of  such  an  association  it  must  be 
shown  that  he  either  authorized  it  or  ratified  it.  He  may 
authorize  such  contract  in  three  ways:  First,  he  may  join  the 
association  understanding  that  a  part  of  its  objects  was  making 
such  contracts.^  Thus  a  member  of  a  polo  team  who  joins 
understanding  that  certain  expenses  were  to  be  incurred  in 
which  he  should  share  is  liable  thereon.^  Second,  he  may 
specifically  authorize  the  contract  in  question.^  Third,  his 
authority  may  be  shown  by  the  fact  that  he  was  instrumental 
in  making  the  contract.^**  Thus  persons  who  sign  as  directors,^^ 
or  as  treasurer,^^  or  allow  their  names  to  be  used  as  officers,^^ 
or  themselves  make  the  contract  as  a  committee,^*  bind  them- 
selves personally.  Thus  subscribers  to  a  fund  as  a  bonus  to 
induce  a  factory  to  locate  in  their  town  are  not  liable  for  the 
contracts  of  an  alleged  association  with  no  definite  members, 
formed  at  a  citizens'  meeting,  to  secure  such  location.^^  A  mem- 
ber may  ratify  contracts  expressly,  or  impliedly  as  by  accepting 
benefits  which  he  knows  or  should  know  were  obtained  by  such 
contract.  Such  an  association  cannot  go  out  of  existence,  with 
contracts  outstanding.^^ 

The  members  of  the  association  may  enforce  a  contract  en- 


7  Lawler  v.  Murphy,  58  Conn.  294;  is  Murray  v.  Walker,  83  la.  202  ; 
8  L.  R.  A.  113;  20  Atl.  457;  Mc-  48  N.  W,  1075.  Contra,  by  statute, 
Kenney  v.  Bowie,  94  Me.  397 ;  47  members  of  a  G.  A.  R.  post  are  not 
Atl.  918;  Clark  v.  O'Rourke,  111  personally  liable  though  they  make 
Mich.  108;  66  Am.  St.  Rep.  389;  69  the  contracts  in  person  for  the  post. 
N.  W.  147.  Pain  v.  Sample,  158  Pa.  St.  428;  27 

8  Bennett    v.    Lathrop,    71    Conn.  Atl.  1107. 

613;   71  Am.  St.  Rep.  222;   42  Atl.  i^McKinnie  v.  Postles   (Del.),  54 

634.  Atl.  798. 

9  Winona  Lumber  Co.  v.  Church,  is  Cheney  v.  Goodwin,  88  Me.  563 ; 
6  S.  D.  498;  62  N.  W.  107.  34  Atl.  420. 

10  Comfort  v.  Graham,  87  la.  295;  is  Camden,  etc..  Co.  v.  Guarantors, 
54  N.  W.  242;  Kierstead  v.  Bennett,  etc.,  59  N.  J.  L.  328;  35  Atl.  796; 
93  Me."  328;  45  Atl.  42;  Fredendall  Roper  v.  Burke,  83  Ala.  193;  30  So. 
V.  Taylor,  23  Wis.  538 ;  99  Am.  Dec.  439 ;  McFadden  v.  Murphy.  149 
203.  Mass.  341;  21  N.  E.  868;  Lafond  v. 

iiPelton  V.  Place,  71  Vt.  430;  46  Deems,  81  N.  Y.  507;  Strickland  v. 

Atl.  63.  Prichard,  37  Vt.  324. 

12  Kierstead    v.    Bennett,    93    Me. 
328 ;  45  Atl.  42. 


VOLUNTARY  ASSOCIATIONS.  1577 

tered  into  with  the  association  as  made  for  their  benefit/^  So 
where  a  superior  labor  organization  took  away  the  charter  of 
an  inferior  association,  the  latter  can  sue  on  causes  of  action 
accruing  in  its  favor/^  If  a  member  of  the  association  is 
liable  in  one  of  these  ways,  he  cannot  avoid  liability  because 
the  contracting  party  did  not  know  his  name  or  identity/^ 

A  difficulty  in  enforcing  a  contract  against  a  voluntary  asso- 
ciation is  found  in  the  fact  that  the  association  can  not  be 
sued  by  name,  but  the  individual  members  in  the  jurisdiction 
of  the  court  must  be  made  parties,"''  unless  by  statute  the 
association  may  be  sued  by  its  name.  The  statutory  right  to 
sue  an  association  by  name  does  not  abrogate  the  Common  Law 
right  to  sue  the  individual  members,^^  nor  does  it  give  a  member 
a  right  to  sue  the  association.^^  Members  of  an  association  who 
are  jointly  liable  cannot  sue  the  association  on  a  policy.^^  So 
the  adjuster  of  a  voluntary  association  of  dredgers  who  divides 
the  work  cannot  sue  the  association  because  he  does  not  get  his 
share  of  their  earnings."* 

A  note  by  a  fluctuating  society,  signed  individually  by  trus- 
tees, is  considered  in  equity  as  a  charge  on  their  property,"^ 
and  an  association  though  it  has  no  power  to  borrow,  may 
pledge  a  claim  against  an  insolvent  trust  company  for  its  de- 
posits.^® 

17  Senour  v.  Maschinot  (Ky.),  31  21  Jenkinson  v.  Wysner,  125  Mich. 
S.  W.  481;  Local  Union,  etc.,  v.  Bar-      89;  83  N.  W.  1012. 

rett,  19  R.  I.  663;  36  Atl.  5;  Acker-  22  Huth   v.  Humboldt   Stanim,   61 

mann  v.  Schuetzen  Verein  (Tex.  Civ.  Conn.  227;  23  Atl.  1084. 

App.),  60  S.  W.  366.  23  Perry  v.   Cobb,  88  Me.  435;  49 

18  Wicks  V.   Monihan,    130   N.    Y.  L.  R.  A.  389;  34  Atl.  278. 

232;  14  L.  R.  A.  243;  29  N.  E.  139.  2*  Potter  v.   Dredging  Co.,   59   N. 

laLawler    v.    Murphy,    58    Conn.      J.  Eq.  422;  46  Atl.  537. 
294;  8  L.  R.  A.  113;  20  Atl.  457.  25  Society  of   Shakers  v.   Watson, 

aoAUnut    v.    Lancaster,    76    Fed.      68  Fed.  730;  15  C.  C.  A.  632. 
131.  26  Commonwealth    v.    Trust    Co., 

161  Mass.  550;  37  N.  E.  757. 


1578  PAGE    ON    CONTKACTS. 


CHAPTER  XLVII. 


THE  GOVERNMENT. 
§1006.     Contracts  of  the  United  States. 

The  United  States  is  a  government  of  limited  powers,  pos- 
sessing only  such  as  are  expressly  or  impliedly  conferred  upon 
it  by  the  Constitution  of  the  United  States.  It  has  full  power 
to  contract  when  such  contract  is  a  suitable  and  appropriate 
method  of  carrying  such  powers  into  execution.^  The  United 
States  is  liable  for  interfering  with  the  work  of  a  contractor,'* 
or  for  arbitrary  and  unreasonable  conduct  of  its  engineers,^  but 
not  for  damages  for  a  delay  not  due  the  United  States.^  The 
United  States  may  be  liable  on  an  implied  contract  for  office 
rent,^  or  for  use  and  occupation.®  Under  claim  of  implied 
contract  the  United  States  cannot  be  held  for  infringement  of 
a  patent,^  or  for  damage  on  an  elevator  in  postoffice   build- 

1  Langford  v.  United  States,  95  e  Clifford  v.  United  States,  34  Ct. 
Fed.  933 ;  United  States  v.  Utz,  80      CI.  223. 

Fed.  848;  Starin  v.  United  States,  7  Schillinger  v.  United  States,  155 
31  Ct.  CI.  65;  Myerle  v.  United  U.  S.  163 ;  Russell  v.  United  States, 
States,  31  Ct.  CI.  105;  Haliday  v.  35  Ct.  CI.  154.  No  implied  con- 
United  States,  33  Ct.  CI.  453;  Greg-  tract  to  pay  for  a  patent  arises 
ory  V.  United  States,  33  Ct.  CI.  434 ;  'where  patentor  introduces  it  into 
Salisbury  v.  United  States,  28  Ct.  public  service,  and  pattern,  working 
CI.  52;  Salisbury  y.  United  States,  drawings  and  machines  were  paid 
28  Ct.  CI.  404.  for     by    the     government.     Gill     v. 

2  Kelly  V.  United  States,  31  Ct.  CI.  United  States,  160  U.  S.  426. 
361.  Though    where    the    patent    is    used 

3  Collins  V.  United  States,  35  Ct.  with  the  understanding  that  pay- 
Cl.  122.  ment  is  to  be  made  therefor  an  im- 

4  United  States  v.  Bliss,  172  U.  S.  plied  contract  exists.  United  States 
321;  Churchyard  v.  United  States,  v.  Mfg.  Co.,  1.56  U.  S.  552;  Talbert' 
100  Fed.  920.  v.  United  States,  25  Ct.  CI.  141.     A 

5  Swigett  v.  United  States,  78  Fed.  local  postmaster  cannot  be  enjoined 
456.  from  using  a  patented  machine  fur- 


THE  GOVEKXMENT.  151(9 

ing,^  or  for  fees  voluntarily  overpaid  in  by  a  consul-general,"  nor 
for  attorneys'  fees  where  the  suit  was  brought  in  the  name 
of  the  United  States  but  the  attorneys  looked  to  their  clients 
for  their  fees/" 

The  chief  peculiarity  of  United  States  contracts  is  the  prac- 
tical difficulty  in  enforcing  them  against  the  government. 
From  the  very  nature  of  a  government,  having  no  political 
superior,  enforcing  payment  of  its  debts  is  war,  actual  or 
threatened.  Permission  to  sue  may  be  given  by  the  state, 
either  by  general  or  by  special  statutes.  The  United  States  has 
established  the  Court  of  Claims  and  thus  given  permission  to 
be  sued  therein  on  contracts,^^  but  not  in  a  state  court.^"  The 
Court  of  Claims  can  also  entertain  actions  against  the  United 
States  in  quasi-contracts ;  such  as  actions  to  recover  payments 
illegally  exacted  by  duress  or  compulsion  of  law.^^  The  statute 
creating  the  Court  of  Claims  does  not,  however,  change  the 
nature  of  the  liability  of  the  United  States.  Payments  made 
voluntarily  cannot  be  recovered  in  this  court.^*  If  the  claim 
is  not  on  contract  the  sole  remedy  is  to  appeal  to  Congress.^^ 

The  United  States  in  giving  permission  to  be  sued  may  im- 
pose such  conditions  as  it  sees  fit.  In  consenting  to  be  sued, 
it  may  restrict  the  comjDensation  of  attorneys;^®  or  provide 
against  any  compensation  ;^'^  or  it  may  require  claims  to  be  paid 
direct  to  claimants  and  not  to  attorneys.^^     It  may  provide  for 

nished  by  the  government  as  this  is  v.  Ellsworth,  101  U.  S.  170;  United 

really  an  action  against  the  United  States  v.  Lawson,  101  U.  S.  164. 

States.     International,    etc.,    Co.    v.  i*  United    States    v.    Edmonston, 

Bruce,  194  U.  S.  601    (decided  by  a  181  U.  S.  500;  United  States  v.  Wil- 

divided   court).  son,  168  U.  S.  273. 

8  Bigby  V.  United  States,  103  Fed.  is  German  Bank  v.  United  States, 
597.  148  U.  S.  573. 

9  United  States  v.  Wilson,  168  U.  is  Ball  v.  Halsell,  161  U.  S.  72. 

S.  273.  i'^  A  statute  that  no  part  of  money 

10  Coleman  v.  United  States,  152  repaid  to  a  state  in  refunding  direct 
U.  S.  96.  taxes  shall  go  to  an  attorney  binds 

11  See  Court  of  Claims  eases  in  the  state  and  the  agent  or  attorney 
this  section.  of  the  state.     Wailes  v.  Smith,  157 

12  Stanley  v.  Schwalby,  162  U.  S.  U.  S.  271. 

255.  18  Spalding   v.   Vilas,    161    U.    S. 

13  Swift      Company      v.      United      483. 
States,  111  U.  S.  22;  United  States 


1580  PAGE    ON    CONTRACTS. 

priority  of  payment  of  its  own  debts/*'  and  may  set  off  damages 
for  delay  against  the  contract  compensation.-''  The  legislative 
department  may  also  provide  directly  for  enforcing  contracts. 
An  appropriation  made  by  Congress  for  paying  a  claim  is 
final.^^  In  the  absence  of  special  restrictions  the  ordinary  rules 
of  contract  law,  such  as  the  rules  of  commercial  paper,^"  apply 
to  contracts  with  the  United  States ;  and  Common-Law  rules  of 
evidence  apply  to  actions  thereon. ^^ 

The  United  States  has  also  provided  that  contractors  cannot 
assign  claims  against  the  United  States,  and  the  allowance  of 
such  assignment  by  a  disbursing  officer  gives  it  no  validity.^* 
This  prohibition  does  not  apply  to  claims  against  officers,  as  to 
a  claim  against  a  post-office  inspector  for  money  seized  by  him 
but  not  then  turned  over  to  the  postmaster-general,"^  or  drafts 
of  deputies  accepted  by  a  marshal,"*^  nor  does  it  apply  to  a 
pledge  of  a  crop  of  sugar  including  the  bounty,^^  nor  to  a  trans- 
fer by  one  partner  to  another  of  all  the  partnership  property 
including  such  claim,'^  nor  to  an  assignment  of  a  claim  against 
the  United  States  to  a  receiver  ordered  by  a  court  of  chancery,^® 
nor  to  the  purchase  of  a  claim  sold  in  bankruptcy.^"  This  stat- 
ute is  solely  for  the  protection  of  the  government,  and  if  the 
government  sees  fit  to  recognize  the   assignments^,   or  if  the 

19  State  V.  Foster,  5  Wyo.  199;  29  cock   v.   United    States,   27    Ct.    CI. 

L.  R.  A.  226;  38  Pac.  926.  185;  Harris  v.  United  States,  27  Ct. 

2oSatterlee  v.  United   States,    30  CI.  177. 

Ct.  CI.  31.  25  United   States  v.   Ferguson,   78 

21  United  States  v.  Louisville,  169  Fed.  103. 

U.   S.   249.     Where   Xew   York   bor-  26  Douglas  v.   Wallace,   161   U.   S. 

rowed  from  her  canal  fund  to  raise  346. 

troops,  a  U.  S.  statute  to  repay  the  27  Barrow    v.    Milliken,    74    Fed. 

"costs,  charges  and  expenses  prop-  612;  20  C.  C  A.  559. 

erly   incurred"   includes    such   loan  28jernegan  v.  Osborn,   155  Mass. 

and   interest   paid   thereon.     United  207;  39  N.  E.  520. 

States  V.  New  York.  160  U.  S.  598.  29  PHee  v.  Forrest,  173  U.  S.  410; 

22  Wells   Fargo   &   Co.   v.   United  Redfield  v.  United  States,  27  Ct.  CI. 
States.  45  Fed.  337.  393;   Price  v.  Forrest.  54  N.  J.  Eq. 

23  Allen  V.  United   States,   28   Ct.  669;  35  Atl.  1075;  Forrest  v.  Price, 
CI.  141.  52  N.  J.  Eq.  16;  29  Atl.  215. 

24  Greenville     Savings     Bank     v.  so  McKay  v.  United  States,  27  Ct. 
Lawrence,  76  Fed.  545;  22  C.  C.  A.  CI.  422. 

646;   U.  S.  Rev.  St.  §  3477;   Hitch-  3i  Hobbs    v.    McLean,    117    U.    S. 


THE  GOVERNMENT.  1581 

question  arises  solely  between  assignor  and  assignee,^^  the  as- 
signment is  valid. 

So  in  claims  where  specified  forms  of  assignment  are  required 
informality  in  assignment,  though  "  absolutely  void  "  by  stat- 
ute, does  not  invalidate  it  as  between  the  parties,  but  the  as- 
signee may  enforce  his  lien  after  payment  by  the  government 
to  the  assignor.^^ 

§1007.     Contracts  of  a  State  of  the  "Cnion. 

Each  of  the  states  of  the  Union  is  a  government  possessing 
general  and  unlimited  powers,  except  such  as  are  expressly  or 
impliedly  denied  to  it  by  the  Constitution  of  the  United  States. 
Within  the  sphere  of  its  powers  it  may  make  such  contracts  as 
it  wishes.^  A  state  contract  possesses  the  usual  incidents  of 
contracts.  Thus  a  contract  between  the  governor  and  a  pri- 
vate partnership  for  public  printing  is  assignable  and  the  as- 
signee may  mandamus  college  officials  for  "  copy,"  and  sureties 
on  that  bond  are  not  released  by  such  assignment.^  It  is  held, 
however,  that  a  state  is  not  liable  for  interest  unless  it  has  agreed 
to  pay  it.^  So  the  state  may  employ  an  agent  to  prosecute  a 
claim  against  the  United  States.* 

The  people  of  the  state,  being  the  ultimate  sovereign  power 
therein,  may  in  the  state  constitution  restrict  the  contractual 
power  of  the  various   departments   of  the   state.     Thus  they 

567;  Goodman  v.  Niblack,  102  U.  S.  33  York  v.  Conde,   147  N.  Y.  486; 

556;  Lopez  v.  United  States,  24  Ct.  42  N.  E.  193;  U.  S.  R.  S.  §  3477. 
CI.  84;  2  L.  R.  A.  571;  Dulaney  v.  i  Poole  v.  Fleeger,  11  Pet.   (U.  S.) 

Sciidder,  94  Fed.  6;  36  C.  C.  A.  52;  185;  Green  v.  Riddle,  8  Wheat.   (U. 

Thayer  v.   Pressey,   175  Mass.   225;  S.)   1;  Kaufmann  v.  Cooper,  46  Neb. 

56  N.  E.  5.  644 ;   65  N.  W.   796 ;   Van  Dusen  v. 

32  Dexter  v.  Meigs,  47  K  J.  Eq.  State,  11  S.  D.  318;  77  N.  W.  201. 
488;   21  Atl.   114;   In  re  Hone,  153  2  Leader  Printing  Co.  v,  Lowry,  9 

N.  Y.  522;  47  N.  E.  798.     The  stat-  Okl.  89;  59  Pac.  242. 
ute  does  not  apply  where  the  work  3  Carr  v.  State,  127  Ind.  204;   22 

was  finished  by  the  creditors  of  the  Am.  St.  Rep.  624;   11  L.  R.  A.  370; 

contractor,  and  one  of  the  creditors  26  N.  E.  778. 

secured  all  the  money  and  applied  it  *  Davis     v.     Massachusetts,      164 

to   his   claim;    other    creditors   gar-  Mass.  241;   30  L.  R.  A.  743;  41  N. 

nisheed.     Eewell   v.    Surety  Co.,   80  E.  292. 
Miss.  782;  28  So.  755. 


1582  PAGE    ON    CONTKACTS. 

may  limit  the  amount  of  the  debt  to  be  contracted  for  specified 
purposes,^  or  may  require  advertisement  for  bids,  in  the  absence 
of  which  no  liability  even  in  qumitum  meruit  will  arise.**  A 
constitutional  provision  that  bids  must  be  let  to  the  lowest 
responsible  bidder  does  not  refer  to  incidental  matters,  such  as 
printing  proceedings  of  the  general  assembly  from  day  to  day, 
for  which  advertising  is  impracticable/  A  limitation  on  the 
amount  of  indebtedness  does  not  apply  to  a  warrant  payable 
only  out  of  a  specific  fund.^  So  the  people  may  by  the  consti- 
tution forbid  all  contracts  except  those  made  in  pursuance  of 
some  statute.'' 

The  peculiarity  of  the  contracts  of  a  state,  like  those  of  the 
United  States,  is  that  they  cannot  be  enforced  against  the  state 
unless  the  state  consents  thereto.^'*  A  branch  of  the  state  gov- 
ernment, such  as  a  state  university,^^  cannot  be  sued  except  by 
statutory  authority.^^  The  rule  that  a  state  cannot  be  sued 
without  its  own  consent  cannot  be  evaded  by  bringing  a  suit 
in  the  nature  of  mandamus  against  a  state  officer  the  effect  of 
which  will  be  to  enforce  a  contract  against  the  state.^^  Thus 
an  architect  submitting  plans  for  state  capitol  cannot  have  spe- 
cific performance,  as  the  state  is  the  real  party  defendant.^^ 
But  while  mandamus  will  not  lie  without  statutory  authority 

5  In  re  Contracting  of  State  Debt,  n  Oklahoma,  e'^c,  College  v.  Wil- 

21  Colo.  399;  41  Pac.  1110.  lis,  6  Okla.  593;   40  I,  R.  A.  677; 

6Mulnix  V.  Ins.  Co.,  23  Colo.  71;  52  Pac.  921. 
33  L.  R.  A.  827 ;  46  Pac.  123.  12  University  of  Illinois  v.  Bruner, 

7  Stone  V.  Publishing  Co.  (Ky.),  175  111.  307;  51  N.  E.  687;  affirming 
55  S.  W.  725.  66    111.    App.    665;     distinguishing, 

8  Allen  V.  Grimes,   9   Wash.  424;  Thomas  v.  University,  71  111.  3J0. 
37  Pac.  662.  is  Fitts  v.  McGhee,  172  U.  S.  51^; 

9  Locke  V.  State,  140  N.  Y.  480;  In  re  Ayers,  123  U.  S  433;  Hagood 
35  K  E.  1076;  Stanton  v.  State,  5  v.  Southern,  117  U.  S.  52;  Mills 
S.  D.  515;  59  N.  W.  738.  Publishing  Co.   v.   Larrabee,   78   la. 

10  Denning  V.  State,  123  Cal.  316;  97;  42  N.  W.  593;  People  v.  Du- 
55  Pac.  1000;  Hope  v.  Board  of  laney,  96  111.  503;  Board  v.  Gannt, 
Liquidation,  41  La.  Ann.  535;  6  So.  76  Va.  455;  Miller  v.  Board,  etc., 
819;  Coxe  V.  State,  144  N.  Y.  396;  46  W.  Va.  192;  76  Am.  St.  Rep.  811; 
39  N.  E.  400;  Sayre  v.  State.  123  N.  32  S.  E.  1007. 

Y.  291;  25  N.  E.  163;  Northwestern.  i4  Cope  v.   Hastings,   183   Pff.   St. 

etc..  Bank  v.  State,  18  Wash.  73;  42      300;  38  Atl.  717. 
L.  R.  A.  33;  50  Pac.  586. 


THE  GOVERNMENT.  1583 

against  state  officials  in  cases  in  which  the  state  is  really  a  party 
as  an  indirect  means  of  enforcing  a  state  contract  it  will  lie  to 
compel  a  board  to  let  a  contract  which  it  has  awarded,  if  the 
proceedings  have  been  regular,  and  the  letting  is  a  mere  min- 
isterial act/^ 

The  legislature  may  ratify  specific  contracts.^®  Where  shrub- 
bery and  trees  were  planted  on  the  grounds  of  a  state  college 
under  an  unauthorized  contract  with  the  board  of  regents,  the 
state  was  held  liable  for  a  reasonable  value  therefor  where  with- 
out ratifying  it  the  state  passively  enjoyed  the  benefit  of  such 
contract/^  A  contract  which  cannot  be  enforced  at  any  time 
or  by  any  means  is  of  course  an  anomaly.  At  the  same  time 
these  are  genuine  contracts,  though  unenforceable  without  the 
consent  of  the  state.  This  may  be  seen  from  the  following 
considerations:  (1)  The  principle  that  a  state  cannot  be  sued 
is  not  especially  applicable  to  state  contracts.  It  also  prevents 
recovery  in  quasi-contract.  So  a  county  which  overpaid  its 
taxes  cannot  sue  the  state  for  them^^  unless  by  statutory  author- 
ity/^ The  same  principle  prevents  recovery  in  tort.  (2)  The 
state  may  grant  permission  to  bring  suit  against  it.  This  per- 
mission does  not  create  the  liability  sought  to  be  enforced."" 

Statutory  permission  to  sue  includes  breaches  of  contract 
occurring  before  the  passage  of  such  statute,^^  and  implies  that 
the  case  will  be  governed  by  the  usual  rules  of  law."  Thus 
statutes  of  limitation  will  apply,  and  the  court  will  not  recom- 
mend the  payment  of  what  would  otherwise  be  a  just  claim.^^ 
Power  given  to  a  court  to  allow  "  legal  rights  "  against  the  state 

15  state  V.  Toole,  26  Mont.  22 ;  91  County,  106  Mich.  662 ;  64  N.  W. 
Am.  St.  Rep.  386;  55  L.  R.  A.  644;       570. 

66    Pac.   496    (but   relief   was   here  i9  \\Tiite  v.  Smith,   117   Ala.  232 

refused  as  bids  had  not  been  adver-  23  So.  525. 

tised  for  properly).  20  Denning  v.  State,  123  Cal.  316 

16  Brown  v.  State,  14  S.  D.  219;  55  Pac.  1000. 

84  N.  W.  801 ;  Geo.  H.  Fuller  Dock  21  Chapman  v.  State,  104  Cal.  690 

Co.   V.   State,   6   Ida.   315;    55    Pac.  43  Am.  St.  Rep.  158;  38  Pac.  457. 

857.  22  Harris  v.  State,  9  S.  D.  453 ;  69 

17  Jewell  Nursery  Co.  v.  State.  5  N.  W.  825. 

S.  D.  623;  59  N.  W.  1025.  23  Cowles  v.  State,  115  N.  C.  173; 

18  Attorney      General      v.      Bay      20  S.  E.  384. 


1584  PAGE    ON    CONTEACTS. 

does  not  include  mere  moral  obligations  neither  legal  nor  equit- 
able."* Permission  to  sue  on  a  contract  is  not  ratification  there- 
of.'^ A  statutory  right  to  sue  a  state  can  be  revoked  unless  rights 
have  vested  thereunder."*^  If  a  state  gives  its  consent  to  be  sued 
it  may  impose  such  conditions  as  it  pleases,  as  that  the  action 
can  be  brought  only  in  a  state  court."^  So  if  the  state  gives  a 
certain  remedy  against  itself  by  statute  only  that  remedy  can 
be  had."*  So  permission  to  sue  on  certain  classes  of  claims  does 
not  confer  the  right  to  sue  on  other  classes.  An  injury  suffered 
by  a  fall  of  seats  used  to  view  horse  racing  on  the  grounds 
of  a  fair  under  state  control  cannot  be  treated  as  a  breach  of 
implied  contract  with  the  state. "^  (3)  Under  the  Constitution 
of  the  United  States^"  the  judicial  power  of  the  United  States 
extends  to  controversies  between  two  or  more  states  and  be- 
tween a  state  and  citizens  of  another  state.  The  supreme  court 
of  the  United  States  has  original  jurisdiction  of  cases  in  which 
a  state  shall  be  a  party.  While  the  convention  that  drafted  the 
Constitution  seems  to  have  believed  that  this  grant  of  power 
did  not  give  to  an  individual  the  right  to  sue  a  state,  the  Su- 
preme Court  decided  that  it  did,  and  the  action  of  assumpsit 
was  allowed.^^  In  consequence  of  that  decision  the  eleventh 
amendment  to  the  Constitution  of  the  United  States  was 
adopted,  which  provides  that  "  the  judicial  power  of  the  United 
States  shall  not  be  construed  to  extend  to  any  suit  in  law  or 
equity  commenced   or  prosecuted   against  one   of  the   United 

.24  Western,    etc.,    Ry.    v.     State,  2g  Maury    v.    Commonwealth,    92 

(Ga.),  14  L.  R.  A.  438.  Va.  310;  23  S.  E.  757. 

25  Carolina     National     Bank     v.  27  Smith    v.    Reeves,    178    U.    S, 

State,  60  S.  C.  465 ;  85  Am.  St.  Rep.  436. 

865;    38    S.    E.    629.      (A    superin-  28  Cornwall  v.  Commonwealth,  82 
tendent    of     the     penitentiary    had  Va.  644;  3  Am.  St.  Rep.  121. 
taken  notes  for  convict  hire,  and  en-  29  Melvin   v.   State,   121    Cal.    16; 
dorsed  them   to  the  bank.     It  was  53  Pac.  416.     (In  this  case  the  stat- 
held  that  as  he  had  no  authority  to  ute    specifically    forbade    an    appro- 
take  them,  the  state  was  not  liable  priation  of  money  for  horse-races.) 
on   his   indorsement,   or   for   money  Citing  Gibbons  v.  United  States,  8 
had  and  received.)    Nichols  v.  State,  Wall.  (U.  S.)  269. 
11    Tex.   Civ.    App.   327;    32   S.   W.  so  Art.  III.,  §  2. 
452     (defective    advertisement    for  si  chishclm    v,    Georgia,    2    Dall. 
bids).  (c;.  15.)    41sl. 


THE  GOVERNMENT. 


1585 


States  by  citizens  of  another  state  or  by  citizens  or  subjects  of 
a  foreign  state."  While  this  restricts  the  jurisdiction  of  the 
Supreme  Court  in  cases  brought  by  a  natural  person,  it  leaves 
it  unaffected  in  suits  brought  against  a  state  by  the  United 
States  or  another  state  of  the  Union.  The  Supreme  Court 
of  the  United  States  may  therefore  enforce  contracts  made 
between  two  states  of  the  Union.^^  So  if  a  natural  person  buys 
bonds  issued  by  one  state  and  donates  them  absolutely  to  an- 
other state,  the  latter  state  may  sue  the  former  on  them,  even 
if  the  purpose  of  the  assignment  was  to  enable  the  state  to 
maintain  such  action,  as  long  as  it  was  for  the  benefit  of  the 
state.^^  However,  if  the  assignment  of  bonds  to  the  state  is 
not  absolute,  but  merely  for  the  purpose  of  enabling  it  to  sue 
for  the  benefit  of  the  real  owners  of  the  bonds  the  state  cannot 
maintain  the  action.^*  So  the  United  States  may  sue  a  state  in 
the  action  of  debt  on  bonds  issued  by  the  latter,^^  or  it  may  sue 
a  state  for  an  accounting  and  money.^®  (4)  While  an  individual 
cannot  maintain  an  action  against  a  state  on  a  contract  made 
with  it,  he  can  assert  rights  which  he  has  acquired  by  virtue  of 
such  contracts ;  such  as  a  contract  for  taxing  a  railroad  in  a 
certain  manner.^^  So  in  an  action  to  which  the  state  is  not  a 
party,  rights  existing  by  virtue  of  a  contract  made  by  a  state 
may  be  asserted  and  enforced,  as  under  a  contract  between  two 
states.^^ 

32  Virginia  v.  Tennessee,  148  U.  S.  se  United  States  v.  Michigan,  190 
503.  U.  S.  379. 

33  South    Dakota   v.   North    Caro-  37  Stearns  v.  Minnesota,  179  U.  S. 
lina,  192  U.  S.  286.  223. 

34  New    Hampshire    v.    Louisiana,  38  Poole  v.  Fleegler,   11   Pet.    (U. 
108  U.  S.  76.  S.)    185;  Green  v.  Biddle,  8  Wheat. 

35  United    States  v.   North   Caro-  (U.  S.)   1. 
lina,   136  U.   S.  211. 


100 


1586  PAGE    ON    CONTKACTS. 


CHAPTER  XLVm. 


PUBLIC  CORPORATIONS. 

§1008.     Nature  and  classes  of  public  corporations. 

A  public  corporation  is  a  corporation  formed  by  the  state 
for  purposes  of  local  government  and  administration.'^  Public 
corporations  are  divided  into  municipal  corporations  and  the 
organizations  of  less  extensive  pov^ers,  such  as  counties,  schopl 
districts  and  the  like  known  as'  quasi  corporations.  Municipal 
corporations  are  those  public  corporations  which  have  extensive 
powers  of  local  government,  including  the  power  of  making 
local  laws.  Quasi  corporations  have  limited  powers  of  govern- 
ment or  administration,  and  lack  the  power  of  making  local 
laws.^  The  difference  in  powers  between  municipal  corpora- 
tions and  quasi  corporations  often  leads  to  important  distinc- 
tions in  the  validity  of  their  contracts.  The  difference  in  name 
is  unimportant.  A  county  may  be  included  imder  the  term 
*'  municipal  or  other  corporation."^ 

§1009.     Notice  of  powers  of  public  corporations. 

All  persons  dealing  with  a  public  corporation  are  bound  to 
take  notice  of  the  statutes  creating  it  and  conferring  power 
upon  it,  and  the  mandatory  statutes  which  prescribe  the  man- 
ner in  which  it  may  exercise  its  power.'     Thus  where  bonds 

iThe  Mayor  of  Nashville  v.  Ray,  i  The  Floyd  Acceptances,  7  Wall. 

19  Wall.    (U.  S.)    468;   Eichards  v.  666;  Marsh  v.  Fulton  Co.,  10  Wall. 

Clarksburg,  30  W.  Va.  491 ;  4  S.  E.  676 ;      German     Savings     Bank     v. 

774.  Franklin  Co.,   128   U.   S.  526;   Bar- 

2Schweiss  v.  Court,  23  Nev.  226;  nett  v.  Dennison,  145  U.  S.  135;  Nes- 

34  L.  R.  A.  602;  45  Pac.  289.  bitt  v.  Riverside,  etc.,  District,  144 

3  Central,  etc.,  Co.  v.  Wright,  164  U.   S.  610;    National    Bank,   etc.,  v. 

U.  S.  327.     So  may  a  school  district.  Granada,    54    Fed.     100;     Coffin    v. 

Curry  v.  District  Township,   62   la.  Kearney  Co..  57  Fed.  137;  Manhat- 

102;    17  N.  W.   191.  tan  Co.  v.  Ironwood,   74  Fed,  535; 


PUBLIC   CORPORATIONS. 


1587 


were  issued  under  a  statute  which  fixed  the  levy  at  ten  mills 
per  annum  for  thirteen  years,  a  sum  insufficient  to  pay  the 
bonds  in  full,  the  court  said  that  all  bondholders  "  were  bound 
to  take  notice  of  the  extent  of  the  taxing  district,  and  of  the 
value  of  the  property  therein,  and  with  those  facts  before  them 
they  acted  at  their  peril  as  far  as  the  property  owners  in  this 
special  taxing  district  are  concerned.""  So  bonds  of  a  school 
district  are  void  if  for  purpose  for  which  it  can  not  borrow 
money.  ^ 

§1010.     Power  of  public  corporations  to  make  contracts. 

Where  there  is  no  specific  statutory  provision  it  is  usually 
said  that  a  public  corporation  has  an  implied  power  to  make 
contracts  necessary  to  enable  it  to  exercise  the  powers  and  per- 
form the  duties  which  are  conferred  or  imposed  upon  it  by 
law.^  It  has  even  been  held  that  if  no  provision  therefor  is 
made  by  statute  a  city  has  implied  power  to  contract  for  light- 


20  C.  C.  A.  642 ;  Sutro  v.  Dunn,  74 
Cal.  593;  16  Pac.  505;  Smith,  etc., 
Co.  V.  Denver,  20  Colo.  84;  36  Pac. 
844;  Law  v.  People,  87  111.  385; 
McPherson  v.  Foster,  43  la.  48;  22 
Am.  Rep.  215;  Cedar  Rapids  Water 
Co.  V.  Cedar  Rapids,  117  la.  250; 
90  N.  W.  746 ;  Murphy  v.  Louisville, 
9  Bush  (Ky.)  189;  Osgood  v.  Bos- 
ton, 165  Mass.  281;  43  N.  E.  108; 
State  V.  Ry.  Co.,  80  Minn.  108;  50 
L.  R.  A.  656;  83  N.  W.  32;  Raton 
Waterworks  Co.  v.  Raton,  9  N.  M. 
70;  49  Pac.  898;  reversed  on  an- 
other point,  174  U.  S.  360;  Commis- 
sioners of  Wilkes  Co.  v.  Call,  123 
N.  C.  308;  44  L.  R.  A.  252;  31 
S.  E.  481;  McPeeters  v.  Blanken- 
ship,  123  N.  C.  651;  31  S.  E.  876; 
Roberts  v.  Fargo,  10  N.  D.  230; 
86  N.  W.  726;  People's  Bank  v. 
School  District,  3  N.  D.  496;  28  L. 
R.  A.  642;  57  N.  W.  787;'  Wellston 
v.  Morgan,  65  O.  S.  219;  62  N.  E. 
127;  Diggs  v.  Lobsitz,  4  Okla.  232; 


43  Pac.  1069;  Ecroyd  v.  Coggeshall, 
21  R.  L  1;  79  Am.  St.  Rep.  741;  41 
Atl.  260;  Livingston  v.  School  Dis- 
trict, 9  S.  D.  345;  69  N.  W.  15. 

2  Miller  v.  Hixson,  64  0.  S.  39, 
56;  59  N.  E.  749. 

3  Board  of  Education,  etc.,  v. 
Blodgett,  155  111.  441;  46  Am.  St. 
Rep.  348;  31  L.  R.  A.  70;  40  N.  E. 
1025. 

1  French  v.  Paving  Co.,  181  U.  S. 
324;  Alabama,  etc.,  Co.  v.  Reed,  124 
Ala.  253;  82  Am.  St.  Rep.  166;  27 
So.  19;  McBean  v.  Fresno,  112  Cal. 
159;  .53  Am.  St.  Rep.  191;  31  L.  R. 
A.  794;  44  Pac.  358;  Oakland  v. 
Water  Front  Co.,  118  Cal.  160;  50 
Pac.  277;  Heilbron  v.  Cuthbert,  96 
Ga.  312;  23  S.  E.  206;  Agnew  v. 
Brail,  124  111.  312;  16  N.  E.  230; 
Board,  etc.,  of  Perry  Co.  v.  Gardner, 
1.55  Ind.  165;  57  N.  E.  908;  Mills 
Co.  V.  R.  R.  Co.,  47  la.  66;  Mitchell 
V.  Negaunee.  113  Mich.  359;  67  Am. 
St.  Rep.  468;   38  L.  R.  A.   157;   71 


1588  PAGE    ON    CONTKACTS. 

ing^  or  for  water.^  These  cases,  however,  represent  a  rather 
extreme  view.  Power  of  a  municipal  corporation  is  usually  to 
be  deduced,  expressly  or  impliedly,  from  statutory  provisions. 

§1011.     Effect  of  statute  on  power  to  contract. 

The  powers  of  public  corporations  are  now  provided  for  in 
most  states  by  statute.  Where  such  statutes  are  drawn  with 
such  detail  that  it  is  evidently  the  intention  of  the  legislature 
to  make  complete  provision  for  the  power  of  cities  to  make 
contracts,  the  question  of  the  existence  of  such  power  turns 
upon  the  construction  of  such  statutes.^  Where  the  statutes 
completely  provide  for  what  purposes  and  in  what  manner  a 
public  corporation  may  contract,  no  implied  power  to  contract 
exists.^ 
§1012.     Effect  of  statute  on  power  to  make  implied  contracts. 

A  public  corporation  may  incur  liability  on  implied  contract 
if  it  could  make  an  express  contract  of  the  same  nature,  and  if 
the  statute  does  not  prescribe  the  exclusive  method  of  making 
such  contracts.^     Thus  where  a  city  causes  part  of  the  elec- 

N.  W.  646 ;  State  v.  Martin,  27  Neb.  69    Am.    St.    Rep.    304 ;    53    N.    E. 

441;   43  N.  W.  244;   Oakley  v.  At-  118;   Wellston  v.  Morgan,  65  O.   S. 

lantic  City,  63  N.  J.  L.  127;  44  Atl.  219;  62  N.  E.  127;  Markley  v.  Min- 

651;  Hoffman  v.  Pawnee  County,  3  eral    City,    58    O.    S.    430;    65   Am. 

Okla.  325;  41  Pac.  566;  Renting  v.  St.  Rep.  776;  51  N,  E.  28;  Gas  and 

Titusville,   175  Pa.  St.  512;  34  Atl.  Water  Co.  v.  Elyria,  57  O.  S.  374; 

916;    Jones    v,    Camden,    44    S.    C.  49    N.    E.    335;    Citizens'    Bank    v. 

319;  51  Am.  St.  Rep.  819;  23  S.  E.  Terrell,  78  Tex.  450;  14  S.  W.  1003; 

141;    Richmond,    etc.,    Co.   v.    West  Winchester  v.  Redmond,  93  Va.  711 ; 

Point,   94  Va.   668;    27   S.   E.   460;  57    Am.    St.    Rep.    822;    25    S.    E. 

Sheafe   v.    Seattle,    18    Wash.    298;  1001. 

51  Pac.  385;  Tiede  v.  Schneidt,  105  2  Wellston   v.    Morgan,    65    O.    S. 

Wis.  470;   81  N.  W.   826.  219;  62  N.  E.  127;  Gas  and  Water 

2  Lake  Charles,  etc.,  Co.  v.  Lake  Co.  v.  Elyria,  57  O.  S.  374;  49  N.  E. 
Charles,    106    La.   65;    30   So.   289;  335. 

Fawcett  v.  Mt.  Airy,  134  N.  C.  125;  1  Austin  v.  Bartholomew,  107  Fed. 

45  S.  E.  1029.  349;   46  C.  C.  A.  327;   Brush,  etc., 

3  Lake  Charles,  etc.,  Co.  v.  Lake  Co.  v.  Montgomery,  114  Ala.  433;  2) 
Charles,  106  La,  65;  30  So.  289.  So.  960;   Buck  v.  Eureka,   124  Cal. 

1  Jacksonville,  etc.,  Co.  V.  Jackson-  61;    56    Pac.    612;    New   Athens   v. 

ville,  36  Fla.  229;   51  Am.  St.  Rep.  Thomas,    '82     111.     259;     Frankfort 

24;    30  L.  R.  A.   .540;    18   So.   677;  Bridge  Co.  v.  Frankfort,  18  B.  Mon. 

Danville  v.  Water  Co.,  178  111.  299;  (Ky.)  41. 


PUBLIC  COKPOEATIONS.  1589 

i 

tricity  furiiisLeJ,  to  bo  used  in  lighting  public  buildings,  and 
refuseki  to  designate  the  lights  to  be  removed  and  notifies  the 
company  Bot  to  remove  i»ny,  it  is  liable  for  the  electricity  fur- 
nished in  excess  of  the  contract  amount.^  So  it  may  be  liable 
on  an  implied  contract  for  attorneys'  fees.^  If  the  statute  pre- 
scribes the  method  of  making  a  contract,  a  city  cannot  be  held 
liable  on  an  implied  contract,  not  entered  into  according  to 
statute.*  If  there  is  no  power  to  make  an  express  contract 
there  can  be  no  implied  contract.^  Thus  where  by  statute 
there  can  be  no  contract  between  the  city  and  an  ofiicial,  a 
pound  master  can  have  no  claim  on  an  implied  contract  for 
premises  furnished  as  a  pound.^  Thus  in  the  absence  of  stat- 
ute a  county  is  not  liable  to  an  acquitted  defendant  for  costs  in 
a  criminal  case,'^  nor  to  compensate  attorneys  for  defendant  on 
appeal,^  nor  for  physician's  services  at  an  inquest,^  nor  for 
compensation  for  a  sheriff's  posse/*'  So  as  he  is  not  a  peace 
oflScer  a  deputy  marshal  can  have  no  fees  for  arrest  of  va- 
grants under  the  statute/^  The  statute  may  impose  a  liabil- 
ity on  the  county  for  services  rendered  by  a  member  of  a 
board  of  health  of  a  village  to  the  poor  during  an  epidemic  of 
smallpox/^     A  limitation  on  the  amount  of  indebtedness  ap- 

2  Brush,  etc.,  Co.  v.  Montgomery,  N.  W.  693.     Nor  is  it  liable  for  de- 
114  Ala.  433;  21  So.  960.  fendant's    attorney    fees    unless    the 

3  Buck  y.  Eureka,  124  Cal.  61;  56  statute  is  complied  with.     De  Long 
Pac.  612.  V.  Muskegon  County,  111  Mich.  568; 

4Zottman    v.    San    Francisco,    20  69   JST.   W.    1115. 

Cal.  96;  81  Am.  Dec.  96;  Detroit  v.  »  Galveston    County    v.    Ducie,    91 

Robinson,   38    Mich.    108;    Wellston  Tex.  665;  45  S.  W.  798. 

V.  Morgan,  65  O.  S.  219;   62  N.  E.  lo  Sears    v.    Gallatin    County,    20 

127.  Mont.  462;  40  L.  R.  A.  405;  52  Pac. 

5  Berka    v.    Woodward,    125    Cal.  204,    citing    Anderson    v.    Jefferson 

119;   73  Am.  St.  Rep.  31;  45  L.  R.  County,    25    O.    S.    13;    Chapin    v. 

A.    420;    57    Pac.    777;    Spitzer    v.  Ferry,   3   Wash.   386;    15   L.    R.    A. 

Blanchard,  82  Mich.  234;  46  N.  W.  116;   28  Pac.  754;  Randies  v.  Wan- 

400.  kesha  County.  96  Wis.  629;    71   X. 

6Macy  V.  Duluth.  68  Minn.  452;  W.  1034. 

71  N.  W.  687.  iiTwinim    v.   Lucas   County.    104 

7  v;»<>^  V,  Multonomah  County,  31  la.  231;  73  N.  W.  473. 

or.  134;  49  Pac.  730.  12  St.   John's   v.   Clinton   County, 

8  State  V.  Young,  104  la.  730;  74      111  Mich.  609;   70  K  W,  131. 


1590  PAGE    ON    CONTEACTS. 

plies  to  implied  contracts  as  well  as  to  express  ones.*^  It  doe* 
not  apply,  however,  to  quasi-contract  as  distinguished  from  gen- 
uine implied  contracts.  Thus  it  does  not  apply  to  the  return 
of  money  paid  for  illegal  tax  certificates  which  under  the  ordi- 
nance in  force  was  never  the  property  of  the  city/* 

§1013.     Construction  of  statutory  powers. 

Power  given  by  statute,  either  expressly  or  impliedly,  carries 
with  it  power  to  make  contracts  necessary  and  proper  to  carry 
such  power  into  execution.^  Thus  power  to  provide  for  supply- 
ing water  and  lighting  includes  power  to  make  contracts  for 
that  purpose.^  Power  to  provide  a  water  supply  confers  power 
to  erect  a  plant  to  supply  water.^  Power  to  abate  nuisances 
includes  power  to  contract  for  the  removal  of  garbage  to  a  place 
without  the  city  limits.*  Power  to  build  a  sewer  includes 
power  to  make  a  contract  therefor.^  Power  to  keep  streets  in 
order  includes  power  to  release  a  railroad  company  from  its 
liability  to  keep  up  a  bridge.  The  city  may  agree  to  maintain 
such  bridge  itself.''  So  power  to  grant  franchises  "  upon  such 
terms  and  conditions  as  council  may  prescribe  "  includes  power 
to  take  a  bond  to  insure  the  prompt  installment  and  completion 
of  the  plant. ^  So  power  to  contract  includes  power  to  impose 
reasonable   restrictions.^     Power   to   construct  waterworks   in- 

13  Hedges    v.    Dixon    County,    150  Sehneidt,   105   Wis.  470;    81   N.  W. 

U.  S.  182;   Windsor  v.  Des  Moines,  826. 

110  ia.  175;  81  N.  W.  476;   Board,  2  Reed  v.  Anoka,  85  Minn.  294;  88 

etc,  ci,  D  County  v.  Gillett,  9  Okla.  N.  W.  981. 

5&<^;  ^0  Pac.  277.  3  Pawcett  v.  Mt.  Airy,   134  N.  C. 

'4  f'holpa    V.    Taconia,    15    Wash.  125;   45  S.  E.  1029. 

$'6";  4<o  Pf^c.  400.  *  Kelley  v.  Broadwell    (Neb.),  92 

y-  French  v.  Paving  Co.,  181  U.  S.  N.  W.  643. 

$24;    McBean   v.    Fresno,    112    Cal.  5  Jones  v.  Holzapfel,  11  Okla.  405; 

159;  53  An'.  St.  Rep.  191;  31  L.  R.  68  Pac.  511. 

A.  794;  44  Pac.  358;  Board,  etc.,  of  6  Hicks  v.  Ry.,  —  Va.  — ;  45  S.  E. 

Perry  Coun(,y  v.  Gardner,   155  Ind.  888. 

165;  57  K.  E.  908;  Reed  v.  Anoka,  7  Salem  v.  Anson,  40  Or.  339;  91 

85  Minn.  ^iH;  88  N.  W.  981;  Salem  Am.  St.  Rep.  485;  56  L.  R.  A.  169; 

V.   Anson,  40   Or.   339;    91   Am.   St.  67  Pac.  190. 

Rep.  485;  56  L.  R.  A.  169;  67  Pac.  « Hamilton    v.    Gambell,    31    Or. 

190;   Renting  v.  Titusville,  175  Pa.  328;    48   Pac,   433. 
St.    512;     34    Atl.    916;     Tiede    v. 


PUBLIC   CORPORATION'S.  1591 

eludes  power  to  repay  to  private  persons  the  amount  spent  by 
them  in  constructing  pipes  to  connect  with  the  city  waterworks.* 
A  grant  of  a  specified  jDower  does  not  confer  analogous 
powers  not  granted.  Power  to  erect  cisterns  for  fire  purposes 
does  not  confer  power  to  erect  a  system  of  general  water- 
works/" and  power  to  construct  waterworks  does  not  confer 
power  to  engage  in  a  general  plumbing  business.^^  Under  the 
power  to  tax,  a  public  corporation  cannot  contract  to  pay,  for 
discovering  unassessed  and  untaxed  personalty,  one-half  the 
taxes  thus  added.^"  So  power  to  rent  market  stalls  does  not 
include  power  to  hire  an  auctioneer.^^  Power  to  maintain 
roads  is  not  power  to  employ  an  inspector,^*  and  power  to  sell 
bonds  does  not  include  power  to  compromise  a  claim  for  breach 
of  a  void  executory  agreement  to  sell  bonds.^^  A  county  cannot 
contract  for  medical  services  to  cure  a  pauper  who  is  an  habit- 
ual drunkard,^^  and  a  board  of  public  works  can  employ  a  pipe- 
man  only  by  contract  at  will.^^ 

§1014.     Examples  of  valid  contracts. 

Since  the  j)ower  of  a  public  corporation  to  bind  itself  by  con- 
tract depends  upon  the  nature  and  extent  of  the  powers  con- 
ferred upon  it  by  statute,  no  general  absolute  rules  can  be  laid 
down  as  to  the  contractual  powers  which  are  necessarily  pos- 
sessed by  every  public  corporation.^     A  slight  difference  in  the 

9  State  V.  St.  Louis,   169  Mo.  31;  is  Ft.  Edward  v.  Fish,  156  X.  Y. 

68  S.  W.  900.  363;    50    N.    E.    973;    affirming    86 

loSavidge    v.    Spring    Lake,    112  Hun   (X.  Y.)   548. 

Mich.  91 ;  70  X.  W.  425.  i6  Putney  Bros.  Co.  v.  Milwaukee 

11  Keen  v.  Waycross,  101  Ga.  588;  Co.,  108  Wis.  554;  84  N.  W.  822. 

29  S.  E.  42.  17  Frankfort  v.  Brawner,  100  Ky. 

izGrannis  v.  Blue  Earth  Co.,  81  166,  172;  37  S.  W.  950;  rehearing 
Minn.  55;  83  X.  W.  495.  An  indi-  denied,  38  S.  W.  497. 
vidual  taxpayer  may  sue  to  annul  i "  Upon  the  general  subject  of 
an  illegal  contract  for  collecting  the  liability  of  a  municipal  corpora- 
back  taxes.  Burness  v.  Multnomah  tion,  the  authorities  are  a  tangled 
County,  37  Or.  460;  60  Pac.  1005.  web  of  contradictions  and  it  is  diffi- 

13  Xorfolk  V.  Pollard,  94  Va.  279 ;  cult  to  assert  any  proposition  with. 
26  S.  E.  832.  respect  to   the  same  for  which   ad- 

14  Turner  v.  Fulton  County,  109  judications  on  both  sides  may  not 
Ga.  633;  34  S.  E.  1024.  be    cited."     Argenti    v.    San    Fran- 


1592 


PAGE    OIT    CONTBACTS. 


■wording  of  two  statutes  may  lead  to  material  differences  in  the 
power  of  making  contracts  possessed  by  the  corporations  acting 
respectively  under  such  statutes.  All  that  can  be  done  is  to 
give  typical  illustrations  of  the  contractual  powers  usually  pos- 
sessed by  public  corporations.  A  public  corporation  usually 
has  power  to  construct  and  maintain  streets,  and  hence  may 
contract  for  the  construction  and  repair"  and  lighting^  of  its 
streets ;  for  sidewalks*  and  shade  trees.^  It  may  contract  for  a 
water  supply,^  and  an  underground  railway.^ 

Under  a  power  to  provide  a  system  of  sewers  a  public  corpora- 
tion may  buy  a  right  of  way  for  a  sewer  f  may  contract  for  dis- 
posing of  sewage  outside  of  the  city  limits  f  and  has  power  to 
contract  with  a  rendering  establishment  situated  outside  the 
city." 


Cisco,  16  Cal,  255,  283;  quoted  in 
Cincinnati  v.  Cameron,  33  0.  S. 
336,  374. 

2  Frencli  v.  Paving  Co.,  181  IT.  S. 
324;  affirming  Barber,  etc.,  Co.  v. 
French,  158  Mo.  534;  54  L.  R.  A. 
492;  58  S.  W.  934;  Renting  v. 
Titusville,  175  Pa.  St.  512;  34  Atl. 
916.  The  contract  for  construction 
may  provide  that  the  contractor 
shall  repair  the  street  as  far  as 
necessary  by  reason  of  poor  -work  or 
defective  material  in  consideration 
of  the  original  assessment.  City 
of  Kansas  City  v.  Hanson,  60  Kan. 
833;  58  Pac.  474;  citing  Cole  v. 
People,  161  111.  16;  43  N.  E.  607; 
Allen  V.  Davenport,  107  la.  90;  77 
N.  W.  532;  Barber  Asphalt  Paving 
Co.  V.  Ullman,  137  Mo.  543;  38 
S.  W.  458;  Robertson  v.  Omaha,  55 
Keb.  718;  44  L.  R.  A.  534;  76  X. 
W.  442 ;  Wilson  v.  Trenton,  60  N.  J. 
L.  394;  38  Atl.  635. 

3  Seitzinger  v.  Tamaqua,  187  Pa. 
St.   539;    41   Atl.   454. 

4  Jones  V.  City  of  Camden,  44  S. 
C.  319;  51  Am.  St.  Rep.  819;  23 
S.  E.  141. 


5  Heller  v.  Garden  City,  58  Kan» 
263;  48  Pac.  841. 

6  Cincinnati  ex  rel.  v.  Cincinnati, 
11  Ohio  C.  C.  309;  1  Ohio  C.  D.  372. 
A  county  may  contract  for  a  water 
supply  for  an  unincorporated  town. 
Agua  Pura  Co.  v.  Las  Vegas,  10 
N.  M.  6;  60  Pac.  208. 

7  Sun,  etc..  Association  v.  The 
Mayor,  etc.,  of  New  York,  152  N.  Y. 
257;  37  L.  R.  A.  788;  46  N.  E.  499 
(by  special  statute) . 

sCoit  V.  Grand  Rapids,  115  Mich» 
493;  73  N.  W.  811,  (Even  if  the 
price  to  be  paid  is  said  to  be  an  ex- 
emption of  the  land  through  which, 
the  right  of  way  runs  from  the 
sewer  assessment;  for  though  a  con- 
tract to  exempt  from  assessment 
was  void,  the  real  purpose  of  the 
contract  was  to  pay  a  sum  equal  to 
the  assessment  for  the  right  of  way, 
which  was  lawful.)  Citing  Turner 
v.  Cruzen,  70  la.  202;  30  N.  W. 
483. 

oMcBean  v.  Fresno,  112  Cal.  159; 
53  Am.  St.  Rep.  191;  31  L.  R.  A. 
794;  44  Pac.  358. 

loTiede  v.  Schneidt,  105  Wis. 
470;  81  N.  W.  826. 


PUBLIC  CORPORATIONS.  1593 

Power  to  buy  land  includes  power  to  create  a  debt  and  to 
issue  non-negotiable  but  not  negotiable  bonds/^  A  city  may 
agree  to  buy  a  lot  for  a  public  library  to  obtain  a  donation 
therefor/^ 

A  city  may  acquire  a  building  for  public  purposes  and  dis- 
pose by  lease  of  any  part  thereof  not  immediately  necessary  for 
public  use/^  So  a  city  may  erect  a  lighting  plant,  and  furnish 
private  light  as  well  as  public,  if  it  is  a  suitable  method  of 
operating/*  A  city  and  county  owning  a  building  in  common 
as  city  hall  and  court  house  may  make  a  joint  contract  for  light- 
ing it.^^ 

A  municipal  corporation  has  power  to  compromise  claims  in 
dispute  between  it  and  other  parties,  such  as  it  could  have 
originally  incurred/®  A  city  having  power  to  place  the  cost 
of  improvements  on  the  general  duplicate,  or  to  make  special 
assessments,  may  compromise  with  abutting  property  owners  if 
the  special  fund  proves  insufficient/^ 

As  a  power  specifically  given  carries  with  it  power  to  make 
contracts  necessary  to  carry  such  given  power  into  effect,  power 
to  construct  a  lighting  plant  includes  power  to  buy  an  engine 

"Witter  V.  Board,  etc.,    112  la.  Mich.  359;  67  Am.  St.  Rep.  468;  38 

380;    83    N.    W,    1041;    Richmond,  L.  R.  A.  157;   71  N.  W.  646;   com- 

etc,  Co.  V.  West  Point,  94  Va.  668;  pare  Biddle  v.  Riverton,  58  N.  J.  L. 

27   S.   E.   460;  (citing    (The  Mayor,  289;  33  Atl.  279. 
etc.,  of)   Nashville  v.  Ray,  19  Wall.  is  State    v.    McCardy,    62    Minn. 

(U.   S.)    468;    Ketchum  v.   Buffalo,  509;  64  N.  W.  1133. 
14  N.  Y.  356).  16  Oakland    v.    Water-Front    Co., 

12 Attorney  General  V.  Nashua,  67  118  Cal.   160;    50  Pac.  277;   People 

N.  H.  478;  32  Atl.  852.  v.    Board,    etc.,    of    San    Francisco, 

13  Curtis  V.  Portsmouth,  67  N.  H.  etc.,  27  Cal.  655;  Agnew  v.  Brail, 
506;  39  Atl.  439  (citing  Spaulding  124  111.  312;  16  N.  E.  230;  Grimes 
V.  Lowell,  23  Pick.  (Mass.)  71;  v.  Hamilton  Co.,  37  la.  290;  Mills 
French  v.  Quincy,  3  All.  (Mass.)  Co.  v.  R.  R.  Co.,  47  la.  66;  State  v. 
9)  ;  Jones  v.  Camden,  44  S.  C.  319;  Martin,  27  Neb.  441;  43  N.  W.  244; 
51  Am.  St.  Rep.  819;  23  S.  E.  City  of  San  Antonio  v.  Ry.  Co.,  22 
141.  Tex.  Civ.  App.  148;   54  S.  W.  281; 

14  Jacksonville,  etc.,  Co.  v.  Jack-  Sheafe  v.  Seattle,  18  Wash.  298; 
sonville,   36   Fla.   229;    51   Am.    St.  51  Pac.  385. 

Rep.  24;    30  L.   R.  A.   540;    18  So.  i7  Sheafe    v.     Seattle,    18     Wash. 

677;     Mitchell    v.    Negaunee,     113      298;  51  Pac.  385. 


1594  PAGE    ON    CONTEACTS. 

therefor/^  and  to  contract  for  labor  and  material/®  Power 
to  erect  poles  and  lights  includes  power  to  contract  therefor."'' 
A  vote  for  free  turnpikes  is  a  vote  to  incur  expenses  necessary 
thereto,"^  and  power  to  build  a  court  house  is  power  to  furnish 
it."^  Power  to  provide  for  "  health  and  welfare "  includes 
power  to  contract  with  a  waterworks  company  for  a  supply  of 
water  to  extinguish  fires/^  but  not  to  operate  a  dispensary.^* 

A  county  may  make  a  contract  to  investigate  the  books  of  the 
county  auditor  and  treasurer, ^^  and  may  give  a  bond  for  money 
borrowed  to  support  the  families  of  soldiers  during  the  Rebel- 
lion.^^ Under  power  to  "  construct  and  maintain  waterworks  " 
it  cannot  sell  without  legislative  enactment. ^^  A  public  cor- 
poration cannot  bind  itself  by  contract  not  to  exercise  its  gov- 
ernmental functions.  It  cannot  contract  to  exempt  from  taxa- 
tion.^« 

§1015.     Employment  of  attorney. 

Where  there  is  statutory  provision  therefor  a  public  corpora- 
tion may  retain  a  special  counsel.^  This  has  been  recognized 
as  an  implied  power  where  the  interests  of  the  corporation  were 

18  Arbuckle-Ryan  Co.  v.  Grand  110;  68  Am.  St.  Rep.  80;  29  S.  E. 
Ledge,    122    Mich.    491;    81    N.    W.      602. 

358.  25  Board,  etc.,  of  Perry  County  v, 

19  Rockebrandt  v.  Madison,  9  Ind.  Gardner,  155  Ind.  165;  57  N.  E 
App.  227;  53  Am.  St.  Rep.  348;  36      908. 

N.  E.  444.  26  Commissioners,     etc.,     of    Bar 

20  Oakley  v.  Atlantic  City,  63  N.  stow  County  v.  Conyers,  108  Ga 
J.  L.   127;   44  Atl.   651.     Power   to      559;  34  S.  E.  351. 

levy  a  special  tax  for  lighting  does  2-  Huron  Waterworks  Co.  v.  Hu 

not  limit  a  general  power  to  light.  ron,  7  S.  D.  9;  58  Am.  St.  Rep.  817 

Townsend,   etc.,   Co.   v.   Port   Town-  30   L.    R.    A.    848;    62   N.    W.   975 

send,  19  Wash.  407;  53  Pac.  551.  Compare  Baily  v.  Philadelphia,  184 

2iWhaley  v.   Commonwealth,   110  Pa.  St.  594;   63  Am.  St.  Rep.  812; 

Ky.  154;  61  S.  W.  35.  39  L.  R.  A.  837;  39  Atl.  494,  where 

22  Alabama,  etc.,  Co.  v.  Reed.  124  it  was  held  to  have  power  to  lease 
Ala.  253;  82  Am.  St.  Rep.  166;   27  water-works. 

So.  19.  28  City  of  Tampa  v.  Kaunitz,   39 

23  Webb  City,  etc.,  Co.  v.  Webb  Fla.  68.3;  63  Am.  St.  Rep.  202;  23 
City,  78  Mo.  App.  422.  So.  416. 

24Leesburg   v.    Putnam.    103    Ga.  1  Appel   v.    State,   9   Wyom.    187; 

61   Pac.   1015. 


PUBLIC   CORPORATIONS.  1595 

affected  in  another  state;"  or  where  the  services  of  an  attorney 
were  needed  suddenly,  as  to  obtain  an  injunction.'^  Where  a 
public  official  is  designated  by  statute  as  the  attorney  for  a 
public  corporation  it  cannot  employ  another  attorney.  Thus 
a  county  cannot  employ  special  counsel  in  a  suit  of  which  the 
attorney-general  is  put  in  charge  by  statute  ;■*  and  cannot  be  held 
to  pay  attorney  fees  for  suit  on  the  bond  of  a  defaulting  county 
trustee,  to  the  district  attorney-general,  his  partner  and  the 
county  attorney,  where  the  members  of  the  county  court  knew  of 
the  rendition  of  services,  but  did  not  know  that  the  services 
were  rendered  in  a  private  capacity.^  So  where  bonds  are  is- 
sued under  an  unconstitutional  statute  the  board  thus  created 
cannot  bind  the  city  by  employing  an  attorney  to  defend  actions 
growing  out  of  the  act.® 

§1016.     Contracts  to  be  performed  during  long  period. 

Unless  specifically  restrained  by  statute  a  public  corporation 
may  make  a  contract  w^hich  by  its  terms  is  to  last  for  a  long 
period  of  time.  Contracts  for  water  and  lighting  are  the  com- 
mon examples  of  contracts  of  this  sort.^  The  time  must,  how- 
ever, be  reasonable."  Thus  a  five-year  lighting  contract  ter- 
minable at  three  months'  notice,^  a  contract  for  water  supply 
to  last  twenty-five  years,*  or  ten  years,^  or  for  lighting  to  last 
ten  years,®  or  five  years,^   a  contract  for  furnishing  gas  for 

2  Memphis    v.    Adams,    9    Heisk.  2  McBean  v.  Fresno,  112  Cal.  159; 
(Tenn.)   518;  24  Am.  Rep.  331.                 53   Am.   St.  Rep.   191;    31   L.   R.  A. 

3  Louisville    v.    Murphy,    86    Ky.      794;  44  Pac.  358. 

53;   5  S.  W.  194.  3  Hartford  v.  Light  Co.,  65  Conn. 

4  Storey  v.  Murphy,  9  N.  D.  115;       324;  32  Atl.  925. 

81  N.  W.  23.  4  Walla  Walla  v.  Water  Co.,   172 

sMcHenderson    v.    Anderson    Co.,  U.  S.  1. 

105  Tenn.  591;  59  S.  W.  1016.  5  Though   the  contract  is  such  as 

6  City    of    Findlay    v.    Pendleton.  to  tie  up  the  general  revenue  for  the 

62  0.  S.  80;  56  N.  E.  649.  water   fund.     Monroe  Water  Co.  v. 

1  Denver    v.    Hubbard,     17     Colo.  Heath,    115    Mich.    277;    73    N.    W, 

App.  346;   68  Pac.  993;  Maine  Wa-  234. 

ter  Co.  V.  Waterville,   93  Me.   586;  e  Reid    v.    Trowbridge,    78    Miss. 

49  L.  R.  A.  294;  45  Atl.  830;   Seit-  542;  29  So.  167. 

zinger  v.  Tamaqua,  187  Pa.  St.  539;  t  Black    v.    Chester,    175    Pa.    St. 

41  Atl.  454.  101;  34  Atl.  354. 


1596  PAGE    ON    CONTRACTS. 

twenty-five  years/  a  contract  for  water  for  twenty  years,®  or 
for  thirty  years/**  have  in  view  of  the  nature  of  the  contracts 
been  held  not  unreasonable.  Such  contracts  bind  successive 
officers,"  but  they  must  go  into  full  effect  during  the  term  of 
the  officers  who  enter  into  them.^"  Unless  in  good  faith  for  a 
reasonable  time  and  for  the  public  interest  a  contract  extending 
beyond  the  term  of  the  officials  making  it  is  void.^^ 

A  contract  for  the  erection  and  maintenance  of  a  bridge  "  for 
all  future  time  ""  has  been  held  unreasonable.  If  the  time 
for  which  a  contract  may  be  made  is  fixed  by  statute,  no  con- 
tract in  excess  of  such  time  can  be  made.^^  A  city  whose  cor- 
porate existence  is  to  end  by  statutory  merger  in  a  larger 
municipality  cannot  make  a  contract  to  last  beyond  its  own 
existence."  So  a  ten-year  contract  made  by  the  officials  of  a 
town  included  within  the  limits  of  "  Greater  New  York," 
made  fourteen  days  before  the  charter  of  "  Greater  New 
York  "  was  to  go  into  effect,  w^as  held  void  as  a  mere  scheme 
to  encumber  the  new  municipality.^^  The  authorities  are 
divided  on  the  question  of  the  effect  of  a  contract  by 
which  the  public  corporation  attempts  to  bind  itself 
for  a  longer  time  than  allowed  by  law.  Some  courts  hold 
it  good  up  to  the  limit  for  which  the  corporation  might  have 

sVincennes  v.  Light  Co.,  132  Ind.  416;    Indianapolis   v.    Coke   Co.,   66 

114;    16   L.    R.   A.   485;    31    N.    E.  Ind.    396;    Grant   v.   Davenport,    36 

573.  la.    396;     Smith    v.    Dedham,     144 

9  City  of  Valparaiso  v.  Gardner,  Mass.  177;  10  N.  E.  782;  Weston  v. 
97  Ind.  1;  49  Am.  Rep.  416;  Light,  Syracuse,   17   N.  Y.   110. 

etc.,  Co.  V.  Jackson,   73  Miss.  598;  12  Kerlin  Bros.  Co.  v.   Toledo,  20 

19  So.   771.  Ohio  C.  C.  603;  11  Ohio  C.  D.  56. 

10  Little  Falls,  etc.,  Co.  v.  Little  i3  Board,  etc.,  of  Franklin  County 
Falls,  102  Fed.  663.  v.  Ranck,  9  Ohio  C.  C.  301. 

11  Detroit  v.  Ry.,  184  U.  S.  368;  instate  v.  Ry.  Co.,  80  Minn.  108; 
Pike's  Peak  Power  Co.  v.  Colorado  50  L.  R.  A.  656;  83  N.  W.  32. 
Springs,  105  Fed.  1;  44  C.  C.  A.  is  Gaslight,  etc.,  Co.  v.  New  Al- 
333;  Illinois,  etc..  Bank  v.  Arkansas  bany,  156  Ind.  406;  59  N.  E.  176; 
City,  76  Fed.  271;  34  L.  R.  A.  (City  of )  Wellston  v.  Morgan,  59  O. 
518;    McBean   v.    Fresno,    112    Cal.  S.   147;   52   N.  E.   127. 

159;  53  Am.  St.  Rep.  191;  31  L.  R.  le  Hendrickson  v.  New  York,  160 

A.    794;    44    Pac.    358;    Liggett   v.  N.  Y.  144;   54  N.  E.  680. 

Kiowa  County,  6  Colo.  App.  269 ;  40  i7  Hendrickson  v.  New  York,   IGO 

Pac.    475;     City    of    Valparaiso    v.  N.  Y.  144;  54  N.  E.  680. 
Gardner,   97    Ind.    1;    49    Am.   Rep. 


PUBLIC  CORPORATIONS.  1597 

bound  itself/^  Thus  a  contract  for  twenty  years,  to  be  renewed 
for  twenty  more  if  the  city  did  not  buy,  is  good  for  the  first 
twenty  where  the  city  can  bind  itself  for  only  twenty  years/" 
Such  a  contract  has  been  said  to  be  good  as  far  as  performed.^" 
Other  authorities  hold  such  a  contract  totally  void."^ 
Power  to  contract  for  a  water  supply  for  thirty  years  is  not 
power  to  make  a  fixed  and  unalterable  rate.""  Under  a  pro- 
vision of  the  constitution  forbidding  legislative  appropriations 
for  more  than  two  years  a  state  officer  cannot  bind  the  state  for 
contracts  extending  beyond  that  period.^^ 

§1017.    Power  to  borrow  money. 

The  numerical  weight  of  authority  holds  that  municipal  cor- 
porations have  implied  power  to  borrow  money  when  necessary 
for  the  purpose  of  their  creation.^  A  minority  strong  in  logic 
if  not  in  numbers  holds  that  a  public  corporation  has  no  power 
to  borrow  except  such  as  is  given  to  it  by  the  legislature,  either 
expressly  or  by  necessary  implication,  from  express  powers.^ 
Power  to  borrow  is  often  conferred  by  statute.^  Public  cor- 
porations other  than  municipal,  such  as  counties  or  township, 
are  far  more  limited  in  their  powers  of  borrowing  than  munici- 
pal corporations.* 

18  Defiance  Water  Co.  v.  Defiance,  49  N.  W.  1051;  State  v.  Babcock, 
90  Fed.  753.  22  Neb.  614;   35  N.  W.  941;   Bank 

19  Neosho,  etc.,  Co.  v.  Neosho,  136  v,  Chillicothe,  7  Ohio,  Part  II.,  31; 
Mo.  498;  38  S.  W.  89.  Mills  v.   Gleason,    11   Wis.   470;    78 

20  Dawson  v.  Waterworks  Co.,  106  Am.  Dec.  721;  Clark  v.  Janesville, 
€a.  696;  32  S.  E.  907.  10   Wis.    136. 

21  Gaslight,  etc.,  Co.  v.  New  Al-  2  Allen  v.  La  Fayette,  89  Ala. 
bany,  156  Ind.  406;  59  N.  E.  176;  641;  9  L.  R.  A.  497;  8  So.  30; 
Kirkwood  v.  Highlands  Co.,  94  Mo.  Coquard  v.  Oquawka,  192  111.  355; 
App.  637;  68  S.  W.  761;  (City  of)  61  N.  E.  660;  Wells  v.  Salina,  119 
Wellston  V.  Morgan,  59  O.  S.  147;  N.  Y.  280;  7  L.  R.  A.  759;  23  N.  E. 
52  N.  E.  127 ;  Defiance  v.  Council  of  870. 

Defiance,  23  Ohio  C.  C.  96.  3  Heinl  v,  Terre  Haute,   161   Ind. 

22  Danville  v.  Water  Co.,  178  111.  44;  66  N.  E.  450;  Corliss  v.  High- 
299;  69  Am.  St.  Rep.  304;  53  N.  E.  land  Park,  —  Mich.  — ;  93  N.  W. 
118.  254;    affirmed   on   rehearing,   93    N. 

23  State  V.  Medbery,   7  0.  S.  522.  W.  610. 

1  Richmond    v.    McGirr,    78    Ind.  *  Brown  v.   Board,   108   Ky.   783; 

192;  Austin  v.  Colony,  51  la.  102;      57  S.  W.  612. 


1598 


PAGE    ON    CONTRACTS. 


§1018.     Power  to  issue  negotiable  instruments. 

Closely  connected  with  the  foregoing  question  is  that  of  the 
implied  power  of  a  public  corporation  to  issue  negotiable  in- 
struments as  evidences  of  a  lawful  debt.  There  is  a  divergence 
of  authority  as  to  whether  an  implied  power  to  issue  negotiable 
instruments  exists  if  power  to  do  so  is  not  given  by  statute. 
Some  authorities  hold  that  this  power  is  implied/  others  that  it 
exists  only  when  expressly  given  by  the  legislature,^  Where 
this  view  is  entertained  power  to  improve  a  street,  raising  the 
money  therefor  by  a  special  assessment,  is  not  power  to  issue 
bonds.^  A  city  incorporated  after  the  passage  of  a  statute 
authorizing  cities  then  incorporated  to  issue  bonds  cannot  issue 
them.*  Even  an  express  power  to  borrow  does  not  include 
power  to  issue  negotiable  bonds.^  Under  power  to  borrow  for 
municipal  purposes  a  city  may  issue  bonds  to  retire  the  floating" 


1  Carter  County  v.  Sinton,  120  U. 
S.  517;  Holmes  v.  Shreveport,  31 
Fed.  113;  Commonwealth  v.  Wil- 
liamstown,  156  Mass.  70;  30  N.  E. 
472;  Hubbard  v.  Sadler,  104  N.  Y. 
223;  10  N.  E.  426;  Smathers  v. 
Madison  County,  125  N.  C.  480;  34 
S.  E.  554;  Murry  v.  Fay,  2  Wash. 
352;    26   Pae.   533. 

2Barnett  v.  Denison,  145  U.  S. 
135  (citing  Claiborne  County  v. 
Brooks,  111  U.  S.  400;  Kelley  v. 
Milan,  127  U.  S.  139) .  To  the  same 
eflFect  are  Brenham  v.  Bank,  144  U. 
S.  173;  Hopper  v.  Covington,  8  Fed. 
777;  Dudley  v.  Lake  County,  80 
Fed.  672;  Coffin  v.  Indianapolis, 
59  Fed.  221;  Watson  v.  Huron,  97 
Fed.  449;  38  C.  C.  A.  264;  Coquard 
V.  Oquawka,  192  111.  355;  61  N.  E. 
660;  Neugass  v.  New  Orleans,  42 
La.  Ann.  163;  21  Am.  St.  Rep. 
368;  7  So.  565;  Brinkworth  v.  Gra- 
ble,  45  Neb.  647;  63  N.  W.  952; 
State  V.  Newark,  54  N.  J.  L.  624;  23 


Atl.  129;  Johnson  City  v.  R.  R.,  100 
Tenn.  138;  44  S.  W.  670;  Richard- 
son V.  Marshall  County,  100  Tenn. 
346;  45  S.  W.  440;  Waxahachie  v. 
Brown,  67  Tex.  519;  4  S.  W.  207; 
Thornburgh  v.  Tyler,  16  Tex.  Civ. 
App.  439;  43  S.  W.  1054. 

3  Redondo  Beach  v.  Cate,  136  CaL 
146;    68   Pac.   586. 

4  Oquawka  v.  Graves,  82  Fed.  568 ; 
27  C.  C.  A.  327. 

5  Brenham  v.  Bank,  144  U.  S.  173; 
Merrill  v.  Monticello,  138  U.  S.  673; 
German  Ins.  Co.  v.  Manning,  95  Fed,. 
597;  Lehman  v.  San  Diego,  27  C.  C. 
A.  668;  83  Fed.  669;  Ashuelot  Na- 
tional Bank  v.  School  District,  56 
Fed.  197;  Dodge  v.  Memphis,  51 
Fed.  165;  Heins  v.  Lincoln,  102  la. 
69;  71  N.  W.  189  (criticising  Sioux 
City  V.  Weare,  59  la.  95 ;  12  N.  W. 
786).  Contra,  Commonwealth  v. 
Williamstown,  156  Mass.  70;  30  N. 
E.  472. 


PUBLIC  CORPOKATIONS.  1599 

debt,^  or  to  refund  prior  bonds/  In  opposition  to  this  view 
it  has  been  held  that  power  to  issue  bonds  does  not  include 
power  to  issue  new  negotiable  bonds  to  take  up  the  old  bonds,® 
A  statute  which  violates  a  mandatory  provision  of  the  constitu- 
tion cannot  authorize  an  issue  of  bonds,**  nor  can  the  legislature 
make  bonds  payable  elsewhere  than  at  the  city  treasury.^"  If  a 
negotiable  instrument  is  issued  by  a  corporation  having  author- 
ity to  issue  only  non-negotiable  instruments  it  is  void."  Ac- 
cording to  the  divergence  of  views  already  expressed  some  au- 
thorities treat  municipal  bonds  as  non-negotiable/^  while  others 
treat  both  the  bonds^^  and  the  coupons  thereon^*  as  negotiable. 
A  statute  giving  authority  to  issue  municipal  bonds  for  cer- 
tain purposes  only  excludes  power  to  issue  bonds  for  any  other 
purpose/^  If  power  to  issue  bonds  exists,  they  may  be  issued 
where  no  prior  debt  exists,  as  where  they  are  issued  to  buy 
waterworks/^ 

§1019.     Statutory  restriction  on  power  to  borrow. 

Statutory  provisions  as  to  the  power  of  a  public  corporation 
to  borrow  money  and  the  methods  by  which  it  may  borrow  are 

6  Morris  v.  Taj^lor,  31  Or.  62;  49  Slingerland  v.  Newark,  54  N.  J.  L. 

Pac.  660  (citing  Quincy  v.  Warfield,  62;  23  Atl.  129. 

25  111.  317;   79  Am.  Dee.  330;   Ga-  is  G^lpcke    v.    Dubuque,  1    Wall, 

lena  V.  Corwith,  48  111.  423 ;  95  Am.  (U.    S.)      175;      Thomson  v.    Lee 


Dec.  557;  Solon  v.  Bank,  114  N.  Y. 


County,  3  Wall.   (U.  S.)   327;  Lex- 
ington V.  Butler,  14   Wall.    (U.   S.) 
122;   21  N.  E.  168;   Commonwealth      282;    Humboldt  Township  v.   Long, 

V.  Pittsburgh,  41  Pa.  St.  278;  Rogan  92  U.  S.  642;  Roberts  v.  Bolles,  101 

V.  Watertown,  30  Wis,  259).  U.  S.   119;   Wilson  County  v.  Bank, 

7  Pierre    v.    Dunscomb,    106    Fed.  103  U.  S.  770;  Ottawa  v.  Bank,  105 

611;  45  C.  C.  A.  499.  U.   S.   342;    Ackley  School  District 

sCoquard    v.    Oquawka,    192    111,  v.    Hall,    113   U.    S,    135;    Klamath 

355;   61  N.  K  660.  Falls  v.  Sachs,  35  Or.  325;   76  Am. 

oLake  County  v.  Graham,  130  U.  St.  Rep.  501;  57  Pac.  329. 

S.  674;    Wilkes  Co.  v.  Call,  123  N.  n  Lexington   v.   Butler.    14   Wall. 

C.  308;   44  L.  R.  A.  252;   31  S.  E.  (U.  S.)   282;   Walnut  v.  Wade,  103 

481.  U.  S.  683;  Stewart  v.  Lansing.  104 

10  Los  Angeles  v.  Teed,    112   Cal,  U.    S.    505;    Thompson    v.    Perrine. 

319;  44  Pac,  580,  106  U.  S.  589. 

"Dodge  V.  Memphis,  51  Fed.  165.  is  Uncas    National    Bank    t.    Su- 

12  Goodwin  v.   East  Hartford,    70  perior,  115  Wis.  340;  91  N.  W.  1004. 

Conn.  18;  38  Atl.  876;  State  ex  rel.  le  State   v.    Topeka,   —  Kan.   — ; 

74  Pac.  647, 


160(?  PAGE    ON    CONTRACTS. 

at  present  in  most  states  very  full  and  ample.^  As  has  been  in- 
dicated in  the  preceding  section,  much  of  the  discussion  as  to 
the  implied  power  of  a  public  corporation  to  borrow  turns  on 
the  effect  of  the  statutes  on  that  subject."  Bonds  issued  after 
a  repeal  of  the  law  under  which  they  were  issued,^  or  under  an 
unconstitutional  law/  are  void.  A  law  allowing  a  specified 
township  to  issue  bonds  is  not  of  general  nature  and  hence  is 
constitutional,  even  if  not  uniform,  under  a  constitutional  pro- 
vision requiring  laws  of  a  general  natvire  to  be  uniform.^  A 
statute  authorizing  a  town  to  vote  bonds  to  aid  a  railroad,  with- 
out formally  amending  its  charter,''  or  special  authority  to  bor- 
row without  formally  amending  a  general  statute  limiting  such 
power,^  confers  such  authority.  A  limited  power  of  borrowing 
excludes  implied  power. ^  Statutes  on  the  subject  of  issuing 
bonds  should  be  construed  together  if  possible  as  in  pari  materia 
even  if  passed  at  different  times.^  If  statutes  passed  at  differ- 
ent times  cannot  be  reconciled,  the  later  controls.  Thus  a  gen- 
eral law  may  be  superseded  by  a  charter.^"  So  a  grant  of  gen- 
eral power  to  borrow  money  and  issue  bonds  for  municipal 
purix)ses  is  not  restricted  by  a  prior  grant  for  special  purposes.^^ 

lEllinwood  v.  Reedsburg,  91  Wis.  v,  Ellet,   47  0.  S.  90;   21  Am.   St. 

131;  64  N.  W.  885.  Rep.   772;    23   N.   E.   931;    Commis- 

2  Commonwealth  v.  Williamstown,  sioners  v.  RosehCj  50  0.  S.  103;  40 
156  Mass.  70;  30  N.  E.  472.  Am.  St.  Rep.  653;  19  L.  R.  A.  584; 

3  Lehman   v.   San   Diego,    73   Fed.  33  X.  E.  408;   Loeb  v.  Trustees,  91 
105.  Fed.    37.     Disapproving    Hixson    v. 

4Slocomb  V.   Fayetteville,   125  N,  Burson.    54    O.    S.    470;    43    N.    E. 

C.  362;   34  S.  E.  436.  1000;   State  v.  Davis,  55  O.  S.  15; 

5  Battleboro  Savings  Bank  v.  Har-  44  N.  E.  511). 

dy   Township,   98   Fed.    524    (citing  6  Glenn  v.  Wray,   126  N.  C.  730; 

Cass  v.  Dillon,  2  0.  S.  607;   State  36  S.  E.  167. 

V.  Judges,  21  O.  S.  1 ;  State  v.  Cov-  ^  Peabody  v.  Waterworks.  20  R.  I. 

ington,  29  O.  S.  102;  McGill  v.  State,  176;  37  Atl.  807. 

34  O.  S.  228;  State  v.  Hoffman,  35  «  Hughson  v.  Crane,  115  Cal.  404; 
O.  S.  435;    State  v.  Commissioners,  47  Pac.  120.     Contra,  Galena  v.  Cor- 

35  O.    S.   458;    State   v.   Board,   38  with.  48  111.  423;  95  Am.  Dec.  557. 
O.  S.  3;  State  v.  Powers,  38  O.  S.  9  Roberts  v.  Taft,   109  Fed.   825; 
54;  Hart  v.  Murray,  48  O.  S.  605;  48  C.  C.  A.  681. 

29  N.  E.  576;   State  v.  Kendle.  52  lo  McHugh  v.  San  Francisco,  132 

O.  S.  346;   39  N.  E.  947;   Ex  parte  Cal.  381;  64  Pac.  570. 

Falk,  42  0.  S.  638;  State  v.  Winch,  n  Pierre   v.   Dunscomb,    106    Fed. 

45  O.  S.  663;   18  N.  E.  380;   State  611;  45  C.  C.  A.  499. 


PUBLIC   COEPOKATI02fS.  IGOl 

Power  to  incur  indebtedness  for  municipal  improvements  is  not 
limited  by  a  grant  of  power  in  another  section  of  the  statute  to 
make  specific  kinds  of  improvements/"  Clerical  errors  and 
grammatical  inaccuracies  are  to  be  disregarded  if  the  meacing 
of  the  statute  is  clear.  Thus  a  statute  authorizing  bondti  if 
"  two  thirds  of  the  qualified  electors  voting  an  assent "  mtans 
if  two  thirds  of  the  qualified  electors  voting,  assent/^  Restrie 
tions  as  to  requiring  bond  in  case  the  cost  of  constructing  a 
street  is  assessed  upon  abutting  property  owners  have  no  appli' 
cation  to  contracts  for  constructing  a  sidewalk.^*  Power  to 
issue  bonds  with  interest  coupons  payable  at  a  given  place 
is  not  power  to  issue  bonds  with  interest  coupons  payable  tilse- 
where.^^  Power  to  refund  "  bonded  indebtedness  actually  ex- 
isting" is  power  to  include  unpaid  interest  coupons  in  the 
face  of  the  new  bonds/* 

§1020.     Construction  of  statutory  provisions. 

Power  to  refund  a  debt  includes  power  to  issue  negotiable 
bonds  therefor/  though  in  such  case  the  corporation  cannot 
issue  bonds  in  excess  of  such  debt.^  Power  to  issue  "  bonds  '* 
is  power  to  issue  negotiable  bonds  f  power  to  "  donate  money  or 
other  securities  "  is  power  to  issue  bonds  ;*  and  power  to  "  borrow 
money  and  for  that  purpose  to  issue  bonds  "  includes  power  to 
refund.^     Power  to  issue  interest  bearing  bonds  includes  power 

12  Hammond  v.  San  Leandro,  135  S.  W.  668;  rehearing  denied,  22  S. 
Cal.  450;   67  Pac.  692.  W.   960;    reversing   21    S.    W.   375; 

13  Fritz  V.  San  Francisco,  132  Cal.  Klamath  v.  Sachs.  35  Or.  325;  76 
373;    64   Pac.    566.  Am.    St.    Pvcp.    501;     57    Pac.    329 

14  Tennessee  Paving-Brick  Co.  v.  (other  provisions  of  the  statute 
Barker    (Ky.),    59    S.    W.    755.  showed   that  negotiable  bonds  were 

15  Middleton  v.  St.  Augustine,  42  contemplated). 

Fla.    287;    89    Am.    St.    Rep.    227;  4  Limd    v.    Chippewa   County,    93 

29   So.  421.  Wis.  640;   84  L.  R.   A.   131;   67  N. 

16  Kelly  V.  Cole,  63  Kan.  385 ;  65      W.  927. 

Pac.  672.  5  Huron  v.  Bank,  86  Fed.  272 ;  30 

iRathbone    v.    Hopper,    57    Kan.  C.  C.  A.  38;  49  L.  R.  A.  534  (citing 

240;  34  L.  R.  A.  674;  45  Pac.  610.  Quincy  v.  Warfield,  25  111.  317;  79 

2  Louisville,  etc.,  v.  Zimmerman,  Am.  Dec.  330;  Galena  v.  Corwith, 
101  Ky.  432;  41  S.  W.  428.  48  111.  423;  95  Am.  Dec.  557;  Mor- 

3  Austin  V.  Naile,  85  Tex.  520;  22  ris   v.   Taylor,   31   Or.   62;    49   Pac. 

101 


1602 


PAGE    ON    CONTRACTS. 


to  attach  interest  coupons,®  and  power  to  sell  bonds  and  pay 
proceeds  includes  power  to  deliver  bonds.^  Power  to  issue 
bonds  is  generally  held  to  include  power  to  make  them  payable 
in  gold.*  Power  to  issue  bonds  must  be  strictly  followed. 
Thus  a  vote  to  issue  bonds  to  two  persons,  on  their  erecting  a 
mill,  does  not  authorize  issuing  bonds  to  a  partnership  consist- 
ing of  them  and  others,**  and  if  the  amount  of  each  bond  is 
fixed,  the  bonds  are  invalid  if  in  larger  amounts  though  ag- 
gregating the  same.^**  However,  where  bonds  were  to  run  ten 
years,  they  are  valid  if  payable  more  than  ten  years  from  their 
date  but  within  ten  years  from  their  issue.^^  If  bonds  are 
issued  by  authority  of  law  they  are  not  made  invalid  because 
their  proceeds  are  misapplied.^^  A  city  cannot  issue  bonds 
for  a  greater  sum  than  that  borrowed  by  selling  them  below 
par,  which  must  include  interest  due,^^  and  officials  selling  state 
bonds  below  par  are  liable,  even  if  the  bonds  would  not  sell 
at  par.^*  So  a  city  cannot  sell  at  the  face  value,  paying  large 
commissions.^^     So  a  city  cannot  add  enough  to  the  amount 


660;   Eogan  v.  Watertown,  30  Wis. 
259). 

6  Atchison  Board,  etc.,  v.  De  Kay, 
148   U.   S.   591. 

7  Clifton  Forge  v.  Electric  Co.,  92 
Va.  289;  23  S.  E.  288. 

8  Woodruff  V.  Mississippi,  162  U. 
S.  291  (reversing  Woodruff  v.  State, 
66  Miss.  298;  6  So.  235)  ;  Moore  v. 
Walla  Walla,  60  Fed,  961;  Judson 
V.  Bessemer,  87  Ala.  240;  4  L.  R. 
A.  742 ;  6  So.  267 ;  Skinner  v.  Santa 
Rosa,  107  Cal.  464;  29  L.  R.  A. 
512;  40  Pae.  742;  Murphy  v.  San 
Luis  Obispo,  119  Cal.  624;  39  L. 
R.  A.  444;  51  Pae.  1085;  affirming 
in  bane  48  Pae.  974;  Heilbron  v. 
Cuthbert,  96  Ga.  312;  23  S.  E.  206; 
Farson  v.  Louisville,  etc.,  97  Ky. 
119;  30  S.  W.  17;  Winston  v.  Fort 
Worth  (Tex.),  47  S.  W.  740;  Pack- 
wood  V.  Kittitas  County,  15  Wash. 
88;  .55  Am.  St.  Rep.  875;  33  L.  R. 
A.    673;    45    Pae.    640;    Kenyon   v. 


Spokane,  17  Wash.  57;  48  Pae.  783. 
Contra,  Burnett  v.  Maloney,  97 
Tenn.  697;  34  L.  R.  A.  541;  37  S. 
W.  689. 

9  George  v.  Cleveland,  53  Neb. 
716;  74  N.  W.  266. 

10  Livingston  v.  School  District,  9 
S.  D.  345;   69  N.  W.   15. 

11  Syracuse  Township  v.  Rollins, 
104  Fed.  958;  44  C.  C.  A.  277. 

12  Gladstone  v.  Throop,  71  Fed. 
341;  18  C.  C.  A.  61;  Jones  v.  City 
of  Camden,  44  S.  C.  319;  51  Am. 
St.  Rep.  819;  23  S.  E.  141;  Clifton 
Forge  V.  Electric  Co.,  92  Va.  289; 
23  S.  E.  288;  Clifton  Forge  v. 
Bank,  92  Va.  283;  23  S.  E.  284. 

13  Ft.  Edward  v.  Fish.  156  N.  Y. 
363;  50  N.  E.  973;  affirming  86  Hun 
(N.  Y.)    548. 

Instate  V.  Buchanan  (Tenn.  Ch. 
App.),  52  S.  W.  480. 

isWhelen's  Appeal,  108  Pa.  St. 
162;   1  Atl.  88;  Hunt  v.  Fawcett,  8 


PUBLIC  COEPOEATIONS.  1603 

of  its  warrants  to  compensate  for  the  discount  at  which  they 
must  be  sold/*'  Power  to  settle  claims  includes  power  to  issue 
warrants  for  amounts  due  ;^~  and  power  to  retire  warrants 
includes  power  to  issue  them,  even  if  there  will  be  no  money 
to  pay  them  with  for  over  a  year/^  Power  to  borrow  for 
running  expenses  is  not  power  to  borrow  for  erecting  a  court 
house/^  Under  a  statute  which  requires  all  the  interest  and 
part  of  the  principal  of  an  issue  of  bonds  to  be  paid  annually, 
an  issue  of  bonds  the  principal  of  which  is  payable  one  hundred 
dollars  a  year  for  nineteen  years,  and  thirty-three  thousand 
one  hundred  dollars  at  the  twentieth  year,  is  valid.""  A  power 
to  make  a  contract  for  water  and  to  levy  a  tax  of  a  certain 
amount  therefor  does  not  restrict  the  contract  price  to  the 
amount  of  the  tax.^^ 

§1021.     Statutory  prohibition  against  incurring  debt. 

The  extravagance  of  American  municipalities  has  led  to 
various  attempts  on  the  part  of  legislatures  to  prevent  or  re- 
strict future  indebtedness.  Contracts  in  violation  of  such 
statutes  are  invalid.^  A  statute  restraining  the  power  of  cities 
to  incur  debts,  in  the  exact  language  of  the  constitution  is 
abrogated  by  a  subsequent  enlargement  of  power  to  incur  debts 
given  by  a  later  constitutional  amendment.^  Various  methods 
of  restraint  have  been  tried.  Some  of  the  more  common  types 
are  discussed  in  the  following  sections.     There  is  this  inherent 

Wash.  396;   36  Pac.  318.     However,  States,   103   Fed.   418;   43   C.   C.   A. 

it   has   been   held   that   a   city  may  261. 

pay  ten  per  cent  of  the  face  value  i9  Lewis    v.    Lofley,    92    Ga.    804; 

to   a   broker   for   lithographing   and  19  S.  E.  57    (a  county), 

selling  their  bonds.     State  v.  Land  20  Kemp   v.   Hazelhurst,   80   IMiss. 

Co.,  75  Minn.  456;  sub  nom.,  In  re  443;  31  So.  908. 

Taxes,  etc.,  78  N.  W.  115.  21  Ft.  Madison  v.  Water  Co.,  114 

leMimicipal    Security  Co.   v.   Ba-  Fed.    292;    52    C.    C.    A.    204;    af- 

ker    County,    33    Or.    338;    54    Pac.  firming  110  Fed.  901 ;  Marion  Water 

174.  Co.  v.  Marion.   121  la.  306;   96  N. 

17  City  of  New  Orleans  v.  Warner,  W.   883. 

180  U.   S.   199;    affirming   101    Fed.  1  Shinn  v.  Board  of  Education,  39 

1005;  41  C,  C.  A.  676.  W.  Va.  497;  20  S.  E.  604. 

18  City  of  Little  Rock  v.  United  2  Bray  v.   Florence,  62  S.  C.  57; 

39  S.  E.  810. 


1604  PAGE    ON    CONTEACTS- 

difficulty  underlying  them  all.  Local  government  "without  th« 
exercise  of  discretion,  is  an  impossibility;  yet  the  existence  of 
discretion  generally  involves  the  jx)wer  to  abuse  it  as  well  as 
to  exercise  it.  The  problem  for  the  legislature  to  solve  is  to 
obtain  the  maximum  of  discretionary  power  with  the  minimum 
of  abuse. 

§1022.     Necessity  of  appropriation. 

One  group  of  statutes  intended  to  prevent  municipalities 
from  incurring  indebtedness,  seeks  to  restrict  expenditure  to  in- 
come. Different  statutes  of  this  group  seek  to  attain  this  re- 
sult in  different  ways.  Some  of  these  statutes  forbid  a  contract 
unless  an  appropriation  has  been  made  by  the  proper  authorities 
available  for  payment  on  such  contract.^  A  contract  entered 
into  when  no  such  appropriation  has  been  made  is  unenforce- 
able," and  no  recovery  can  be  had  for  property  or  services  fur' 
nished  thereunder.^  Thus  a  contract  to  complete  a  building 
made  when  an  appropriation  for  part  of  its  cost  only  has  been 
made  is  invalid,  although  the  city  had  agreed  to  make  a  subse- 
quent appropriation  to  complete  such  building.*  So  no  recovery 
can  be  had  in  excess  of  the  appropriation  made.^  A  general 
appropriation  for  the  expense  of  building  a  bridge  is  sufficient 
to  make  valid  a  contract  with  an  adjoining  land  owner  whereby 
the  city  agrees  to  pay  damages,  and  allow  him  to  use  a  vault 
built  by  the  city  under  the  street,  in  consideration  of  his  allow- 
ing the  city  to  swing  its  bridge  over  his  land.^  A  general  ap- 
propriation for  constructing  a  street  intended  to  cover  futures 


1  Hilliard  v.  Bunker,  68  Ark.  340 


58    S.    W.    362;    Wiegel   v.    Pulaski      726 


County,  61  Ark.  74;  32  S.  W.  116 
Indianapolis  v.  Wann,  144  Ind.  175 
31  L.  R.  A.  743;  42  N.  E.  901;  Kel 
ley  V.  Broadwell  (Neb.),  92  N.  W 
643;  Clark  v.  Portsmouth,  68  N.  H 
263;   44  Atl.  388;   Engstad  v.  Din 


V.  Fargo,   10  N.  D.  230;   86  N.  W. 


3  Board  of  Water  Commissioners 
V.  Commissioners,  126  Mich.  459; 
85  N.  W.  1132;  Roberts  v.  Fargo, 
10  N.  D.  230;   86  N.  W.   726. 

4  Johnston  v,  Philadelphia,  113 
Fed.  40. 


nie,  8  N.  D.  1;  76  X.  W.  292.  5  Hurley  v.  Trenton.  67  X.  J.  L. 

2  Hurley  v.  Trenton,  67  N.  J.  L.  350;   51  Atl.   1109;   affirming  66  N. 

350;     51    Atl.    1109;    affirming    66  J.  L.  538;  49  Atl.  518. 

N.  J.  L.  538;  49  Atl.  518;   Roberts  .6  Chicago  v.  Milling  Co.,   196  111. 


PUBLIC   COKPORATIONS.  1605 

repairs  is  sufficient  to  make  valid  a  contract  therefor/  If  an 
appropriation  lapses  at  the  end  of  a  fiscal  year  it  cannot  validate 
subsequent  contracts  unless  re-appropriated.*  Such  a  statute 
is  superseded  by  a  subsequent  grant  of  power  to  incur  indebted- 
ness for  specified  purposes,  from  which  grant  restrictions  are 
omitted.® 

§1023.    Necessity  of  levying  tax  to  meet  obligation. 

Other  statutes  provide  that,  either  in  air  cases  or  where  the 
debt  has  reached  a  certain  amount,  no  contract  is  valid  unless  a 
means  is  provided  by  taxation  for  paying  principal  and  in- 
terest.^ It  is  generally  necessary  to  impose  such  a  tax  as  will 
keep  the  interest  down  and  form  a  sinking  fund  which  will 
discharge  the  principal  within  the  time  specified  by  law.  Where 
such  provision  is  found  in  the  constitution  the  statute  authoriz- 
ing the  debt  need  not  fix  the  tax  rate,  but  may  leave  it  to  county 
officers,^  and  it  is  complied  with  by  a  tax  to  begin  at  a  consider- 
able time  in  the  future.^  There  must  be  a  specific  levy  for 
the  sinking  fund,  a  general  levy  being  insufficient.*  Such  pro- 
vision applies  to  a  contract  of  compromise  of  a  prior  claim.® 
If  the  contract  price  exceeds  the  amount  to  be  raised  by  such 
tax,  the  excess  over  the  amount  raised  by  taxation  cannot  be 
recovered.^     Such  statutes  apply  only  to  interest-bearing  con- 

580;    63   N.   E.    1043;    affirming   97  755;   Howard  v.   Smith,  91  Tex.  8; 

111.  App.  651.  38    S.    W.    15;    Mineralized    Rubber 

7  Louisville  v.  Gosnell    (Ky.),  61  Co.  v.  Cleburne,  22  Tex.   Civ.   App. 

S.  W.  476.  621;    56   S.  W.   220. 

sNeumeyer    v.    Krakel,    110    Ky.  2  Mitchell  County  v.  Bank,  91  Tex. 

624;   62  S.  W.  518.  361;    43    S.    W.    880;    reversing    15 

9Belding,  etc.,  Co.  v.  Belding,  128  Tex.  Civ.  App.  172;  39  S.  W.  628. 
Mich.  79;  87  N.  W.  113.  3  City  of  Boise  City  v.  Trust  Co., 

1  Brazoria   Co.   v.   Bridge   Co.,   80  7    Ida.    342;    63    Pac.    107     (tax   to 

Fed.    10;    25    C.    C.    A.    306;    John  begin  in   1909). 

Hancock,  etc.,  Co.  v.  Huron,  80  Fed.  *  Wade  v.  Travis  County,  72  Fed. 

652;    affirmed,    100    Fed.    1001;    40  985. 

C.   C.  A.   683;   Wilkins  v.   Waynes-  5  Austin  v.  McCall,  95  Tex.  565; 

boro,    116   Ga.   359;   42   S.   E.   767;  68  S.  W.  791;  reversing   (Tex.  Civ. 

Epping  V.  Columbus,   117   Ga.  263;  App.)    67  S.  W.  192. 
43    S.    E.    803;    DaAvson   v.   Water-  6  Gray  v.  Bourgeois,  107  La.  671 ; 

works   Co.,    102   Ga.   594;    29   S.   E.  32  So.  42. 


1606  PAGE    ON    CONTRACTS. 

tracts  extending  over  a  term  of  years,  and  not  to  contt't«3tTi  to 
be  paid  out  of  the  taxes  of  the  current  year.'^  Such  a  provision 
does  not  apply  to  a  long  time  contract  for  a  v^^ater  supply  pay- 
able in  installments.* 

§1024.     Liabilities  forbidden  in  excess  of  current  income. 

Other  statutes  of  this  group  forbid  contracts  incurring  liabil- 
ity which  cannot  be  paid  out  of  taxes  for  that  fiscal  year.^ 
Under  a  statute  of  this  class  the  fact  that  interest  on  the  debt 
incurred,  and  an  amount  to  be  paid  into  the  sinking  fund 
sufficient  to  discharge  the  debt  ultimately  are,  when  added  to- 
gether, within  the  annual  income  of  the  city,  does  not  prevent 
a  debt  in  excess  of  the  income  from  being  invalid.^  Persons 
who  work  for  the  city  must  take  notice  of  such  provision,^  and 
debts  contracted  in  violation  thereof  cannot  be  paid  out  of  the 
next  year's  taxes.*  Such  provisions  cannot  be  evaded  by  buy- 
ing goods  on  credit  extending  to  the  next  fiscal  year.^  In  de- 
termining what  the  revenue  is  money  lost  by  a  bank  failure 
must  be  included  in  the  estimate  of  revenue.®  A  liability  in- 
curred when  there  was  sufficient  money  on  hand  to  discharge 
it  is  not  avoided  because  the  fund  is  exhausted  before  the  claim 


7  Herman    v.    Oconto,    110    Wis.  N.   W.  466;   Greenville  v.  Laurent, 
660;  86  N.  W.  681.  75  Miss.  456;  23  So.  185.     This  re- 

8  Blanks  v.  Monroe,  110  La.  944;  striction     exists     only    by    statute. 
34  So,  921.  Mitchell    v.    Negaunee,     113    Mich. 

1  Weaver    v,    San    Francisco,    111  359;  67  Am.  St.  Kep.  468;  38  L.  R. 

Cal.  319;  43  Pac.  972;  Bradford  v.  A.  157;  71  N.  W.  646. 

San    Francisco,    112    Cal.    537;    44  2  Richmond  v.  Powell,  101  Ky.  7; 

Pac.  912;  Montague  v.  English,  119  27  S.  W.  1. 

Cal.  225;    51  Pac.   327;   Phillips  v,  3  Weaver    v.    San    Francisco,    111 

Reed,   107   la.  331;   76  N.  W.  850;  Cal.  319;  43  Pac.  972. 

77    N.    W.    1031     (citing    Shaw    v.  4  Montague   v.    English,    119    Cal. 

Statler,   74  Cal.   258;    15   Pac.  833;  225;  51  Pac.  327. 

Putnam  v.  Grand  Rapids,   58  Mich.  5  Trump    Mfg.    Co.    v.    Buchanan, 

416;   25  N.  W.  330;   State  v.  Mar-  116    Mich.     113;     74    N.    W.    466; 

tin,  27  Neb.  441;  43  N.  W.  244);  Merchants'       National       Bank       v. 

Grady  v.  Landram    (Ky.),  63  S.  W.  Spates,  41  W.  Va.  27;   56  Am.  St. 

284;   State  v.  St.  Paul,  Judge,  etc.,  Rep.  828;  23  S.  E.  681. 

107  La.  777;  32  So.  88;  Trump  Mfg.  6  Higgins  v.  San  Diego,   131   CaJ. 

Co.  V.  Buchanan,  116  Mich.  113;  74  294;  63  Pac.  470. 


PUBLIC   COKPOEATIONS.  1607 

is  presented/  and  a  debt  contracted  against  a  special  fund  must 
be  paid  though  prior  debts  not  out  of  such  fund  cannot  be  paid.^ 
Where  debts  are  invalid  if  they  exceed  the  amount  of  taxes  for 
that  year  less  certain  specified  municipal  expenditures  for 
necessary  purposes,  it  is  error  to  deduct  other  items  of  expense 
than  those  fixed  by  statute  from  the  year's  taxes.®  The  year 
for  which  such  debts  and  revenues  are  to  be  estimated  is  prima 
facie  a  calendar  year/*'  If  a  fiscal  year  is  intended  the  council 
may  change  the  time  of  beginning  thereof  if  they  do  not  thereby 
make  two  fiscal  years  out  of  one." 

§1025.     Necessity  of  certificate  showing  sujficient  funds. 

Other  statutes  avoid  contracts  unless  the  proper  oflScer,  such  as 
the  auditor,  certifies  that  there  is  a  sufiicient  fund  on  hand 
unappropriated  to  discharge  the  liability.^  Thus  a  contract 
employing  an  attorney  is  void  unless  such  certificate  is  filed.^ 
Such  a  statute  applies  only  to  so  much  of  the  cost  of  an  im- 
provement as  is  to  be  paid  from  general  taxation  and  not  to 
the  part  to  be  raised  by  assessment  f  and  does  not  apply  where 
the  fund  is  to  be  raised  by  taxation  thereafter/  or  out  of  the 
income  of  the  property  for  the  purchase  of  which  the  debt 
is  incurred/  or  to  bonds  issued  to  refund  prior  valid  debts.® 

7  Montague   v.   English,    119    Cal.  2  Findlay  v.   Pendleton,   62   O.   S. 
225;  51  Pae.  327.  80;  56  X.  E.  649. 

8  Meyer  v.  Widber,  126  Cal.  252;  3  Comstock  v.  Nelsonville,  61  0.  S. 
58  Pac.  532.  288;   56  N.  E.  15. 

9  Lebanon,    etc.,    Co.    v.    Lebanon,  *  Defiance  Water  Co.  v.  Defiance, 
163  Mo.  246;  63  S.  W.  809.  90   Fed.   753    (a  contract  for   water 

10  Garfield  Township  v.  Dodsworth      supply). 

Book  Co.,  9  Kan.  App.  752;  58  Pac.  5  Kerr  v.   Bellefontaine.  59   0.   S. 

565.  446;   52  N.  E.  1024   (a  contract  for 

11  First  National  Bank  v.   Keith,  gas  works).     A  voucher  not  drawn 
183  111.  475;  56  X.  E.  179.  on  particular  fund,  where  there  are 

1  Jutte,    etc.,    Co.    v.    Altoona,    94  not   enough   funds  to   the  credit   of 

Fed.  61 ;  36  C.  C.  A.  84 ;  Higgins  v.  the  account  on  which  it  should  have 

San   Diego,   118   Cal.    524;    45   Pac.  been    drawn,    is    properly    refused. 

824;  modified  on  rehearing.  50  Pac.  State  v.  Boyden.  18  Ohio  C.  C.  282: 

670;   City  of  Findlay  v.  Pendleton,  10  Ohio  C.  D.  137. 
62  O.  S.  80;  56  X.  E.  649:  Comstock  6  Clapp  v.  Marice  City,  111  Fed, 

V.  Xelsonville,  61   O.  S.  288;   56  X.  103;   49  C.  C.  A.  251- 
E.   15. 


1608  PAGE    ON    CONTKACTS. 

§1026.    Limitation  on  amount  of  indebtedness. 

Statutes  of  a  second  group  have  for  their  purpose  prohibit- 
ing debts  of  a  public  corporation  in  excess  of  a  certain  limit, 
which  is  either  a  fixed  sum  or  a  percentage  on  the  valuation 
of  the  taxable  property  within  the  corporate  limits.  Contracts 
in  excess  of  such  limit  are  invalid/  and  no  recovery  can  be  had 
oh  quantum,  meruit.'  In  some  states,  however,  such  a  contract 
is  voidable,  but  not  void.^  A  later  statute  will  not  be  presumed 
to  repeal  the  earlier  statute  though  it  does  not  in  terms  re- 
enact  it.*  A  "  general  welfare  "  clause  does  not  authorize  the 
issue  of  bonds  in  excess  of  the  amount  specifically  fij^ed  by 
statute.^ 

Where  such  limitation  is  found  in  the  state  constitution 
the  legislature  cannot  authorize  a  debt  in  excess  thereof.^  So 
if  it  is  created  by  the  federal  statute  for  the  government  of 
a  territory  the  territorial  legislature  cannot  authorize  further 
indebtedness.'^  A  statute  will  be  presumed  to  refer  to  the  con- 
stitutional limitation  though  it  does  not  repeat  it  expressly.^ 
A  statute  authorizing  the  issuing  of  railroad  aid  bonds  "  to  any 
amount "  will  be  construed  as  meaning  to  any  amount  within 
constitutional  limits,^  Such  a  limitation,  whether  created  by 
statute^''  or  by  a  constitutional  provision,"  does  not  invalidate 

1  Litchfield  v.   Ballou,    1 14   U.    S.  5  Grace  v.  Mayor,  etc.,  of  Hawk- 

190;  Eathbone  v.  Kiowa  County,  73  insville,  101  Ga.  553;  28  S.  E.  1021. 

Fed.  395 ;   Sutro  v.  Rhodes,  92  Cal.  6  Doon  Township  v.  Cummins,  142 

117;  28  Pac.  98;  Laporte  v.  Game-  U.  S.  366;   Hodges  v.  Crowley,   186 

well,  etc.,  Co.,  146  Ind.  466;  58  Am,  111.  305;  57  N.  E.  889;  Reynolds  v. 

St.  Rep.  359;   35  L.  R.  A.  686;   45  Waterville,    92    Me.    292;    42    Atl, 

N.   E.   588;    Mosher   v.   School   Dis-  553. 

trict,  44  la.  122;  McPherson  v.  Fos-  7  Martin    v.    Territory,    5    Okla. 

ter,   43   la.   48;    22   Am.   Rep.   215;  188;  48  Pac.  106;   Spencer  v.  Gray, 

Helena   Waterworks   Co.   v.   Helena,  5  Okla.  216;  48  Pac.  110. 

27  Mont.  205;   70  Pac.  513.  « Swanson    v.    Ottumwa,    118    la. 

2McGillivray  v.    School    District,  161;    59  L.  R.   A.  620;    91   N.  W. 

112  Wis.  354;  88  Am.  St.  Rep.  969;  1048. 

58  L.  R.  A.  100;  88  N.  W.  310.  »  Germania  Savings  Bank  v.  Darl- 

3  Sioux    City,    etc.,    Co.    v.    Trust  ington,  50  S.  C.  337 ;  27  S.  E.  846. 
Co.,  173  U.  S.  99.  10  City  of  Mitchell  v.   Smith,  12 

4  Beck  V.  St.  Paul,  87  Minn.  381;  S.  D.  241;  80  N.  W.  1077. 

92  N.  W.  328.  11  Myers  v.  Jeffersonville,  145  Ind. 

431;    44   N.   E.   452;    McCreight   v. 


PUBLIC   COEPOBATIONS. 


1G09 


a  preexisting  valid  debt/"  If  the  limit  is  not  reached  whea 
the  contract  is  made,  an  unlawful  diversion  of  public  funds,^* 
as  a  loss  due  to  a  bank  failure,^*  cannot  make  such  contract 
invalid. 

§1027.     Claims  subject  to  limitation. 

The  general  view  taken  of  such  statutory  provisions  is  that 
they  apply  to  all  forms  of  indebtedness,  no  matter  how  incurred 
or  what  is  received  therefor.  Thus  such  limitation  applies  to 
debts  incurred  in  the  purchase  of  property,^  even  if  such  prop- 
erty is  necessary  for  the  management  of  the  public  corporation,^ 
such  as  a  water  supply^  or  electric  lights.^  So  where  the  limit 
of  debt  is  exceeded  a  contract  for  Y,000  lamps  "  more  or  less  " 
is  invalid.^  These  provisions  apply  to  debts  incurred  in  carry- 
ing out  powers  conferred  on  the  municipality  by  statute.® 
Thus  where  no  debt  can  be  created  in  excess  of  income  there  is 
no  implied  liability  resting  on  a  county  for  burying  indigent 
dead  after  the  limit  of  indebtedness  has  been  reached,  though. 


City  of  Camden,  49  S.  C.  78;  26  S. 
E.  984. 

12  City  of  Kansas  City  v.  Gas  Co., 
9  Kan.  App.  325;  61  Pac.  317;  Cass 
County  V.  Wilbarger  County,  25  Tex. 
Civ.  App.  52;  60  S.  W.  988. 

13  State  Savings  Bank  v.  Davis,  22 
Wash.  406;  61  Pac.  43. 

14  New  York,  etc.,  Co.  v.  Taeoma, 
21  Wash.  303;  57  Pac.  810. 

iCrogster  v.  Bayfield  Co.,  99 
Wis.  1;  74  N/W.  635;  77  N.  W. 
167  (where  bonds  were  issued  for 
railroad  stock). 

2  Chicago  v.  McDonald,  176  111. 
404;  52  N.  E.  982;  Laporte  v. 
Gamewell,  etc.,  Co.,  146  Ind.  466; 
58  Am.  St.  Rep.  359;  35  L.  R.  A. 
686;  45  N.  E.  588;  Windsor  v.  Des 
Moines,  110  la.  175;  80  Am.  St.  Rep. 
280;  81  N.  W.  476;  Grand  Island, 
etc.,  R.  R.  Co.  v.  Baker,  6  Wyom. 
369;  71  Am.  St.  Rep.  926;  34  L.  R. 
A.  835 ;  45  Pac.  494. 


s  State  V.  Helena,  24  Mont.  521; 
81  Am.  St.  Rep.  453;  55  L.  R.  A. 
336;  63  Pac.  99. 

4  Windsor  v.  Des  Moines,  110  la. 
175;  80  Am.  St,  Rep.  280;  81  N. 
W.  476  (even  if  the  contract  price 
was  no  greater  than  had  been  paid). 

5  City  of  Chicago  v.  Galpin,  183 
III.  399;  55  N.  E.  731  (citing  Lake 
County  V.  Rollins,  130  U.  S.  662; 
Thompson-Houston  Electric  Co.  v. 
Newton,  42  Fed.  723;  City  of  Chi- 
cago V.  McDonald,  176  HI.  404;  52 
N.  E.  982;  Beard  v.  Hopkinsville, 
95  Ky.  239;  44  Am.  St.  Rep.  222; 
23  L.  R.  A.  402;  24  S.  W.  872; 
overruling  City  of  East  St.  Louis 
V.  Coke  Co.,  98  111.  415;  38  Am. 
Rep.  97;  City  of  Carlyle  v.  Power 
Co.,  140  111.  445;  29  N.  E.  556). 

6  Lake  County  v.  Rollins,  130  U. 
S.  662. 


IGIO  PAGE    ON    CONTRACTS. 

omission  of  burial  is  a  misdemeanor.'^  Sucli  limitation  applies 
to  obligations  imposed  by  statute  as  well  as  to  those  created 
by  express  contract.^ 

According  to  the  foregoing  cases  the  fact  that  the  debt  in 
question  is  incurred  in  the  necessary  and  legitimate  exercise  of 
the  corporation  does  not  make  the  case  an  exception  to  the  plain 
provisions  of  the  statute.^  The  authorities  are  not  unanimous 
upon  this  point,  however.  In  some  jurisdictions  the  provision* 
limiting  indebtedness  are  held  not  to  apply  to  certain  forms* 
of  indebtedness  which  are  required  by  mandatory  constitutional 
provisions.^'*  Thus,  even  where  the  limit  of  indebtedness  has 
been  reached  it  has  been  held  that  a  county  is  liable  for  the  fees 
of  jurors,^^  or  for  the  expense  of  keeping  its  prisoners  in  the 
jail  of  another  county^^  and  that  a  city  is  liable  on  warrants 
issued  for  the  salaries  of  its  policemen,  marshal  and  treasurer  ;^* 
or  for  expenses  of  printing  ballots,  quarantining,  impounding 
stock  and  insuring  city  buildings.^*  Even  where  there  is  a  limi- 
tation of  debts  to  a  certain  per  cent  of  the  assessed  value  a  new 
county  may  borrow  money  for  necessary  running  expenses  before 
the  first  assessment.^^ 

The  limitation  of  the  statute  cannot  be  evaded  by  having 
the  purchase  assume  the  form  of  a  lease,  the  rental  to  pay  the 
purchase  price,^®  nor  by  deferring  the  payment  of  the  purchase 

7  Pacific  Undertakers  v.  Widber,  12  Potter  v.  Douglass  County,  87 
113  Cal.  201 ;  45  Pac.  273.  Mo.  239. 

8  Grand  Island,  etc.,  R.  R.  Co.  v.  is  Hull  v.  Ames,  26  Wash,  272 ;  66 
Baker,   6   Wyoni.   369;    71   Am,   St.  Pac.  391. 

Rep.  926 ;  34  L,  R.  A.  835 ;  45  Pac,  i*  Gladwin    v,    Ames,    30    Wash. 

494,  608;  71  Pac.  189. 

9  Chicago  V.  McDonald,  176  111,  is  Hall,  etc.,  Co.  v.  Board,  etc., 
404;  52  N,  E,  982;  Prince  v.  of  Roger  Mills  County,  8  Okla.  378; 
Quincy,  105  111,  138;  44  Am,  Rep,  58  Pac.  620;  Board,  etc.,  of  Roger 
785;  Law  v.  People,  87  111.  385;  Mills  County  v,  Rowden,  8  Okla. 
Sackettv,  New  Albany,  88  Ind,  473;  406;  58  Pac.  624;  Same  v.  Sauer, 
45  Am.  Rep.  467.  8  Okla.  409;   58  Pac.  625, 

loRauch   V,    Chapman,    16    Wash,  leHall   v.   Cedar   Rapids,    115   la. 

568;  58  Am,  St.  Rep.  52;   36  L.  R.  199;  88  N.  W.  448;  Earles  v.  Wells, 

A,  407;  48  Pac,  253.  94  Wis.  285;  59  Am.  St.  Ei?p.  886; 

11  Ranch  V.   Chapman,   16   Wash.  68  N.  W.  964. 
568;  58  Am,  St.  Rep.  52;  36  L.  R. 
A.  407 ;  48  Pac-  253, 


PUBLIC   CORPORATIONS.  IGll 

price,^'  nor  by  dividing  a  deLt  into  installments,  each  within  the 
limit.^^  So  where  the  limit  is  reached  a  city  cannot  buy  prop- 
erty encumbered  with  liens  though  it  assumes  no  liability.^* 
So  a  mortgage  on  land  purchased  by  a  city  was  counted  as  a 
debt,  the  city  taking  subject  thereto,  though  not  promising  to 
pay  such  debt ;  since  without  paying  it,  the  city  cannot  keep  the 
land.-'^ 

A  contract  for  rentals  for  hydrants  is  usually  considered  as 
creating  a  debt  when  each  installment  becomes  due."^  If  such 
contract  does  not  exceed  the  limit  when  made,  but  exceeds  the 
limit  when  due,  it  is  invalid.""  A  contract  which  gives  an  offi- 
cial power  to  order  unlimited  extras  is  invalid. ^^ 

§1028.     Claims  not  subject  to  limitation. 

A  constitutional  or  statutory  limitation  of  indebtedness  does 
not  apply  to  contracts  which  do  not  create  a  personal  liability 
against  the  public  corporation.  Thus  such  a  limitation  does 
not  apply  to  a  contract  payable  out  of  special  assessments  only  ;'• 

iTCulbertson  v.   Fulton,    127    111,  v.   Minneapolis,    63   Minn.    125;    30 

30;    18  N.  E.  781;   Windsor  v.  Des  L,  R.  A.  281;  65  N,  W.  115;  Burn- 

Moines,    110    la.    175;    80    Am.    St.  ham  v.  Milwaukee,  98  Wis.  128;  73 

Rep.  280;  81  N.  W.  476;  Covington  N.  W.  1018. 

V.  McKenna,  99  Ky.  508;  36  S.  W,  21  See  §  1033. 

518;    Brown  v.  Corry,   175  Pa.  St.  22Keihl   v.   South  Bend,   76   Fed. 

528;   34  Atl.  854;   Spilman  v.  Par-  921;   22  C.  C.  A.  618;   36  L.  R.  A. 

kersburg,  35  W.  Va.  605;   14  S.  K  228. 

279 ;   Earles  v.  Wells,  94  Wis.  285 ;  23  N.  P.  Perrine,  etc.,  Co.  v.  Pasa- 

59    Am.    St.    Rep.    886;    68    N.   W.  dena,  116  Cal.  6;  47  Pac.  777. 

964.  1  Denny  v.  Spokane,  79  Fed.  719; 

18  Hoffman  v.  Gallatin  County,  18  25   C.   C.  A.    164;    Jacksonville  Ry. 

Mont.  224;   44  Pac.  973;    18  Mont.  Co.  v.  Jacksonville,   114  111.  562;   2 

246;  44  Pac.  979;  Pepper  v.  Phila-  N.  E.  478;  Quill  v.  Indianapolis,  124 

delphia,    181    Pa.   St.   566;    37    Atl.  Ind.    292;     7    L.    R.    A.     681;     23 

579.  N.    E.    788;    Ft.    Dodge,    etc.,    Co. 

i9lronwood    Waterworks    Co.    v.  v.     Ft.    Dodge,     115     la.     568;     89 

City  of  Ironwood,  99  Mich.  454;  58  K   W.    7;    Clinton  v.   Walliker,    98 

N.  W.  371.  la.   655;    68   N.   W.   431;    Morrison 

20  Browne  v.  Boston,  179  Mass.  v.  Morey,  146  Mo.  543;  48  S.  W. 
821;  60  N.  E.  934.  Contra,  unpaid  629;  Ladd  v.  Gambell,  35  Or.  393; 
installments  of  the  purchase  price  59  Pac.  113;  Little  v.  Portland,  26 
of  a  park  which  constitute  a  lien  Or.  235;  37  Pac.  911;  Smith  v.  Seat- 
only  are  not  counted  as  debts.  Kelly  tie,    25    Wash.    300;    65    Pac.    612; 


1612  PAGE    OX    CONTRACTS. 

or  out  of  a  special  tax;"  or  out  of  the  gross  receipts  of  the 
waterworks  for  the  erection  of  which  the  deht  is  incurred.^ 
If  the  deht  is  one  for  which  a  tax  could  be  laid,  hut  no  tax 
has  been  laid,  it  is  invalid  if  in  excess  of  the  legal  limit.*  A 
limitation  hj  statute  as  to  the  amount  to  be  paid  for  a  court 
house  does  not  apply  to  a  donation  by  private  citizens.^  A  judg- 
ment on  a  claim  is  not  a  contract  within  the  limitation,  and  if  on 
a  debt  which  exceeded  the  limit,  this  fact  must  be  set  up  in  such 
action  and  cannot  be  a  matter  of  collateral  attack  on  the  judg- 
ment.^ Such  limitation  does  not  apply  to  a  judgment  in  tort.^ 
If  a  certain  form  of  indebtedness  is  by  express  statutory  pro- 
vision authorized  in  excess  of  the  limit  of  ordinary  indebtedness, 
such  limitation  is  valid.^ 


§1029.     Claims  payable  out  of  assessments. 

If  the  parties  who  enter  into  a  contract  with  a  public  cor- 
poration are  required,  either  by  statute  or  by  the  terms  of  their 
contract,  to  look  solely  to  local  assessments  for  their  compensa- 
tion, they  cannot,  in  the  absence  of  special  circumstances,  re- 


Baker  V.   Seattle,  2  Wash.   576;   27  524;  41  Pac.  888;  Faulkner  v.  Seat- 

Pac.  462.  tie,  19  Wash.  320;  53  Pac.  365. 

2  City  of  Xew  Orleans  v.  Warner,  -i  Laporte  v.   Gamewell,   etc.,   Co., 
175   U.    S.    120;    modifying   81   Fed,  146  Ind.  466;  58  Am.  St.  Rep.  359 
645;  26  C.  C.  A.  508;  People  V.  May,  35    L.   R.   A.    686;    45   N.   E.    588 
9   Colo.  404;    12   Pac.   838;    Spring-  Beard  v.  Hopkinsville,  95  Ky.  239 
field  V.  Edwards,   84  111.  626;   Law  44  Am.  St.  Rep.  222;   23  L.  R.  A. 
V.  People,   87  III.   385;    Swanson  v.  402;  24  S.  W.  872. 

Ottumwa,  118  la.  161;   59  L.  R.  A.  5  Way  v.  Fox,  109  la.  340;   80  N. 

620;    91   N.   W.    1048.     Contra,  Ot-  W.  405. 

tumwa    V.    Water    Supply    Co.,    119  6  Edmundson    v.    School    District, 

Fed.  315;  59  L.  R.  A.  604,  in  which  98   la.   639;    60  Am.   St.   Rep.   224; 

the   Federal   Court   refused   to   take  67   N.   W.   671.     See   Grand   Island, 

the  same  view  of  the  liability  of  the  etc.,  R.   R.   Co.  v.   Baker,  6   Wyom. 

city   and   the   validity   of   the   bond  369;  71  Am.  St.  Rep.  926;  34  L.  R. 

issue  as  that  taken  by  the  Supreme  A.  835;  45  Pac.  494. 

Court   of   the   State   in   Swanson  v.  7  For   injury   sustained   by   defect 

Ottumwa,  118  la.  161;   59  L.  R.  A.  in  highway.     McAleer  v.  Angell,  19 

620;  91  N.  W.  1048.  R.  I.  688;  36  Atl.  588. 

3  Winston   v.   Spokane,    12    Wash.  « People    v.    Salt    Lake    City,    23 

Utah   13;   64  Pac.  460. 


PUBLIC   COEPOKATIONS. 


1613 


cover  on  the  contract  against  the  corporation  personally.^  Even 
if  the  city  contracts  to  collect  such  assessments  and  fails  to 
take  proper  steps  to  do  so,  many  authorities  hold  that  the  city 
does  not  incur  any  personal  liaLility  on  the  contract.^  The 
remedy  of  the  creditors  is  to  compel  the  officers  by  mandamus 
to  collect  the  assessment,^  or  to  sue  in  equity  to  compel  the 
city  to  exercise  its  powers  in  making  and  collecting  the  assess- 
ments.* Some  courts  hold  that  the  city  is  liable  for  breach 
of  its  contract  to  collect  such  assessments,^  on  the  theory  that 
it  is  charged  as  trustee  with  the  duty  of  collecting  and  apply- 


iVickrey  v.  Sioux  City,  115  Fed. 
437;  Foster  v.  Alton,  173  111.  587; 
51  N.  E.  76;  affirming  74  111.  App. 
511;  Aflfeld  v.  Detroit,  112  Mich. 
560;  71  N.  W.  151;  Huntington  v. 
Force,  152  Ind.  368;  53  N.  E.  443; 
Kansas  City  v.  Ward,  134  Mo.  172; 
35  S.  W.  600;  Wheeler  v.  Poplar 
Bluff,  149  Mo.  36;  49  S.  W.  1088; 
Heller  v,  Milwaukee,  96  Wis.  134; 
70  N.  W.  1111.  The  same  principle 
applies  where  the  debt  incurred  is 
payable  exclusively  out  of  a  special 
tax.  Raton  Waterworks  Co.  v, 
Eaton,  9  X.  M.  70;  49  Pac.  898; 
reversed  on  another  point,  174  U.  S. 
360. 

2  Pontiac  v.  Paving  Co.,  94  Fed. 
65;  36  C.  C.  A.  88;  48  L.  R.  A. 
326  (rehearing  denied,  96  Fed. 
679 )  ;  Greencastle  v.  Allen,  43  Ind. 
347;  Goodrich  v.  Detroit,  12  Mich. 
279;  Soule  v.  Seattle,  6  W^ash.  315, 
324;  33  Pac.  384  (rehearing  denied, 
33  Pac.  1080)  ;  German,  etc..  Bank 
V.  Spokane,  17  Wash.  315;  38  L.  R. 
A.  259;  47  Pac.  1103;  49  Pac.  542 
(overruling  McEwan  v.  Spokane,  16 
Wash.  212;  47  Pac.  433);  Wilson 
V.  Aberdeen,  19  Wash.  89;  52  Pac. 
524;  Rhode  Island,  etc..  Co.  v.  Spok- 
ane, 19  Wash.  616;   53  Pac.   1104; 


Northwestern  Lumber  Co.  v.  Aber- 
deen, 20  Wash.  102;  54  Pac.  935; 
Fletcher  v.  Oshkosh,  18  Wis.  228. 
"  The  city  ig  not  required  to  collect 
the  tax  and  pay  it  over  to  the  con- 
tractor." Thornton  v.  Clinton,  148 
Mo.  648;  50  S.  W.  295. 

3  People  V.  Syracuse,  144  N.  Y. 
63;  38  N.  E.  1006  (though  in  New- 
York  such  remedy  is  not  exclusive)  ; 
Wilson  v.  Aberdeen,  19  Wash,  89; 
52  Pac.  524. 

4  Burlington  Savings  Bank  v. 
Clinton,  111  Fed.  439;  Farson  v. 
SioiLx  City,  106  Fed.  278. 

5  Clayburgh  v.  Chicago,  25  111. 
535;  79  Am.  Dec.  346;  Foster  v. 
Alton,  173  111.  587;  51  X.  E.  76; 
affirming  74  111.  App.  511;  Weston 
V.  Syracuse,  158  N.  Y.  274;  70  Am. 
St.  Rep.  472;  43  L.  R.  A.  678;  53 
N.  E.  12;  reversing  82  Hun  (N.  Y.) 
67;  Reilly  v.  Albany,  112  N.  Y.  30; 
19  X.  E.  508;  Commercial  National 
Bank  v.  Portland,  24  Or.  188;  41 
Am.  St.  Rep.  854;  33  Pac.  532. 
"  It  could  not  be  s'upposed  that  he 
was  not  only  to  earn  his  compensa- 
tion, but  also  to  set  in  motion  and 
keep  in  operation  the  several  agen- 
cies of  the  city  government  over 
which  he  had  no  control,  to  place 


1614  ■       PAGE    ON"    CONTRACTS. 

ing  tlie  assessments.^  If  the  special  assessment  is  collected  Ly 
the  city,  and  the  funds  arising  therefrom  are  then  embezzled 
by  a  city  official  in  whose  custody  they  are,  the  city  becomes 
liable  for  warrants  drawn  on  such  fund,  though  it  was  not 
liable  originally.^  The  liability  of  the  city  in  case  the  assess- 
ment proves  to  be  unenforceable  is  a  question  on  which  there 
is  a  conflict  of  authority.  In  some  jurisdictions  the  city  is 
liable  if  by  reason  of  its  own  lack  of  compliance  with  the  law 
the  assessments  fail,  even  if  it  is  not  primarily  liable,^  and  even 
if  the  limit  of  the  city's  indebtedness  has  been  exceeded.®  So  if 
the  city  has  no  authority  to  make  the  improvement  at  the  ex- 
pense of  the  abutting  property,  the  contractor  is  allowed  to  re- 
cover from  the  city  even  if  he  has  agreed  that  he  will  be  entitled 
in  no  event  to  recover  from  the  city.^"  In  other  jurisdictions  a 
different  view  obtains.  If  the  special  assessment  is  in- 
valid, because  the  ordinance  levying  it  is  irregular,  it  has 
been  held  that  the  contractor  has  no  remedy  and  cannot 
recover.^^ 

If,  however,  the  contract  is  one  on  which  the  corporation  is 
primarily  liable,  a  partial  or  total  failure  of  the  assessments 
does  not  discharge  the  liability  of  the  corporation.^^ 

§1030.     Refunding  bonds. 

Bonds  issued  after  the  limit  has  been  exceeded,  for  the  pur- 

in  the  hands  of  the  city  the  funds  lo  Louisville  v.  Bitzer,  —  Ky.  — ; 

necessary    to   enable    it   to    pay    its  61  L.  R.  A.  434;  73  S.  W.  1115. 

obligations."     Eeilly  v.  Albany,  112  n  (Village  of)  Park  Ridge  v.  Rob- 

N.  Y.  30,  42;  19  X.  E.  508.  inson,  198  111.  571;  92  Am.  St.  Rep. 

eVickery  v.  Sioux  City,  104  Fed.  276;  65  N.  E.  104. 

164,  12  Burlington     Savings     Bank     v. 

'Potter    V.     New     Whatcom,     20  Clinton,  106  Fed.  269;  State  v.  Com- 

Wash.  589;  72  Am.  St.  Rep.  135;  56  missioners,   37  O.   S.   526;   Lewis  v. 

Pae.  394.  Taylor,  18  Ohio  C.  C.  443;   10  Ohio 

8  Gable  v.  Altoona,  200  Pa.  St.  C.  D.  205;  Addyston,  etc.,  Co.  v. 
15;  49  Atl.  367;  Addyston,  etc.,  Corry,  197  Pa.  St.  41;  80  Am.  St. 
Co.  V.  Corry,  197  Pa.  St.  41;  80  Rep.  812;  46  Atl.  1035;  Belton  v. 
Am.  St.  Rep.  812;  46  Atl.  1035.  Stirling  (Tex.  Civ.  App.),  50  S.  W. 

9  Ft.  Dodge,  etc.,  Co.  v.  Ft.  Dodge,  1027. 
115  la.  568;  89  N.  W.  7. 


PUBLIC  CORPORATIONS. 


1615 


i^se  of  taking  up  pre-existing  valid  bonds/  or  warrants,^  or  a 
valid  indebtedness/  or  a  valid  judgment/  are  valid,  even  if  tbe 
bonds  are  to  be  sold  and  their  proceeds  used  to  take  up  valid 
bonds,  and  for  a  short  time  they  increased  the  debt  beyond  the 
limit. ^  In  any  event  the  new  bonds  must  be  so  dated  that 
double  interest  is  not  paid  by  the  city  for  any  period  of  time.* 
There  is  a  conflict  of  authority  on  this  question,  however ;  and 
some  courts  hold  that  the  new  bonds  thus  issued  are  invalid 
since  there  is  no  assurance  that  the  money  received  from  the 
sale  of  the  new  bonds  will  be  applied  to  discharge  the  earlier 
issue.^  The  correct  procedure  is  said  to  be  to  place  the  new 
bonds  in  the  hands  of  a  trustee  for  delivery  when  the  old  bonds 


1  Fairfield  v.  School  District,  116 
Fed,  838;  Lyon  Co.  v.  Bank,  100 
Fed.  337;  40  C.  C.  A.  391  (affirming 
90  Fed.  523)  ;  Keene,  etc..  Bank  v. 
Lyon  Co.,  97  Fed.  159;  Huron  v. 
Bank,  86  Fed,  272;  30  C.  C.  A.  38; 
49  L.  R.  A.  534;  Lake  County  v. 
Standley,  24  Colo.  1;  49  Pac.  23; 
Powell  V.  Madison,  107  Ind.  106;  8 
N.  E.  31;  Heins  v.  Lincoln,  102  la. 
69;  71  N.  W.  189;  Palmer  v,  He- 
lena, 19  Mont.  61;  47  Pac.  209; 
Hyde  v.  Ewert,  —  S.  D.  — ;  91 
N.  W.  474;  National,  etc.,  Ins.  Co. 
V.  Mead,  13  S.  D.  342;  83  N.  W. 
335;  affirming  on  rehearing  13  S.  D. 
37;  82  N.  W.  78. 

sHotchkiss  v.  iMarion,  12  Mont, 
218;  29  Pac,  821;  Morris  v.  Taylor, 
31  Or.  62;  49  Pac.  660. 

3  Independent  School  District  v. 
Eew,  111  Fed.  1;  55  L.  R.  A.  364; 
49  C.  C.  A.  198;  Board,  etc.,  of 
Lake  County  v.  Bank,  108  Fed.  505; 
47  C.  C.  A.  464;  Board,  etc,  of 
Lake  County  v.  Piatt,  79  Fed.  567; 
25  C.  C.  A.  87;  Los  Angeles  v.  Teed, 
112  Cal.  319;  44  Pac.  580;  Me- 
Creight  v.  City  of  Camden,  49  S.  C. 
78;  26  S.  E.  984;  Hyde  v.  Ewert, 
—  S.  D.  — ;  91  N.  W.  474;  West- 


ern, etc.,  Co,  V.  Lane,  7  S,  D,  599; 
65  N.  W.  17. 

4  Board,  etc.,  of  Lake  County  v. 
Piatt,  79  Fed.  507;  25  C.  C.  A.  87; 
Board,  etc.,  of  Pratt  County  v.  So- 
ciety, etc.,  90  Fed.  233;  32  C.  C.  A. 
596;  Jamison  v.  School  District,  90 
Fed.  387.  But  such  bonds  are  in- 
valid if  the  judgment  has  been  bond- 
ed already.  District  of  Rock  Rap- 
ids V.  Society,  etc.,  98  la.  581;  67 
N.  W.  370. 

5  Huron  v.  Bank,  86  Fed.  272 ;  49 
L.  R.  A.  534;  30  C.  C.  A.  38;  Los 
Angeles  v.  Teed,  112  Cal.  319;  44 
Pac.  580;  Powell  v.  Madison,  107 
Ind.  106;  8  N.  E.  31;  Hotchkiss  v. 
Marion,  12  Mont.  218;  29  Pac.  821; 
Palmer  v.  Helena,  19  Mont.  61 ;  47 
Pac.  209;  Poughkeepsie  v.  Quintard, 
136  X,  Y.  275;  32  N.  E.  764;  Miller 
V.  School  District,  5  Wyom.  217; 
39  Pac.  879. 

6  Louisville  v.  Zimmerman,  101 
Ky.  432;  41  S.  W.  428. 

7  Doon  Township  v.  Cummins,  142 
U.  S.  366;  Heins  v.  Lincoln,  102  Ta. 
69;  71  :N.  W.  189;  Birkholz  v,  Din- 
nie,  6  N.  D.  511;  72  N,  W,  931; 
State  V,  McGraw,  12  Wash,  541; 
41  Pac.  893. 


1616  PAGE    ON    CONTRACTS. 

were  delivered  up  and  cancelled,^  or  to  exchange  the  new  bonds 
for  the  old.^  So  if  the  valuation  of  property  has  shrunk  so 
that  earlier  bonds,  valid  when  issued,  are  in  excess  of  the  per 
cent  of  the  valuation  allowed  by  law,  refunding  bonds  issued 
to  take  up  such  earlier  bonds  are  valid.^"  If  the  bonds  issued 
in  excess  of  the  limit  are  used  in  part  to  refund  valid  debts, 
they  are  valid  up  to  such  amount.^^  Refunding  bonds  are 
invalid  if  in  excess  of  the  limit  of  such  bonds  fixed  by  statute.^^ 
If  the  pre-existing  bonds  are  invalid  as  in  excess  of  the  limit 
of  indebtedness  the  refunding  bonds  are  invalid."  Refunding 
bonds  if  issued  to  the  proper  parties  may  be  made  payable  to 
bearer.^*  Warrants  issued  for  a  prior  valid  debt  are  not  in- 
valid though  issued  after  the  limit  of  indebtedness  is  exceeded/* 

§1031.    Method  of  valuing  property. 

The  value  of  projDerty  as  fixed  by  the  assessing  bodies  and 
not  its  real  value  must  be  used  to  determine  whether  the  limit 
is  exceeded.^  This  has  been  held  to  be  the  last  assessed  value 
before  the  bonds  are  issued  and  not  before  they  are  voted,^ 
though  another  theory  is  that  it  is  "  the  last  assessment  preced- 
ing the  incurring  of  the  indebtedness."  and  not  "the  last  pre- 
ceding the  completion  of  the  work."^     If  the  value  fixed  bj 

sHeins  v.  Lincoln,  102  la.  69;  71  i*  West  Plains  Township  v.  Sage^ 

N.  W.   189.  69  Fed.  943;  16  C.  C.  A.  553. 

9  "There   "was   a    legal   method —  is  United    States    v.    Capdevielle, 

the  method  of  exchange  —  by  which  118  Fed.  809;  55  C.  C.  A.  421. 

they    could   have    issued    the    bonds  ^City   Water    Supply    Co.   v.   Ot- 

without  increasing  the  debt  a  mill."  tumwa,   120  Fed.  309;  City  of  Chi- 

Lyon  County  v.  Bank,  100  Fed.  337,  cago  v.  Fishburn,   189   111.  367 ;    59 

339.  N.  E.  791. 

loEwert  v.  Mallery,  —  S.  D.  — ;  2  Corning   v.   Meade   County,    102 

91  N.  W.  479.  Fed.  57;  42  C.  C.  A.  154;  Board  of 

11  Aetna  Life  Ins.  Co.  v.  Lyou  Lake  County  v.  Sutliflf,  97  Fed,  270, 
County,  82  Fed.  929;  same  case,  95  281;   38  C.  C.  A.  167;   Rathbone  v. 

,  Fed.  325.  Board,    etc.,    of   Kiowa   County,    83 

12  Guckenberger  v.  Dexter,  17  Ohio      Fed.  125,  132;  27  C.  C.  A.  477. 

C.  C.   115;   affirming  5  Ohio  X.  P.  3  Croyster  v.  Bayfield  County,  99 

429.  Wis.   1;    74   K  W.   635;    74  X.   W. 

i3Holliday  v.  Hildebrandt,  97  la.  167;  overruling  State  v.  Tomahawk^ 

177;  06  N.  W.  89.  96  Wis.  73;  71  X.  W.  86. 


PUBLIC  CORPORATIONS. 


1617 


local  assessors  is  subsequently  modified  by  lawful  authority 
the  assessed  value  ultimately  fixed  controls/  Under  some 
statutes  even  a  bona  fide  holder  is  bound  to  take  notice  of  the 
assessment  lists/  under  others  he  is  justified  in  relying  on  the 
clerk's  abstract  of  assessments  without  going  back  to  the  books 
of  the  precinct  assessors  and  boards  of  equalization.* 

§1032.    Method  of  ascertaining  debt. 

The  method  of  ascertaining  indebtedness  in  such  cases  is 
important.  The  principal  and  impaid  interest  due  on  all  out- 
standing debts  on  the  day  that  the  amount  of  the  new  debt  is 
fixed  must  be  ascertained.^  Interest  to  become  due  thereafter 
must  not  be  counted."  Warrants  payable  out  of  funds  on 
hand/  or  out  of  taxes  levied  and  unappropriated/  even  if 
anticipating  a  levy  already  made  but  not  collected/  are  not 
to  be  counted  among  the  debts  'to  determine  if  the  limit  is 
exceeded.  If  cash  on  hand  is  to  be  deducted  from  the  amount 
of  indebtedness  outstanding  warrants  must  be  first  deducted 
from  the  amount  of  cash  on  hand.^  Even  taxes  due  from 
former  years  but  not  collected  have  been  deducted  from  debts/ 
and  it  has  been  held  proper  to  deduct  the  sinking  fund  from 

4  Chicago,  etc.,  Ry.  v  Wilber,  63  ane,  17  Wash.  57;  48  Pac.  783,    But 

Neb.  624;   88  N".  W.  660.  in  State  v.  Tomahawk,  96  Wis.  73; 

sHolliday  v.  Hilderbrandt,  97  la.  71  K  W,   86,  it  seemed  to  be  held 

177;  66  N.  W.  89.  that  only  warrants  against  cash  on 

6  Valley    County    v.    McLean,    79  hand  were  to  be  counted. 
Fed.  728;  affirming  74  Fed.  389.  5  Darling  v.  Taylor,  7  jST.  D.  538; 

lEpping    V.    Columbus,    117    Ga.  75  N.  W.  766    (citing  Grant  v.  Da- 

263;  43  S.  E.  803.  venport,   36   la.   396;   Laurence  Co. 

2  Ashland  v.  Culbertson,  103  Ky.  v.  Meade  County,  10  S.  D,  175;  72 
161;  44   S.  W.  441.  N.   W.   405;    Shannon   v.   Huron,   9 

3  State  V.  Tomahawk,  96  Wis.  73;  S.  D.  356;  69  N.  W.  598;  In  re 
71  N.  W.  86.  State  Warrants,  6  S.  D.  518;  62  X. 

4  (City  of )  Cedar  Rapids  V.  Bech-  W.  101;  Spilman  v.  Parkersburg, 
tel,  110  la.  196;  81  N.  W.  468;  35  W.  Va.  605;  14  S.  E.  279;  dis- 
Adams  v.  Waterville,  95  Me.  242';  approA-ing  Prince  v.  Quincy,  105  111. 
49  Atl.  1042;  Spangler  v.  Leitheiser,  138;  44  Am.  Rep.  785). 

182  Pa.  Si  277;  37  Atl.  832;  Shan-  «  Balch  v.  Beach,  119  Wis.  77;  95 

non  V.  Huron,  9   S.  D,  356;    69   N".  N,  W.  132. 

W.  598;  Rogan  v.  Sherman,  20  R.  I.  7  State  v.  Hopkins,   14  Wash.  59, 

388;   39  Atl.  568;  Kenyon  v.  Spok-  66;  44  Pac.  134,  550. 
103 


1618  PAGE    ON    CONTKACTS. 

debts/  Taxes  uncertain  in  amount,  as  licenses  for  the  sale  of 
liquor  or  taxes  on  the  earnings  of  a  street-railway  cannot  be 
deducted  from  the  gross  debts.^  Taxes  which  have  become 
a  lien  but  are  not  yet  collectible  cannot  be  counted  as  an  asset/" 
Taxes  not  yet  placed  in  the  hands  of  the  proper  officers  for  collec- 
tion cannot  be  deducted.^^  Cash  on  hand  is  to  be  deducted 
from  the  gross  amount  of  indebtedness/"  Money  borrowed  for 
a  specific  purpose  cannot  be  counted  as  an  asset  of  the  city, 
though  in  the  treasury,  and  though  no  contract  for  its  expen- 
diture has  been  made/^  There  is  some  conflict  on  these  points, 
however.  It  has  been  held  improper  to  deduct  cash  on  hand,^* 
or  uncollected  taxes,^^  or  claims  against  others/*  If  taxes  are 
not  to  be  deducted,  current  expenses  payable  out  of  the  taxes 
cannot  be  counted  as  debts/^  In  determining  whether  the 
limit  or  indebtedness  has  been  reached,  invalid  claims 
which  are  not  debts,  such  as.  invalid  bonds,^*  and  illegal  war- 
rants,^**  cannot  be  counted  as  a  part  of  the  indebtedness, 
even  if  voluntarily  paid/"'  Debts  of  other  public  cor- 
porations cannot  be  included  though  such  debts  may  be 
ultimately  paid  in  whole  or  in  part  by  taxes  imposed  upon  the 
property  in  the  public  corporation  whose  debt  is  in  question. 

8  Kelly  V.  Minneapolis,  63  Minn.  404;  52  N.  E.  982;  Municipal  Secur- 
125;  30  L.  R.  A.  281;  65  N.  W.  ity  Co.  v.  Baker  County,  33  Or.  338; 
115.  54  Pac.  174. 

9  Rice  V.  Milwaukee,  100  \Yis.  is  Jordan  v.  Andrus,  27  Mont.  22 ; 
516;  76  N.  W.  341.  69  Pac.   118. 

10  Herman  v.  Oconto,  110  Wis.  i7  O'Bryan  v.  Owensboro,  —  Ky. 
660;  86  N.  W.  681.                                      — ;  68  S.  W.  858;  rehearing  denied, 

iiBalch  V.  Beach,  119  Wis.  77;  95  69  S.  W.  800;  Redding  v.  Espleu 
N.  W.   132.  Borough,  207   Pa.   St.  248;   56  Atl. 

12  Johnson   v.   Pawnee   County,    7       431. 

Okla.  686;  56  Pac.  701;  Crogster  v.  isAshuelot     National      Bank     v. 

Bayfield  County,  99  Wis.  1;    74  N.  Lyon  County,  81  Fed.  127;  German 

W.  635;  77  N.  W.  167.  Ins.   Co.  v.   Manning,   95  Fed.   597; 

13  Herman  v.  Oconto,  110  Wis.  State  v.  Hopkins,  14  Wash.  59,  66; 
660;   86  N.  W.  681.  44  Pac.  134,  559. 

14  City  Water  Supply  Co.  v.  Ot-  i9  Keene,  etc.,  Bank  v.  Lyon  Coun- 
tumwa,    120   Fed.    309;    Chicago   v.  ty.  97  Fed.  159. 

McDonald,    176   111.   404;    52   N.   S.  20  Lyon  County  v.  Bank.   87   Fed. 

982.  137;  30  C.  C.  A.  582;   affirming  81 

16  Chicago   V.   McDonald,    176   111.       Fed.  127. 


PUBLIC   COEPOKATIONS.  1619 

Thus  the  debt  of  a  school  district  co-terminous  with  a  city  can- 
not be  counted  as  city  debt,^^  nor  can  the  debt  of  a  water  district 
be  so  counted ;""  nor  the  proportionate  share  of  the  'county  debt 
payable  by  the  city;"^  nor  the  proportionate  share  of  the  state 
debt.^*  IsoT  are  bonds  to  be  paid  by  a  tax  on  a  township  which 
is  to  be  collected  and  paid  over  by  the  county,  debts  of  the 
county.^^  A  debt  payable  solely  out  of  special  assessments, 
not  creating  a  personal  liability  against  the  city  is  not  to  be 
counted.^^  If  a  debt  is  incurred  for  which  the  city  is  primarily 
liable,  it  must  be  counted  in  determining  whether  the  statutory 
limit  is  exceeded,  even  if  the  city  is  to  be  reimbursed  out  of 
local  assessments,"^  or  in  some  other  manner,  as  in  case  of 
bonds  to  be  paid  out  of  the  proceeds  of  the  waterworks.^^  If  a 
bond  is  a  personal  liability  against  the  corporation,  it  must  be 
counted  though  provision  is  made  for  a  tax  to  pay  such  bond."^ 
The  legislature  may  provide  specifically  that  a  certain  debt  is 
not  to  be  counted  in  determining  the  limit  of  indebtedness.^" 
If  a  special  provision  is  made  by  statute  for  issuing  bonds  in 
excess  of  the  amount  usually  permitted,  as  where  they  are 
issued  for  some  specific  purpose,  as  for  furnishing  water,^^  or 
where  they  are  issued  in  a  specific  manner,  as  by  vote  of  the 
electors,^^  bonds  issued  under  such  special  provisions  are  not 
to  be  counted  in  determining  whether  the  usual  limit  of  in- 

2iHeinl  v.  Terre  Haute,  161  Ind.  enport,  107  la.  90;  77  N.  W.  532; 
44;  66  X.  E.  450;  Hyde  v.  Ewert,  Stehmever  v.  Charleston,  53  S.  C. 
S.  D.  — ;  91  N.  W,  474.  259;   31   S.   E.   322;    Fowler  v.   Su- 

22  Kennebec  Water  District  v.  Wa-  perior,  85  Wis.  411;  54  N.  W.  800. 
terville,  96  Me.  234;  52  Atl.  774.  28  Joliet    v.    Alexander,     194    111. 

23  Todd  V.  Laurens,  48  S.  C.  395;  457;   62  N.  E.  861. 

26   S.  E.  682.  29  0ttumwa  v.  Water  Supply  Co., 

24  Lancaster     School     District     v.  119  Fed.  315;   59  L.  R.  A.   604. 
Eobinson-Humphrey    Co.,    64    S.    C.  30  Prince    v.    Crocker,    166    Mass. 
545;   42  S.  E.  998.  347;    32    L.   R.   A.   610;    44    X.    E. 

25  Board,    etc.,   of   Monroe   Co.   v.  446. 

Harrell,    147    Ind.    500;    46    N.    E.  3i  Los  Angeles  v.  Hance,  137  Cal. 

124.  490;    70   Pac.  475;    Wells  v.    Sioux 

26  Davis  V.  Des  Moines,  71  la.  500;  Falls,  —  S.  D.  — ;  94  N.  W.  425. 
32  N.  W.  470.  32  State  v.  Blake.  26  Wash.  237; 

27  Burlington  Savings  Bank  v.  66  Pac.  396 ;  Hazeltine  v.  Blake,  26 
Clinton,  111  Fed.  439;  Allen  v.  Dav-  Wash.  231;   66  Pac.  394. 


1620 


PAGE    ON    CONTKACTS. 


debtedness  Las  been  exceeded.  Since  the  special  issue  conld 
be  made,  though  the  ordinary  indebtedness  of  the  city  had  then 
readied  the  statutory  limit,  it  follows  that  if  the  special  issue 
is  made  before  the  ordinary  indebtedness  has  reached  such 
limit,  it  should  not  prevent  the  ordinary  indebtedness  from 
reaching  such  limit  thereafter.^^  Bonds  issued  under  a  special 
statute  for  erecting  a  county  insane  asylum  are  not  to  be  in- 
cluded to  determine  whether  debt  exceeds  the  limit.^*  An 
unliquidated  claim  for  damages  for  breach  of  contract  by  a 
contractor  cannot  be  subtracted  from  the  amount  due  on  the 
contract  in  estimating  debts.^^ 


§1033.     Amounts  to  become  due  under  installment  contracts. 

A  contract  lasting  for  a  considerable  time  calling  for  the 
performance  of  services  to  the  corporation  and  payment  there- 
for in  installments  as  such  services  are  rendered  is,  by  the  weight 
of  authority,  a  liability  of  the  corporation  only  for  so  much 
as  is  earned  and  due  and  not  for  future  unearned  installments, 
in  determining  the  debts  of  the  corporation/     Contracts  for  a 


33  Keller  v.  Scranton,  202  Pa.  St. 
586;  52  Atl.  26;  State  v.  Blake, 
26  Wash.  237;  66  Pac.  396;  Hazel- 
tine  V.  Blake,  26  Wash.  231;  66  Pac. 
394. 

34Kyes  V.  St.  Croix  Co.,  108  Wis. 
136;  83  N.  W.  637. 

35  Herman  v.  Oconto,  110  Wis. 
660;  86  N.  W.  681. 

1  Walla  Walla  v.  Water  Co.,  172 
U.  S.  1 ;  affirming  60  Fed.  957 ;  Cen 
terville  v.   Guaranty   Co.,    118   Fed 
332;  55  C.  C.  A.  348;  Fidelity,  etc 
Co.  V.  Water  Co.,  113  Fed.  560;  An 
oka,  etc.,  Co.  v.  Anoka,  109  Fed.  580 
Cunningham   v.   Cleveland,    98    Fed 
657;    39    C.    C.    A.    211;    Kiehl   v, 
South  Bend,  76  Fed.  921;   36  L.  R 
A.  228 ;  Budd  v.  Budd,  59  Fed.  735 
McBean  v.  Fresno,  112  Cal.  159;  53 
Am.  St.  Rep.  191;  31  L.  R.  A.  794 
44  Pac.  358;   Smilie  v.  Fresno  Co., 
112  Cal.  311;  44  Pac.  556;  Higgins 


V.  San  Diego,  118  Cal.  524;  45  Pac. 
824;  modified  on  rehearing  50  Pac. 
670;  People  v.  Pacheco,  27  Cal.  175; 
Koppikus  V.  State  Capitol  Commis- 
sioners, 16  Cal.  248;  State  v.  Mc- 
Cauley,  15  Cal.  429;  Denver  v.  Hub- 
bard, 17  Colo.  App.  346;  68  Pac. 
993;  Carlyle  v.  Carlyle  Water  & 
Power  Co.,  140  111.  445;  29  N.  E. 
556;  East  St.  Louis  v.  Coke  Co., 
98  111.  415;  38  Am.  Rep.  97;  La 
Porte  V.  Gamewell,  etc.,  Co.,  146 
Ind.  466;  58  Am.  St.  Rep.  359; 
35  L.  R.  A.  686;  45  N.  E.  588; 
City  of  South  Bend  v.  Reynolds,  153 
Ind.  70;  49  L.  R.  A.  795;  57  X.  E. 
706;  Seward  v.  Liberty,  142  Ind. 
551;  42  N.  E.  39;  Poland  v.  Frank- 
ton,  142  Ind.  546;  41  N.  E.  1031; 
Crowder  v.  Sullivan,  128  Ind.  486; 
13  L.  R.  A.  647;  28  N.  E.  94;  Val- 
paraiso v.  Gardner,  97  Ind.  1 ;  49 
Am.    Rep.     416;     Dively    v.     Cedar 


PUBLIC   COEPORATIONS. 


1G21 


«Upplj  of  light  and  water  are  the  most  common  examples  of 
this  sort.  Where  this  view  is  taken,  the  financial  condition 
of  the  city  when  any  given  installment  becomes  due  determines 
the  validity  of  the  contract  as  to  that  installment.^ 

Other  authorities  hold  that  all  the  sums  which  may  be  pay- 
able under  such  contract  in  the  future  must  be  added  to  deter- 
mine whether  the  limit  is  exceeded.^  All  the  installments  to 
become  due  under  such  a  contract  have  been  counted  as  a  pres- 
ent debt  under  a  provision  forbidding  incurring  a  debt  without 
provision  for  paying  the  same.*  In  many  cases  it  has  not 
been  necessary  to  decide  whether  installments  payable  when 
services  are  rendered  should  be  added  in  determining  the  exist- 
ing amount  of  indebtedness.  If  the  limit  of  indebtedness  has 
already  been  reached  such  contract  creates  a  debt  for  at  least 
the  first  installment  and  if  no  tax  is  levied  to  pay  such  install- 
ment the  contract  is  void.^     A  similar  result  follows  if  the 


Palls,  27  la.  227;  Grant  v.  Daven- 
port, 36  la.  396;  Creston  Water- 
works Co.  V.  Creston,  101  la.  687; 
70  N.  W.  739;  New  Orleans,  etc., 
Co.  V.  New  Orleans,  42  La.  Ann. 
188;  7  So.  5.59;  Smith  v.  Dedham, 
144  Mass.  177;  10  N.  E.  782;  Lud- 
ington,  etc.,  Co.  v.  Ludington,  119 
Mich.  480;  78  N.  W.  558;  Lamar 
Water,  etc.,  Co.  v.  Lamar,  140  Mo. 
145 ;  39  S.  W.  768 ;  Lamar,  etc.,  Co. 
V.  Lamar,  128  Mo.  188;  32  L.  E.  A. 
157;  31  S.  W.  756;  26  S.  W.  1025; 
Saleno  v.  Neosho,  127  Mo.  627;  48 
Am.  St.  Rep.  653 ;  27  L.  R.  A.  769 ; 
30  S.  W.  190;  Weston  v.  Syracuse, 
17  N.  Y.  110;  Territory  v.  Okla- 
homa, 2  Okla.  158;  37  Pac.  1094; 
Wade  V.  Oakmont  Borough,  165  Pa. 
St.  479;  30  Atl.  959;  Seitzinger  v. 
Tamaqua,  187  Pa.  St.  539;  41  Atl. 
454;  Stedman  v.  Berlin,  97  Wis. 
505 ;  73  N.  W.  57. 

2Keihl  V.  South  Bend,  76  Fed. 
921;  36  L.  R.  A.  228. 

3  City  of  Dawson  v.  Waterworks 
Co.,    106    Ga.    696;    32    S.    E.    907; 


overruling  in  part  Spann  v.  Webster 
Co.,  64  Ga.  498;  Cabaniss  v.  Hill, 
74  Ga.  845;  Kuchli  v.  EHectric  Co., 

58  Minn.  418;  49  Am.  St.  Rep.,  523; 

59  N.  W.  1088;  State  v.  Helena,  24 
Mont.  521;  81  Am.  St.  Rep.  453; 
55  L.  R.  A.  336;  63  Pac.  99;  Niles 
Waterworks  v.  Niles,  59  Mich.  311; 
26  N.  W.  525 ;  State  v.  City  of  Bay- 
onne,  55  N.  J.  L.  241;  26  Atl.  81; 
Salem  Water  Co.  v.  Salem,  5  Or. 
29;  Erie's  Appeal.  91  Pa.  St.  398; 
Duncan  v.  Charleston,  60  S.  C.  532; 
39  S.  E.  265. 

4  Dawson  v.  Waterworks  Co.,  102 
Ga.  594;  29  S.  E.  755;  State  v.  Bay- 
onne,  55  N.  J.   L.  241;   26  Atl.  81. 

5  Chicago  V.  McDonald,  176  111. 
404;  52  N.  E.  982;  (holding  re- 
marks in  East  St.  Louis  Co.  v.  Coke 
Co.,  98  111.  415;  38  Am.  Rep. 
97;  and  Carlyle  v.  Power  Co.,  140 
111.  445;  29  N.  E.  556;  obiter  as  in 
those  cases  the  limit  was  not  reached 
when  the  debt  was  incurred)  ;  Beard 
v.  Hopkinsville,  95  Ky.  239;  44 
Am.  St.  Rep.  222;  23  L.  R.  A.  402; 


1622  PAGE    ON    CONTRACTS. 

liability  exceeds  the  appropriation.^  Even  if  the  income  from 
the  property  thus  brought/  or  from  taxes  which  the  city  means 
to  levy/  will  probably  exceed  the  amount  of  the  annual  install- 
ments the  contract  is  invalid  if  it  imposes  a  liability  on  the  city. 
In  other  cases  a  somewhat  different  view  of  such  a  contract  is 
taken.  It  is  held  void  if  it  is  not  shown  that  the  annual 
revenues  from  the  property  will  pay  for  the  installments.^  If 
the  contract  is  really  one  of  purchase  of  a  plant  outright,  the 
price  to  be  paid  under  the  guise  of  annual  rentals,  the  total 
cost  must  be  counted  as  a  debt  existing  when  the  contract  is 
made,  and  if  the  limit  of  indebtedness  is  then  exceeded,  such 
contract  is  invalid.^**  If  the  annual  installments  are  to  be  paid 
out  of  the  receipts  from  the  property  bought  and  no  liability 
attaches  to  the  city,  such  contract  is  valid  even  if  the  limit  of 
indebtedness  is  exceeded.^^ 

Other  authorities  have  held  that  no  appropriation  in  advance 
for  future  installments  was  necessary  where  a  contract  could 
be  based  only  on  an  appropriation.^^!  It  is  sufficient  if  an 
appropriation  be  made  each  year  to  cover  the  installment  accru- 
ing in  that  year.^^  Under  such  a  statute  a  five-year  contract 
for  lighting  was  held  invalid  where  there  was  no  appropriation 
for  more  than  two  months."  So  where  the  statute  requires  the 
certificate  of  the  proper  officer  that  there  are  sufiicient  funds 

24  S.  W.  872 ;  State  v.  Atlantic  City,  v.  Wells,  94  Wis.  285 ;   59  Am.  St. 

49  X.  J.  L.   558;    9   Atl.   759.  Eep.  886;  68  N.  W.  964;   (the  water- 

6  Atlantic  City  Waterworks  Co.  v.  works  to  become  the  property  of  the 
Read,  50  N.  J.  L.  665;  15  Atl.  10.  city   when    the    rentals    are   paid)  ; 

7  Beard  v.  Hopkinsville,  95  Ky,  (distinguishing  Crowder  v.  Sulli- 
239;  44  Am.  St.  Rep.  222;  23  L.  R  van,  128  Ind.  486;  13  L.  R.  A.  647; 
A.  402;  24  S.  W.  872;  State  ex  rel.  28  N.  E.  94;  Smith  v.  Dedham,  144 
Read  v.  Atlantic  City,  49  N.  J.  L.  Mass.  177;  as  true  installment  con- 
558;   9  Atl.   759.  tracts). 

8  Davenport  v.  Kleinschmidt,  6  n  Valparaiso  v.  Gardner,  97  Ind. 
Mont.  502;    13  Pac.  249.  1;  49  Am.  Rep.  416. 

9  Erie's  Appeal.  91  Pa.  St.  398.  12  Lincoln  Land  Co.  v.  Grant,  57 

10  Baltimore,  etc.,  Ry.  v.   People,      Neb.  70;   77  N.  W.  349. 

200  111.  541;  66  N.  E.  148;  Spilman  1 3  Denver    v.    Hubbard,    17    Colo. 

V.  Parkersburg.  35  W.  Va.  605 ;   14  App.  346 ;  68  Pac.  993. 

S.   E.  279;    (the  electric-light  plant  i*  Indianapolis  v.  Wann,  144  Ind. 

to  be  sold  to  the  city  for  one  dollar  175;  31  L.  R.  A.  743;  42  N.  E.  901. 
"when  the  rentals  were  paid )  ;  Earlea 


PUBLIC  COEPOBATIONS.  1623 

in  the  treasury,  such  certificate  need  not  be  made  for  future 
installments/^  An  ordinance  fixing  the  rate  of  hydrant  rentals 
is  not  a  contract,  does  not  create  a  debt,  and  hence  is  valid  even 
if  the  limit  is  reached/*^ 

§1034.    Validity  of  debt  whicli  causes  excess  over  limit. 

When  bonds  are  issued  for  a  debt  which,  when  added  to  the 
pre-existing  valid  debts,  exceeds  the  limit,  some  authorities 
hold  that  the  bonds  are  invalid  in  toto,^  while  others  hold  that 
they  are  good  for  such  amount  as  added  to  pre-existing  debts 
equals  the  legal  limit  of  indebtedness,^  and  if  the  bonds  are 
issued  simultaneously  the  deficiency  is  to  be  pro  rated  among 
the  bonds,^  while  if  issued  in  different  series  at  different  times 
those  first  issued  are  good  up  to  the  legal  limit.*  Other  debts 
which  cause  the  limit  to  be  exceeded  are  valid  up  to  the  limit.^ 
So  a  contract  for  the  erection  of  a  schoolhouse,  which  incurs 
the  debt  which  exceeds  the  statutory  limit,  can  be  enforced  up 
to  the  limit.^ 

§1035.     Popular  vote  on  incurring  debt. 

Many  statutes  require  a  popular  vote  as  a  pre-requisite  to 
incurring  certain  kinds  of  debts,^  as  to  exceed  the  limit  of 

15  Defiance  v.  Defiance,  23  Ohio  Ind.  229;  50  N.  E.  81;  Turner  v. 
C.  C.  96.  Woodson  Co.,  27  Kan.  314. 

16  Danville  v.  Water  Co.,  180  111.  s  Columbus  v.  Woonsocket  Institu- 
235;  54  N.  E.  224;  s.  c,  178  111.  lion.  114  Fed.  162;  52  C.  C  A.  118; 
299;   53  N.  E.   118.  Francis  v.  Howard  Co..  50  Fed.  44, 

1  Hedges  v.  Dixon  Co.,  150  U.  S.  Nolan  Co.  v.  State,  83  Tex.  182;  17 
182;  Massachusetts,  etc.,  Co.  V.  Cane      S.   W.   823. 

Creek  Tp.,  45  Fed.  336;  Crogster  v.  4  Citizens'  Bank  v.  Terrell,  78  fex. 

Bayfield  Co.,  99  Wis.   1;   74  N.  W.  450;  14  S.  W.  1003. 

635;   77  X.  W.  167.  5  Chicago    v.    McDonaW^    176    111. 

2  Columbus  V.  Woonsocket  Insti-  404;  52  X.  E.  982;  Webb  City.  etc.. 
tution.  114  Fed.  162;  52  C.  C.  A.  Co.  v.  Carterville,  153  .Mo.  128;  54 
118;   Everett  v.  Independent  School  S.  W.  557. 

District,  109  Fed.  697 ;   Rathbone  v.  6  McGillivray   v.    School    District, 

Board,  etc.,  of  Kiowa  Co.,   83  Fed.  112  Wis.  354;  8?  Am.  St.  Pvep.  969; 

125;  27  C.  C.  A.  477;  Culbertson  v.  58  L.  R.  A.   100;   88  N.  W.  310. 

Fulton,   127  111.  30;    18   N.  E.  781;  i  State  v.   Kansas   City,   60   Kan. 

Winamac  School  Town  v,  Hess,  151  518:    57   Pac.    118;    Farr   v.    Grand 


1624 


PAGE    ON    CONTKACTS. 


indebtedness.^  An  election  is  necessary  only  when  required  by 
statute.^  Thus,  if  an  election  is  necessary  for  the  validity  of 
an  issue  of  bonds  amounting  to  one  hundred  thousand  dollars 
or  over,  the  council  may  issue  a  less  amount  for  a  proper  pur- 
pose without  an  election,  although  the  total  bonded  indebted- 
ness exceeds  such  limit.*  Where  the  statute  requires  a  vote  on 
purchases  over  $500,  such  provision  cannot  be  evaded  by  giv- 
ing several  warrants  for  the  purchase  each  less  than  $500.^ 

Such  provisions  usually  apply  only  to  the  creation  of  new 
debts  and  not  to  the  refunding  of  old  ones,''  but  if  the  rate  of 
interest  is  increased  an  election  is  necessary  for  refunding.^  A 
contract  by  which  a  viaduct  is  to  be  erected  without  any  expense 
to  the  city,  but  the  city  assumes  the  damages  to  abutting  prop- 
erty incurs  debts  within  the  meaning  of  a  constitutional  pro- 
vision requiring  an  election.^  If  an  election  on  the  question  of 
issuing  aid  bonds  is  held  before  the  adoption  of  a  constitutional 
provision  forbidding  such  issue  and  the  bonds  are  issued  after- 
wards they  are  invalid.®     The  bonds  must  be  restricted  to  the 


Eapids,  112  Mich.  99;  70  N.  W. 
411;  Appleton  Waterworks  Co.  v. 
Appleton,  116  Wis.  363;  93  N.  W. 
262.  Issuing  bonds,  Belknap  v. 
Louisville,  99  Ky.  474;  59  Am.  St. 
Eep.  478;  34  L.  K.  A.  256;  36  S.  W. 
1118;  Roye  v.  Columbia,  192  Pa. 
St.  146;  43  Atl.  597.  Constructing 
sewers,  Kennedy  v.  Belmar,  61  N.  J. 
L.  20;  38  Atl.  756.  Constructing 
roads,  Theis  v.  Board,  etc.,  of  Wa- 
shita Co.,  9  Okl.  643;  60  Pac.  505. 
Contract  for  school  house.  Grady 
V.  Pruit,  111  Ky.  100;  63  S.  W. 
283.  Contract  for  waterworks, 
Painter  v.  Norfolk,  62  Neb.  330;  87 
X.  W.  31;  Defiance  v.  Defiance,  23 
Ohio  C.  C.  96;  Duncan  v.  Charles- 
ton, 60  S.  C.  532;  39  S.  E.  265. 
Contract  for  water  supply.  Har- 
rodsburg  v.  Water  Co.  (Ky.),  64 
S.  W.  658. 

2  Christie    v.    Duluth,     82    Minn. 
202;   84  N.  W.  754;   State  v.  Pull- 


man, 23  Wash.  583 ;  83  Am.  St.  Rep. 
836;  63  Pac.  265. 

3  Board,  etc.,  of  Seward  Co.  v. 
Ins.  Co.,  90  Fed.  222;  32  C.  C.  A. 
585;  Klamath  Falls  v.  Sachs,  35  Or. 
325;  76  Am.  St.  Rep.  501;  57  Pac. 
329. 

4  Le  Tourneau  v.  Duluth,  85  Minn. 
219 ;  88  N.  W.  529. 

5  Fire  Extinguisher  Mfg.  Co.  v. 
Perry,  8  Okl.  429;  58  Pac.  635. 

6Geer  v.  Ouray  Co.,  97  Fed.  435; 
38  C.  C.  A.  250;  Lexington  v.  Bank, 
75  Miss.  1;  22  So.  291;  McCreight 
V.  City  of  Camden,  49  S.  C.  78;  26 
S.  E.  984. 

TBroadfoot  v.  Fayetteville,  128 
X.  C.  529 ;  39  S.  E.  20. 

8  Keller  v.  Scranton,  200  Pa.  St. 
130;  86  Am.  St.  Rep.  708;  49  AtL 
781. 

9Stebbins  v.  Perry  Co.,  167  HI. 
567;  47  N.  E.  1048;  reversing  66 
111.  App.  427.     (The  prior  election 


PUBLIC   COEPORATIOXS.  1625 

purpose  for  which  the  special  tax  is  voted.^''  A  vote  to  buy 
land  and  build  inarket  does  not  give  power  to  build  on  land 
already  owned. ^^  The  statute  may  limit  the  time  within  which 
the  validity  of  a  bond  election  may  be  attacked.^^ 

§1036.     Form  of  resolution. 

The  question  to  be  voted  on  is  usually  submitted  by  ordi- 
nance or  resolution.  The  resolution  or  ordinance  must  show 
the  purpose  for  which  the  debt  is  to  be  incurred.^  Describing 
the  debt  to  be  bonded  as  "  outstanding  indebtedness  other  than 
municipal  bonds  "  is  not  sufficient."  The  amount  of  the  debt 
must  be  given,^  but  if  the  rate  of  interest  is  given  it  is  not 
necessary  to  compute  it.*  In  some  jurisdictions  the  proposi- 
tion submitted  must  specify  the  exact  amount  to  be  issued,  and 
not  merely  the  maximum  amount  for  which  authority  is 
wished  f  in  others  it  is  sufficient  to  state  the  maximum  amount.® 

§1037.     Formalities  of  election.— Voting  on  several  propositions. 

The  formalities  necessary  to  a  valid  election  depend  so  en- 
tirely on  the  details  of  local  statutes  that  no  general  statement 
of  them  is  practicable.  In  the  absence  of  statute,  more  than 
one  proposition  may  be  submitted  at  one  election  if  the  elec- 
tors are  given  a  fair  chance  to  vote  on  each  issue  separately. 
A  vote  may  be  taken  at  the  same  time  on  two  separate  bond 
issues,^   or  two  propositions   for   incurring  indebtedness,^  but 

was  in  this  case  not  authorized  by  3  Dawson  v.  Waterworks  Co.,  106 

law.)  Ga.  696;  32  S.  E.  907. 

10  Callaghan  v.  Alexandria,  52  La.  4  Ponder  v.  Forsyth,  96  Ga.  572; 

Ann.  1013;  27  So.  540.  23  S.  E.  498. 

iiTukey  v.  Omaha,  54  Neb.  370;  5  State    ex   rel.   Schultze   v.   Man- 

69    Am.    St.    Rep.    711;    74    N.    W.  Chester  Township,  61  N.  J.  L.  513; 

613.  40   Atl.   589. 

12  Gray  V.  Bourgeois,  107  La.  671;  e  Chicago,  etc.,  Ry.  v.  Wilber,  63 

32  So.  42.  Neb.  624 ;   88  N.  W.  660. 

i  In  re  Statehouse  Bonds,  19  R.  1.  i  INIaybin  v.  Biloxi.  77  Miss.  673; 

393;  33  Atl.  870.  28  So.  566. 

2  Coffin    V.    Richards,    6    Ida    741,  2  Wetzell    v.    Paducah,    117    Fed. 

744;  59  Pac.  562.  547. 


1626  PAGE    ON    CONTEACTS. 

the  electors  must  have  a  chance  to  vote  on  each  separately.* 

§1038.    Notice  of  election. 

!Notice  is  necessary  only  if  required  by  statute.^  j^otice  of 
the  indebtedness  to  be  voted  on  is  often  necessary  by  statute. 
An  election  is  void  if  legal  notice  is  not  given  substantially 
in  the  form  and  manner  required  by  statute.^  But  where  the 
statute  requires  bond  by  the  commissioners,  before  any  act 
done,  and  the  election  must  be  held  before  such  bond,  it  is 
valid  if  held  before.^  The  notice  must  advise  the  electors 
of  the  proposition  to  be  voted  on.*  Technical  accuracy 
in  the  notice  is  not  necessary  if  it  conveys  in  a  reason- 
ably clear  manner  the  information  necessary.^  Substantial 
compliance  with  the  statutory  requirements  of  notice  is  suffi- 
cient.^ If  ten  days'  notice  is  required,  thirty  days'  notice  is 
sufficient.'  If  five  weeks'  notice  is  required,  notice  once  a 
week  for  five  weeks  is  sufficient  even  if  the  first  notice  was 
given  only  thirty-two  days  before  the  election.^  If  the  law 
requires  fifteen  days'  notice,  it  is  sufficient  if  notices  are  given 
nineteen,  twelve,  and  five  days  respectively  before  the  election.* 
Omission  to  state  the  hours  of  the  election  on  the  question  of 
the  bond  issue  does  not  invalidate  the  notice  where  this  omis- 
sion may  be  supplied  from  the  regular  election  notices."  If 
notice  of  the  election  is  given  as  required  by  statute,  omissions 

3  City    of    Denver    v.    Hayes,    28  359 ;  42  S.  E.  767 ;  Smith  v.  Dublin, 

Colo.    110;    63    Pac.    311;    Cain    v.  113  Ga.  833;  39  S.  E.  327. 

Smith,  117  Ga.  902;  44  S.  E.  5.  s  Paekwood    v.    Kittitas    Co.,    15 

lAsheville  V.  Webb,  134  N.  C.  72;  Wash.    88;    55   Am.    St.    Rep.    875; 

46  S.  E.  19.  33  L.  R.  A.  673;  45  Pac.  640. 

2Demaree    v.    Johnson,    150    Ind.  6  Sommercamp   v.   Kelly,   —   Ida. 

419,    424;    49   N.   E.    1062;    rehear-  — ;   71  Pac.  147. 

ing  denied,  judgment  modified,  50  N.  7  Hesseltine  v.   Wilbur,   29  Wash. 

E.  376.     Or  in  New  Jersey  if  held  407;   69  Pac.   1094. 

in  less  than  twenty  days  after  the  «  State  v.  Weston,  —  Neb.  — ;  93 

resolution  becomes  effective.     State  N.  W.  728. 

ex   rel.   Mittag   v.    Park    Ridge,    01  o  State   v.   Allen,   —  Mo.   — ;    77 

N.  J.  L.  151 ;  38  Atl.  750.  S.  W.  868. 

3  Village  v.  Champlairi  v.  McCrea,  lo  Packwood    v.    Kittitas    Co.,    15 

165  N.  Y.  264;  59  N.  E.  83.  Wash.  88;  55  Am.  St.  Rep.  875;  33 

4Wilkins  v.  Waynesboro,  116  Ga.  L.  R.  A.  673;  45  Pac.  640. 


PUBLIC  COEPOEATIONS.  1627 

to  comply  with  the  provisions  of  the  resolution  of  the  council 
calling  such  election  may  be  waived  by  the  council.** 

§1039.     Number  of  votes  necessary. 

The  number  of  votes  which  must  be  cast  for  the  proposition 
for  indebtedness  in  order  to  carry  it  depends  on  statute  and 
is  usually  either  a  majority  or  two  thirds.  Where  a  general 
statute  provided  that  a  majority  should  be  sufficient,  and  the 
charter  of  a  railroad  provided  that  counties  through  which  it 
passed  might  aid  it  on  a  two-thirds  vote,  it  was  held  that  a 
county  through  which  it  did  not  pass  might  aid  it  by  a  ma- 
jority vote.^  The  question  most  frequently  arising  in  this  con- 
nection is  of  what  votes  this  majority  or  two  thirds  consists. 
It  usually  means  a  majority  of  those  voting,  not  of  those  au- 
thorized to  vote."  If  other  questions  are  voted  on  at  the  same 
election  as  the  question  of  indebtedness,  some  statutes  are  con- 
strued to  require  a  majority  of  all  votes  cast  at  such  election,* 
others  to  require  only  a  majority  on  two  thirds  of  the  votes 
cast  on  the  question  of  the  bond  issue.'*  Where  the  statute 
required  the  assent  of  "  two  thirds  of  the  voters  thereof,  voting 
at  an  election  to  be  held  for  that  purpose,"  it  was  held  to 
require  only  two  thirds  of  those  voting  on  the  bond  question 
and  not  two  thirds  of  all  voting  at  that  election.^  The  statute 
may    require    two-thirds    of    those    authorized    to    vote.     The 

11  Hamilton  v.  Detroit,   83  Minn.  Joaquin  Co.,  109  Cal.  152;  41  Pac. 

119;  85  N.  W.  933.  864;  Holcomb  v.  Davis,  56  111.  413; 

1  Carpenter  v.  Greene  County,  130  Marion  County  v.  Winkley,  29  Kan. 
Ala.  613;  29  So.  194.  36;    Smith    v.    Proctor,    130    N.    Y. 

2  State  V.  Ruhe,  24  Nev.  251;  52  319;  14  L.  R.  A.  403;  29  N.  K  312; 
Pac.  274.  Metcalfe  v.  Seattle,  1  Wash.  297;  25 

sStebbins   v.    Grand    Rapids,    108  Pac.  1010. 

Mich.  693;  66  N,  W.  594;  Bryan  v.  5  Montgomery  County  v.  Trimble, 

City  of  Lincoln  et  al.,  50  Neb.  620;  104  Ky.  629;  42  L.  R.  A.  738;  47  S. 

35   L.   R.    A.    752;    70   N.   W.   252;  W,     773;      overruling     Belknap     v. 

State  ex  rel.  v.  Cornell,  54  Neb.  72;  Louisville,  99  Ky.  474;   59  Am.  St. 

74  N.  W.  432.  Rep.  478 ;  34  L.  R.  A.  256 ;  36  S.  W. 

4  Carroll  Co.  v.  Smith,   111  U.  S.  1118;       McGoodwin      v.      Franklin 

556;  Cass  Co.  v.  Johnston,  95  U.  S.  (Ky.),  38  S.  W.  481;  Owensboro  v. 

360;    Armour,    etc.,    Co.    v.    Finney  Baker    (Ky.),  37  S.  W.   1129. 
Co.,  41  Fed.  321;   Howland  v.  San 


1628  PAGE    ON    CONTRACTS. 

iiiimLcr  authorized  is  to  be  determined  bj  the  registration 
lists,  if  there  are  such  lists ;  and  if  not  by  the  votes  at  the  last 
election,  if  greater  in  number  than  those  cast  at  the  bond  elec- 
tion,*' but  if  the  number  cast  at  thfi  bond  election  is  greater* 
that  number  will  control.'^ 

§1040.    Method  of  holding  election. 

Statutes  usually  provide  with  considerable  detail  the  method 
of  holding  the  election.  Registration  of  voters  at  such  elec- 
tion may  be  required.^  In  such  case  bona  fide  holders  are  not 
bound  to  go  back  of  the  registration  books,  but  may  rely  on 
the  certificate  of  the  registrar  as  to  the  legality  of  the  regis- 
tration.^ Canvassing  of  the  returns  by  the  county  board  is  not 
necessary  if  the  statute  does  not  require  it.^  The  vote  may  be 
recanvassed  if  the  election  laws  allow  it  and  the  bonds  have  not 
been  delivered.*  Slight  irregularities  in  the  form  of  the  ballot 
/lot  tending  to  mislead  the  voters  do  not  invalidate  the  election. 
Thus  where  some  ballots  were  for  "electric  light  contract  and 
tax  levy  "  and  others  for  "  electric  light  contract,"^  or  where 
the  ballots  were  marked  "  For  taxation.  Yes  — .  Against 
taxation,  ^o  — ,"  the  voter  to  mark  in  the  blank,®  the  elec- 
tion was  held  valid.  The  ordinary  election  laws  apply.^ 
Irregularity  in  holding  an  election  in  one  ward  only  does  not 
necessarily  invalidate  the  election.^ 

§1041.     Petition  of  voters. 

LTnder  other  statutes  there  must  be  a  petition  signed  by  a 
majority  of  the  qualified  voters  to  authorize  certain  contracts.* 

6  Wilkins  v.  Waynesboro,  116  Ga.  4  Louisville  v.  Park  Commission- 
359;    42   S.  E.   767.  ers,  112  Ky.  409;  65  S.  W.  860. 

7  McKnight  v.  Senoia,  115  Ga.  s  Lebanon,  etc.,  Co.  v.  Lebanon, 
915;  42  S.  E.  256.  163  Mo.  246;  63  S.  W.  809. 

1  Pacific      Improvement      Co.      v.  e  Bras  v.  McConnell,  114  la.  401; 

Clarksdale,  74  Fed.  528;  20  C.  C.  A.  87  N.  W.  290. 

635.  ■^  Hammond   v.   San   Leandro,   135 

2Claybrook    v.    Rockingham    Co.,  Cal.  450;   67  Pac.  692;    (as  to  the 

117  N.  C.  456;   23  S.  E.  360;   same  time  of  closing  the  polls) . 

case,  114  N.  C.  4.53;  19  S.  E.  593.  8  Lebanon,    etc..    Co.    v.    Lebanon, 

3  Brown  v.   Tngalls   Township,   86  163  Mo.  246;   63  S.  W.  809. 

Fed.  261 ;  30  C.  C.  A.  27.  i  Ex  rel.  McWhirter  v.  Newberry, 


PUBLIC   CORPORATIONS.  1629 

If  SO  many  withdraw  their  consent  before  action  is  taken  that 
less  than  the  requisite  number  is  left,  authority  to  make  such 
contract  is  lacking."  A  petition  that  the  municipality  let  con- 
tracts and  that  three  thousand  dollars  will  be  necessary  there- 
for and  will  benefit  the  town  is  sufficient  to  indicate  the  wish 
of  the  petitioners  that  the  municipality  borrow  such  sum.^  If 
the  petition  must  be  signed  by  freeholders  the  name  of  one 
owning  no  property  in  such  municipality  and  living  on  his 
wife's  property  therein  is  not  sufficient.* 

§1042.    Examples  of  ultra  vires  contracts  in  general. 

A  public  corporation  has  no  implied  authority  to  make  con- 
tracts which  are  not  necessary  to  carry  out  the  governmental 
purposes  for  which  it  was  formed.  Thus  power  to  buy  land 
for  its  use  and  benefit  is  not  power  to  buy  for  investment;^ 
nor  for  making  a  gift  thereof,^  nor  can  a  county  bind  itself  by 
a  warranty  in  its  deed,^  nor  convey  realty  without  an  express 
grant  of  power.*  A  public  corporation  cannot  under  general 
power  contract  that  it  will  abstain  from  exercising  powers 
necessary  in  conducting  local  government.^  It  cannot  contract 
away  its  police  power,"  or  its  power  to  tax.'^  A  city  cannot 
bind  itself  for  all  future  time;  as  to  maintain  a  bridge,^  or  a 
well  in  a  public  street,^  nor  can  a  city  covenant  to  keep  a  whole 


47  S.  C.  418;  sub  nom.  State  ex  rel.  *  Jefferson  County  v.  Grafton,  74_ 

McWhirter  v.  Evans,  25  S.  E.  216.  Miss.   435;    60   Am.    St.   Rep.   516; 

2Biddle  v.  Eiverton,  58  N.  J.  L.  36  L.  R.  A.  798;  21  So.  247. 

289;  33  Atl.  279.  5  McBean  v.  Fresno,  112  Cal.  159; 

3Hubbell  V.  Custer  City,  15  S.  D.  53  Am.  St.  Rep.   191;   31  L.   R.  A. 

55;  87  N.  W.  520.  794;   44  Pac.  358;    Flynn  v.  Water 

4  Hamilton   v.    Detroit,    85   Minn.  Co.,   74    Minn.   180;    77   N.   W.   38; 

83;  88  N.  W.  419.  78  N.  W.  106. 

1  Hunnicutt   v.    Atlanta,    104   Ga.  6  Pittsburg,  etc.,  Ry.  Co.  v.  Hood, 

1;  30  S.  E.  500.  94  Fed.  618;   36  C.  C.  A.  423. 

2Markley  v.  Mineral  City,   58  O.  7  Altgelt  v.  San  Antonio.  81   Tex. 

S.   430;    65   Am.    St.   Rep.   776;    51  436;  13  L.  R.  A.  383 ;  17  S.  W.  75. 

N.  E.  28.  8  State  v.  Ry..  80  Minn.   108;   50 

3  Harrison  v.   Palo  Alto  Co..   104  L.  R.  A.  656;  83  N.  W.  32. 

la.  383;  73N.  W.  872;   (citing  Find-  »  Snyder  v.  Mt.  Pulaski,   170  111. 

la  V.  San  Francisco,  13  Cal.  534).  397;  44  L.  R.  A.  407;  52  N.  E.  62. 


1G30  PAGE    ON    CONTRACTS. 

Street  open/*'  nor  guarantee  against  all  damage  from  the  back- 
ing up  of  a  sewer.^^  A  contract  whereby  a  railroad  agrees  to 
pay  to  the  city  all  damages  due  to  abutting  property  owners 
for  vacating  a  street  is  unenforceable/^  So  a  contract  entered 
into  by  a  city  for  paving  as  a  street  a  strip  of  ground  in  which 
the  city  has  no  right  of  way  is  ultra  vires.^^  Under  general 
power  to  dispose  of  its  property  it  cannot  lease  its  waterworks.^* 
While  a  city  may  grant  a  franchise,  and  such  contract  is  valid 
and  binding  on  the  city/^  it  has  no  power,  in  the  absence  of 
express  statutory  grant,  to  contract  for  an  exclusive  franchise.^^ 
General  language  does  not  imply  power  to  grant  exclusive  priv- 
ileges.^' Thus  an  exclusive  grant  of  the  right  to  furnish  water 
for  a  term  of  years  is  invalid.^^  So  a  public  corporation  can- 
not contract  for  a  monopoly  of  gas.^^  A  public  corporation  can- 
not by  contract  assume  liabilities  imposed  by  law  upon  other 
public  bodies  and  not  upon  itself.  Thus  a  city  cannot  offer  a 
reward  for  conviction  for  a  state  offense,""  or  issue  bonds  for 
a  county  jail."^  County  bonds  for  road  purposes  cannot  be 
issued  where  a  city  within  the  county  is  not  subject  to  the  road 
tax,'^  nor  for  a  state  institution.^^ 

loPenley  v.  Auburn,  85  Me.  278;       City,  122  K  C.  31;  44  L.  E.  A.  427; 

21  L.  R.  A.  657;  27  Atl.  158.  30   S.   E.   349;   Altgelt   v.   San  An- 
iiXashville     v.     Sutherland,     92      tonio,  81  Tex.  436;  13  L.  R,  A.  383; 

Tenn.  335;   36  Am.  St.  Rep.  88;   19  17  S.  W,  75. 

L.  R.  A.   619;   21   S.  W.  674.  i7  Detroit,  etc.,  Ry.  Co.  v.  Detroit, 

12  New  Haven  v.  R.  R.,  62  Conn.  110  Mich.  384;  64  Am.  St.  Rep.  350; 
252;  18  L.  R.  A.  256;  25  Atl.  316.  35  L.  R.  A.  859;  68  N.  W.  304;  af- 

13  Sang  V.  Duluth,  58  Minn.   81;  firmed  171  U.  S.  48. 

59  X.  W.  878.  18  Altgelt  v.  San  Antonio,  81  Tex. 

i4  0gden    City    v.    Irrigation    Co.,  436;  13  L.  R.  A.  383;   17  S.  W.  75. 

16  Utah  440;   41  L.  R.  A.  305;   52  laParfitt  v.  Ferguson,   159  N,  Y. 

Pac.  697;  citing  Huron  Waterworks  111;   53  X.  E.  707. 

Co.  V.   Huron,   7   S.   D.   9 ;    58   Am.  20  Winchester  \.  Redmond,  93  Va. 

St.  Rep.  817;   30  L.  R.  A.  848;   62  711;  57  Am.  St.  Rep.  822;  25  S.  E. 

N.  W.  975.  1001. 

15  People    V.    Telephone    Co.,    192  21  ]VIyers  v.  Jeflfersonville,  145  Ind. 
111.  307;   85   Am.  St.  Rep.   338;    61  431;  44  X.  E.  452. 

X.  E.  428 ;  Baxter  Springs  v.  Power  22  Devine  v.  Board,  etc.,  of  Sacra- 

Co.,  64  Kan.  .591 ;  68  Pac.  63.  mento   Co.,   121   Cal.   670;    54   Pac. 

16  Syracuse  Water  Co.  v.  Syracuse,       262. 

116   X.   Y.    167:    5   L.   R.    A.    546;  23  Oberlin    v.    Wasson,    52    0.    S. 

22  N.   E.   381;    Thrift  v.   Elizabeth       610;  44  X.  E.  1143. 


PUBLIC  CORPORATIONS.  1631 

§1043.     Contracts  for  speculation. 

A  jDublic  corporation  cannot  hy  contract  assume  liabilities  of 
private  corporations  or  individuals,  even  to  induce  such  action 
on  their  part  as  will  benefit  the  individuals  who  comprise  the 
public  body.  Such  aid  cannot  be  given  indirectly  by  agreeing 
to  pay  a  given  rental  for  a  waterworks  if  the  lessor  builds  a 
railroad.^  However,  power  to  build  its  own  road  is  not  subject 
to  the  objection  that  it  is  aiding  a  railroad.^  A  public  cor- 
poration cannot  buy  land  to  donate  to  a  manufacturing  plant,' 
nor  issue  bonds  for  such  purpose,*  nor  pledge  itself  to  aid  an 
association,^  nor  contract  to  secure  a  right  of  way  for  a  rail- 
road,^ nor  contract, to  pay  stenographer's  fees  in  an  action  to 
which  the  city  is  not  a  party  and  from  which  no  liability  could 
arise,^  nor  erect  a  building  on  the  land  of  another,^  nor  contract 
to  build  a  bridge  outside  its  own  limits,  not  for  the  benefit  of 
its  own  citizens  but  to  draw  trade.®  A  city  cannot  agree  to 
extend  a  lighting  contract  if  the  contractor  will  erect  a  plant  to 
produce  electric  power  for  operating  machinery  for  individuals, 
as  this  is  not  contracting  for  the  benefit  of  the  municipality.^*' 
A  public  corporation  cannot  contract  for  obtaining  the  location 
of  the  state  capital,^^  or  the  county-seat.^^     A  city  cannot  em- 

iHiggins  V.  San  Diego,  118  Cal.  7  City  of  Chicago  v.  Williams,  182 

524,  537;  45  Pac.  824;  modified  on  111.  135;  55  N.  E.  123;  reversing  80 

rehearing,  50  Pac,  670.  111.  App.  33. 

2  Sun,  etc.,  Association  v.  Mayor,  s  State    ex   rel.    Knight    v.    Cape 
etc.,  of  New  York,  152  N.  Y.  257;  May,  61  N.  J.  L.  149;  38  Atl.  752. 
37  L.  R.  A.  788;  46  X.  E.  499;   (cit-  9  Manning  v.  Devil's  Lake.  —  N. 
ing  Walker  v.   Cincinnati,  21   O.   S.  D.  — ;  99  X.  W.  51. 

14;   8  Am.  Rep.  24;  Taylor  v.  Rosg  loMealey  v.   Hagerstown.  92  Md. 

Co.,  23  0.  S.  22;  Wyscaver  v.  Atkin-  741;    48   Atl.   746. 

son,    37    0.    S.    80;    Counterman   v.  n  John  Hancock,  etc.,  Co.  v.  Hu- 

Dublin  Township,  38  0.  S.  515).  ron,  80  Fed.  652;    (bonds  issued  for 

3  Markley  v.  Mineral  City,  58  O.  such  expenses,  as  for  printing  mat* 
S.  430;  65  Am.  St.  Rep.  776;  51  N.  ter  to  be  used  in  securing  to  the  lo- 
E.  28.  cation   of  the  state  capital   in   that 

4  Adams  v.  Nemeyer,  54  O.  S.  614 ;  city ;  Shannon  v.  Huron.  9  S.  D. 
46  N.  E.  1154.  3.56:  69  N.  W.  598. 

5  Park  v.  Modern  Woodmen,  181  12  Schneck  v.  Jeffersonville,  152 
111.  214;  54  N.  E.  932.  Ind.  204;  52  N.  E.  212. 

6  Covington,  etc.,  Ry.  v.  Athens,  85 
Ga,  367;  11  S.  E.  663. 


1632  PAGE    ON    CONTRACTS. 

ploy  an  attorney  to  appear  before  the  Secretary  of  the  Interior 
to  try  to  induce  him  to  locate  a  railroad  through  its  limits.^^ 
A  j^nblic  corporation  cannot  contract  for  the  expenses  of  a 
committee  to  represent  the  city  at  the  convention  of  American 
municipalities/*  nor  for  the  expenses  of  members  of  a  council 
committee  to  visit  cities  on  municipal  matters/^  or  for  placing 
a  stone  from  the  county  in  the  state's  building  at  the  World's 
Fair/^  or  for  the  entertainment  of  invited  guests  at  an  encamp- 
ment of  the  Grand  Army  of  the  Republic/"  or  at  an  exposition.^* 

§1044.    Loan  of  credit. 

Credit  cannot  be  loaned  directly  or  indirectly  without  express 
authority.^  Thus  a  contract  for  issuing  interest-bearing  war- 
rants to  the  contractor  on  the  execution  of  the  contract  to  enable 
him  to  raise  money  to  carry  out  the  contract,  the  contractor  to 
repay  the  interest  at  the  final  settlement  is  invalid.'  A  contract 
of  guaranty,  entered  into  by  a  municipal  corporation  is  ordi- 
narily ultra  vires.^  Power  to  erect  a  lighting  plant  is  not 
implied  power  to  guarantee  bonds  of  an  electric  light  company.* 
However,  giving  its  notes  to  pay  assessments  in  a  mutual  in- 
surance company  of  which  it  is  a  member  is  not  a  gratuity  or 

13  Field  V.  Shawnee,  7  Okla.  73;  1  Allen  (Mass.)  103;  Claflin  v.  Ho- 
54  Pac.  318.  pinton,  4  Gray  (Mass.)  502;  Hodges 

14  Waters  v.  Bonvouloir,  172  v.  Buffalo,  2  Denio  (N.  Y.)  110). 
Mass.  286;  52  N.  E.  500.  See  Daggett  v.  Colgan,  92  Cal.  53; 

15  James  V.  Seattle.  22  Wash.  654 ;  27  Am.  St.  Rep.  95;  14  L.  R.  A. 
79  Am.  St.  Rep.  957;  62  Pac.  84.  474;  28  Pac.  51. 

16  Hayes  v.  Douglass  Co.,  92  Wis.  is  Moore  v.  Hoffman,  2  Cinn.  Sup. 
429;  53  Am.  St.  Rep.  926;  31  L.  R.  a.  453. 

A,  213;   65  N.  W.  482.     Contra,  a  i  Scott  v.  La  Porte,  —  Ind.  — ; 

county  may  contract  for  exhibiting  68  N.  E.  278. 

its   products   at    a   state   centennial  aMoran   v.   Thompson,   20   Wash, 

outside  the  county  limits.     State  v.  525;  56  Pac.  29. 

Cornell.   53   Neb.   556;    68   Am.   St.  3  Xashville  v.   Sutherland   Co.,  92 

Rep.  629;   74  N.  W.  59;  Shelby  Co.  Tenn.  335;   36  Am.  St.  Rep.  88;   19 

V.  Exposition  Co..  96  Tenn.  653;  33  L.  R.  A.  619;  21  S.  W.  674. 

L.  R.  A.  717;  36  S.  W.  694.  *  Lynchburg,  etc.,  Co.  v.  Dameron, 

"Stem  V.  Cincinnati.  6  Ohio  N.  95   Va.  545;    28   S.   E.  951;    citing 

P.   15;    (citing  Tash  v,  Adams,   10  Blake  v.  Mayor,  etc.,  of  Macon,  53 

Cush.    (Mass.)    252;  Hood  v.  Lynn,  Ga.  172. 


PUBLIC   COKPORxVTIOXS.  1633 

a  loan  of  credit.^  Under  some  state  constitutions,  it  is  held 

that  the  legislature  cannot  authorize  a  loan  of  credit,"  or  a  gift 
to  a  private  enterprise."  In  other  states  this  power  may  be 
given  expressly  by  statute.®  Issuing  bonds  in  payment  of  a 
valid  stock  subscription  has  been  held  not  to  be  a  loan  of  credit ;' 
and  giving  bonds  for  local  improvements,  the  bonds  to  be  paid 
out  of  the  assessments  is  not  objectionable  as  a  loan  of  credit.^" 

§1045.     Form  necessary  in  contracts  of  public  corporations. 

Under  many  statutes  contracts  of  public  corporations  must  be 
made  in  accordance  with  certain  specified  formalities.  Under 
some  statutes  they  must  be  in  writing,^  in  which  case  oral  con- 
tracts are  invalid,"  and  oral  modifications  of  written  contracts 
are  invalid.^  Under  such  statute  the  acceptance  of  a  bid  is 
not  a  contract  as  no  contract  exists  until  reduced  to  writing 
and  executed.*  A  statute  which  provides  that  no  contract  shall 
bind  the  city  unless  in  writing  and  by  order  of  the  council  is 
exclusive,  and  the  requirements  of  a  valid  contract  are  not 
added  to  by  another  section  requiring  contracts  to  be  counter- 
signed by  the  finance  committee,  numbered  and  registered.^ 
If  a  written  contract  is  entered  into  it  is  valid,  although  the 
statute  requires  it  to  be  executed  in  duplicate."     Under  other 

sFrencli  v.  Milville,  67  X.  J.  L.  Frick  v.  Los  Angeles,  115  Cal.  512; 
349;  51  Atl.  1109;  memorandum  47  Pac.  250;  Logansport  v.  Blake- 
opinion  affirming  66  K  J.  L.  392;  49  more,  17  Ind.  318;  Starkey  v.  Min- 
Atl.  465.  neapolis,  19  Minn.  203 ;  Aurora  Wa- 

6  Coleman  v.  Broad  River  Town-  ter  Co.  v.  Aurora,  129  Mo.  540;  31 
ship,   50  S.  C.   321;   27    S.   E.   774.  S.   W.   946;    Savage   v.   Springfield, 

7  Sutherland-Innes  Co.  v.  Evart,  83  Mo.  App.  323 ;  Arnott  v.  Spo- 
86  Fed.  597;   30  C.  C.  A.  305.  kane,  6  Wash.  442;  33  Pac.  1063. 

sNeale  v.  Wood  Co.,  43  W.  Va.,  2  Smart  v.   Philadelphia,  205   Pa. 

90;  27  S.  E.  370.  St.  329;  54  Atl.  1025. 

9  Johnson  City  v.  R.  R.  Co.,   100  3  McManus    v.    Philadelphia,    201 

Tenn.    138;    44    S.   W.   670;    distin-  Pa.  St.  619;   51  Atl.  320. 
guishing  Colburn  v.  R.  R.,  94  Tenn.  ^Mann  v.  Rochester,  29  Ind.  App. 

43;  28  S.  W.  298;  as  a  loan  of  cred-  12;  63  K  E.  874. 
it  as  well  as  a  stock  subscription.  s  Goodyear  Rubber  Co.  v.  Eureka, 

loRedmon  v.  Chacey,  7  X.  D.  231;  135  Cal.  613;  67  Pac.  1043. 
73  N.  W.   1081.  6  Saleno  v.  Xeosho,  127  Mo.  627; 

1  Times  Publishing  Co.  v.  Weath-  48  Am.   St.  Rep.   653;   27  L.  R.  A 

erby,    139    Cal.    618;    73    Pac.    465;  769;   30  S.  W.  190. 
103 


1634  PAGE    ON    CONTRACTS. 

statutes  such  contracts  must  be  entered  upon  the  public  records, 
in  which  case  a  verbal  contract  employing  a  quarantine  guard 
is  invalid/  But  where  the  statute  requires  a  public  contract 
to  be  recorded  after  it  is  entered  into,  omission  so  to  record  it. 
not  being  the  fault  of  the  contractor  does  not  invalidate  it.^ 
So  if  a  mandatory  statute  requires  an  ordinance,  a  contract  can- 
not be  made  by  resolution  f  though  otherwise  it  may  be  made 
by  resolution,^"  or  on  motion.^^  If  the  statute  requires  the  yea 
and  nay  vote  of  the  council  to  be  taken  and  entered  on  the 
record  on  the  passage  of  a  resolution  to  accept  a  bid  for  bonds, 
an  acceptance  of  such  a  bid  without  such  formality  is  invalid/^ 
Where  the  statute  requires  the  purpose  for  which  a  bond  is 
issued  to  appear  on  its  face,  it  is  sufficient  if  they  purport  to 
be  "  refunding  bonds,"  to  "  extend  the  time  of  payment "  of 
certain  debts.^^  Where  the  statute  requires  the  superintendent 
of  streets  to  fix  the  date  of  beginning  work  within  fifteen  days 
from  the  date  of  the  contract,  it  is  not  necessary  that  the  exact 
date  be  fixed,  if  a  time  within  the  limit  is  indicated  ;^*  and  the 
date  may  be  fixed  in  the  contract.^^ 

§1046.     Advertisement  of  public  contracts. 

Statutes  often  require  advertisement  for  bids  in  public  con* 
tracts  exceeding  a  certain  amount  and  of  certain  classes.  Con- 
tracts of  these  classes   entered   into  without  complying  with 

7  Marion  Co.  v.  Woulard,  77  Miss.  City,  76  Fed.  271;  22  C.  C.  A.  171; 
343;  27  So.  619.  3-1    L.    R.    A.    518;    Wrought    Iron 

8  Diggins  V.  Hartsliorne,  108  Cal.  Bridge  Co.  v.  Arkansas  City,  59 
154;  41  Pac.  283.  Kan.  259;  52  Pac.  869. 

9  Noel  V.  San  Antonio,  11  Tex.  12  Coffin  v.  Portland,  43  Fed.  41L 
Civ.  App.  580;  33  S.  W.  263.  i3  Village   of  Kent   v.   Dana,    100 

10 Illinois,  etc.,  Bank  v.  Arkansas  Fed.  56;    40  C.  C.  A.  281.     But  in 

City,  76  Fed.  271;  22  C.  C.  A.  171;  Keehn   v.   Wooster,    13    Ohio   C.   C, 

34  L.   R.  A.  518;   City  of  Alma   v.  270,  it  was  held  insufficient  to  recite 

Bank,  60  Fed.  203;  Elyria,  etc.,  Co.  that  it  was  issued  to  refund  legal 

V.  Elyria,   57   O.   S.   374;   49  N.  E.  debts. 

335.      (But    one    resolution    cannot  i*  Williams    v.    Bergin,    127    Cal. 
provide  for  the  issuing  and  sale  of  578;   60  Pac.   164;   reversing  on  re- 
bonds  to  buy  waterworks  and  erect  hearing  57  Pac.  1072. 
new  ones.)  isRamish    v.    Hartwell,    126   Cal. 

11  Illinois,  etc.,  Bank  v.  Arkansas  443;  58  Pac.  920. 


PUBLIC  COKPOKATIONS.  1635 

these  formalities  are  unenforceable.^  Advertisement  for  bids 
is  not  necessary  unless  the  statute  requires  it.^  A  statute 
requiring  advertisement  for  one  class  of  public  contracts,  as 
for  work  on  buildings  or  streets  does  not  include  other  classes 
of  contracts,  as  for  electric  lighting.^  If  the  law  does  not  re- 
quire advertisement  but  the  body  empowered  to  act  requires  it, 
the  same  body  may  waive  any  defect  or  irregularity  in  adver- 
tisement.* If  the  notice  required  by  law  is  fairly  given  irregu- 
larity in  giving  it  does  not  make  a  contract  thereunder  void.^ 
Thus  if  the  clerk,  instead  of  the  council,  fixed  the  time  for 
which  the  notice  was  to  be  given,  and  the  council  let  the  contract 
under  such  notice,^  or  if  the  council,  as  required  by  law,  desig- 
nated the  paper  in  which  the  advertisement  should  be  given, 
but  ordered  a  "  re-advertisement "  without  expressly  stating 
that  it  was  to  be  in  the  same  paper,''  or  if  advertisement  is 
made  in  the  name  of  the  wrong  department,®  or  if  it  does  not 
state  when  bids  would  be  opened  and  where  there  is  a  uniform 
and  known  custom  to  open  bids  at  the  end  of  the  time  fixed  for 
receiving  them,^  such  notice  is  sufiicient.  If  the  statute  requires 
a  notice  thirty  days  before  the  contract  is  let,  a  notice  given 
twenty-nine  days  before  the  bids  are  opened,  but  more  than 
thirty  days  before  the  contract  is  let,  is  sufficient.'^"  Contracts 
made  pursuant  to  such  advertisement  are  valid.   But  notice  must 

1  Brooks  V.  Satterlee,  49  Cal.  289 ;  of  Aitkin  Co.,  69  Minn.  297 ;   72  X. 

Bowditch  V.  Superintendent,  etc.,  of  W.  123. 

Boston,    168   Mass.    239;    46    N.    E.  3  Reid    v.    Trowbridge,    78    Miss. 

1026;  Town  of  Clarksdale  v.  Broad-  542;  29  So.  167. 

dus,  77  Miss.  667;  28  So.  954;  Bar-  4  Augusta  v.  McKibben   (Ky.),  60 

ber,  etc.,  Co.  v.  Hezel,  155  Mo.  391 ;  S.   W.  291. 

48  L.  R.  A.  285;  56  S.  W.  449;  Fair-  5  Belser  v.  Allnian.  134  Cal.  399; 

banks  v.  North   Bend,  —  Xeb.  — ;  66  Pac.  492. 

94  N.  W.  537;   Cincinnati  v.  Guck-  6  Belser  v.  Allman.  134  Cal.  399; 

enberger,   60   0.    S.   353;    54   N.    E.  66  Pac.  492. 

376;    State   v.    Butler   Co.    10   Ohio  7  Ellis  v.  Witmer.  134  Cal.  249;  66 

C.    D.    118;    Duryee    v.    Friars,    18  Pac.  301. 

Wash.  55;  50  Pac.  583;   (even  when  » Potts   v.    Philadelphia,    195    Pa. 

bonds  are  to  be  exchanged  for  war-  St.  619;  46  Atl.  195. 

rants).  o  Cass   Farm   Co.   v.   Detroit,    124 

2Crowder    v.    Sullivan.    128    Ind.  Mich.  433 ;  83  N.  V\.  108. 

486;    13   L.    R.    A.    647:    28    X.    E.  lo  Newport    Xews    v.    Potter,    122 

94;  Gillette,  etc.,  Co.  v.  Board,  etc..  Fed.  321;   58  C.  C.  A.  483. 


1636  -JAGE    ON    CONTRACTS. 

Le  given  siibstsib*ia'x)  v  as  required  by  law.  ^Advertisement  in  a. 
paper  not  authorized  bj  law  is  ineffectual.^^  So  if  advertise- 
ment is  to  be  given  unless  the  mayor  dispenses  with  it,  his 
approval  after  a  contract  is  let  without  advertisement  does  not 
make  such  contract  valid.^"  A  re-advertisement  is  equivalent  to 
a  rejection  of  bids  and  avoids  a  contract  under  the  first  adver- 
tisement.^^ After  a  contract  is  let  a  change  in  details  may  be 
made  in  some  jurisdictions  without  re-advertising/*  at  least 
if  the  extra  expenditure  does  not  exceed  the  sum  for  the  ex- 
penditure of  which  the  statute  requires  advertising."  It 
has  been  held  that  a  requirement  for  advertising  for  bids  does 
not  apply  to  a  contract  to  complete  a  contract  abandoned  by  the 
original  contractor.^*' 

§  1047.     Specifications. 

Statutes  often  require  plans  and  specifications  of  the  work 
to  be  done  to  be  prepared  before  contracts  are  let  therefor.  The 
object  of  this  is  usually  to  enable  competing  contractors  to  know 
exactly  what  they  are  to  bid  on.^  Specifications  must  there- 
fore be  reasonably  clear  and  free  from  ambiguity.^  Under  such 
statutes  a  statement  of  the  location  and  capacit;)  of  a  garbage 
crematory  is  insufficient,  as  without  plans  it  is  impossible  to 
say  who  is  the  lowest  bidder.^  So  a  notice  for  bids  for  col- 
lecting garbage,  the  bidders  to  submit  their  own  plans  as  to  the 
method  of  disposing  of  it  is  insufficient.*  So  it  is  insufficient 
where  the  plans  but  not  the  location  of  a  court  house  are  sub- 

11  California,  etc.,  Co.  v.  Moran,  i  Ertle  v.  Leary,  114  Cal.  238;  46 
128  Cal.  373;   60  Pac.  969.  Pac.  1;  Andrews  v.  Ada  Co.,  7  Ida. 

12  Warren  V.  Boston,  181  Mass.  6;  453;  63  Pac.  592;  Wells  v.  Burn- 
62   N.    E.   951.  ham,  20  Wis.  112;  Kneeland  v.  tur- 

13  Johnson  V.  Rock  Hill,  57  S.  C.  long.   20   Wis.  437. 

371 ;  35  S.  E.  568.  2  Piedmont  Paving  Co.  v.  Allmar, 

14  Commissioners   v.  Heating  Co.,      136  Cal.  88;  68  Pac.  493. 

128  Ind.  240;  12  L.  R.  A.  502;  27  N.  3  Riekel^on     v.     Mihvaukee,     1G5 

E.  612.  Wis.  .591;    47  L.  R.     A.  685;   81  N. 

15  Brady  v.   Mayor,   etc..    of  Xew      W.  8G4. 

York,  112  X.  Y.  480;  2  L.  R.  A.  751;  4  Packard  v.  Hayes,  94  Md.  233; 

20  N.  E.  390.  51  Atl.  32. 

16  Newport    Xews   v.    Potter.    122 
Fed.  .321 ;  .58  C.  C  A.  483. 


PUBLIC   COEPOEATIONS.  1637 

mitted  to  the  judges.^     A  contract  is  invalid   where  the  pro- 
posals are  less  advantageous  to  the  city  than  the  specifications.® 

§1048.     Letting  public  contract  to  lowest  bidder. 

A  public  contract  need  not  be  let  to  the  "  lowest  "  bidder 
unless  the  statute  requires  it.^  The  statutes  often  require  the 
contract  to  be  let,  after  advertising,  to  the  "  lowest,"  "  the 
lowest  and  best,"  or  "  the  lowest  responsible  "  bidder.^  A  con- 
tract let  without  complying  with  this  requirement  is  unenforce- 
able.^ Since  the  p^^rpose  of  such  provisions  is  to  secure  to  the 
public  corporation  the  full  benefit  of  free  competition,  a 
change  cannot  be  made  in  a  bid  after  the  time  set  for  receiving 
bids,*  even  if  only  one  person  has  submitted  bids.^  A  contract 
is  void  if  provisions  favorable  to  the  contractor  are  added  after 
the  bids  are  in,  differing  from  the  specifications  on  which  such 
bids  are  made.^  Such  provisions  do  not  prevent  a  city  from 
constructing  public  works  under  the  direction  of  its  own  engi- 
neers and  ofiicers.^ 

These  provisions  are  for  the  benefit  of  the  public.  The  lowest 
bidder  cannot  sue  at  law  for  profits  which  he  would  have  made 
had  his  bid  been  accepted.^     The  lowest  bidder  may  enjoin  the 

sMahon  v.  Luzerne  Co.,  197  Pa,  2  Mueller  v.  Eau  Claire  Co.,  108 

St.  1;   46  Atl.  894.  Wis.  304;   84  N.  W.  430. 

6  state   ex  rel.   Moreland   v.   Pas-  3  Fox  v.  New  Orleans,  12  La.  Ann. 

saic,  63  N.  J.  L.  208;  42  Atl.  1058.  154;    68   Am.   Dec.    766.     So   where 

1  Pacific  Bridge  Co.  v.  Clackamas  bonds  are  sold  at  private  sale  with- 
County,  45  Fed.  217;  Riehl  v.  San  out  giving  a  chance  to  bid.  Rob- 
Jose,  101  Cal.  442;  35  Pac.  1013;  erts  v.  Taft,  116  Fed.  228;  Roberts 
Hartford  v.  Light  Co.,  65  Conn.  324;  v.  Taft,  109  Fed.  825;  48  C.  C.  A. 
32  Atl.  925;  Mayo  v.  Hampden,  141  681. 

Mass.  74;  6  N.  E.  757;   Kundinger  4  Fairbanks    v.    North    Bend,    — 

V.  Saginaw,  —  Mich.  — ;  93  N.  W.  Neb.  — ;  94  N.  W.  537. 

914;    State   v.    Lincoln    County,    35  5  Le  Tourneau  v.  Hugo,  90  Minn. 

Neb.   346;    53  N.   W.   147;    State  v.  420;  97  N.  W.  115. 

Dixon  County,  24  Neb.   106;   37  N.  6  Diamond   v.  Mankato,   89  Minn. 

W.    936;    Oakley   v.    Atlantic    City,  48;  61  L.  R.  A.  448;  93  N.  W.  91. 

63   N.  J.   L.    127;    44  Atl.   651.     It  7  Home,   etc.,   Co.   v.   Roanoke.   91 

was  said  to  be  the  duty  of  the  pub-  Vt.   52;   27  L.  R.  A.  551;   20  S.  E. 

lie   corporation    to  let   the   contract  895. 

to  the  lowest  bidder  unless  by  statu-  »  Talbot  Paving  Co.  v.  Detroit.  109 

tory  authority  in   State  v.   Cornell,  Mich.  657;  63  Am.  St.  Rep.  604;  67 

ii2  Neh.  25:  7J   N.  W.  .961,  N.  W.  979. 


1638  PAGE    ON    CONTRACTS. 

council  from  accepting  a  higher  bid.®  Property  owners  ^sv-ho 
are  obliged  to  pay  more  for  an  improvement  than  they  other- 
wise would  have  been  obliged  to  pay,  may  recover  against  a 
city  which  has  voluntarily  released  the  lowest  bidder,  whose  bid 
has  been  accepted,  and  accepted  the  bid  of  a  higher  bidder,  for 
the  difference  between  the  two  bids.^*^  If  bids  have  been  adver- 
tised for  on'  two  different  specifications,  intended  as  alternative 
for  the  same  work,  a  provision  requiring  the  letting  of  the  con- 
tract to  the  lowest  bidder  does  not  bind  the  city  to  select  that 
specification  on  which  the  lowes-t  bid  is  given.^^ 

§1049.     Exercise  of  discretion  by  public  officers. 

Where  the  statute  requires  the  contract  to  be  let  to  "  the 
lowest  and  best "  bidder,  a  discretion  is  vested  in  the  officials 
who  let  the  contract  to  determine  who  is  the  "  best."^  Such 
statutes  are  intended  "  for  the  benefit  and  protection  of  the 
public  rather  than  that  of  the  bidders  and  .  .  .  they 
confer  no  absolute  right"  upon  a  bidder,^  which  discretion  can- 
not be  controlled  by  mandamus.^  If  the  right  to  reject  all  bids 
is  reserved,  the  lowest  reliable  bidder  cannot  force  the  board  to 
let  the  contract  to  him  though  the  statute  requires  the  contract 

9  Times  Printing  Co.  v.  Seattle.  25  452;  Interstate,  etc.,  Co.  v.  Philadel- 

Wash.  149;  64  Pac.  940.  phia,  164  Pa.  St.  477;  30  Atl.  383; 

loBarfield  v.  Louisville  (Ky.),  64  Douglass  v.  Commonwealth,  108  Pa. 

S.  W.  959;  modifying  on  rehearing,  St.  559;   Reuting  v.  Titusville,   175 

Kimberger  v.  Bitzer,   111  Ky.  429;  Pa.  St.  512;  34  Atl.  916;  Times  Pub- 

63    S.   W.   964;    s.   c.   also   cited   as  lishing  Co.  v.  Everett,  9  Wash.  518; 

Barfield  v.  Gleason.  43  Am.  St.  Rep.  865;  37  Pac.  695. 

iiTrapp  V.  Newport,  —  Ky.  — ;  2  state  v.  Rickards,  16  Mont.  145, 

74  S.  W.  1109;  Trowbridge  v.  Hud-  156;  50  Am.  St.  Rep.  476;  28  L.  R'. 

son,  24  Ohio  C.  C.  76.  A.  298;  40  Pac.  210. 

1  Kelly    V.    Chicago,    62    111.    279;  3  State  v.  Rickards.  16  Mont.  145; 

Mayo  V.  Hampden  Co.,  141  Mass.  74;  50  Am.   St.  Rep.  476;   28  L.  R.  A. 

6  N.  E.  757;   State  v.  McGrath,  91  298;  40  Pac.  210;  State  v.  Hermann. 

Mo.  386;  Hoole  v.  Kinkead,  16  Nev.  63  0.  S.  440;  59  N.  E.  104.     Contra, 

217;     State    ex    rel.    Van    Reipen,  a  gross  abuse   of  discretion  will  be 

]Mayor,  etc.,  of  Jersey  City,  58  N.  J.  controlled    by    mandamus.     Inge    v. 

L.   262;    33    Atl.    740;    East   River,  Board    of    Public    Works,    135    Ala. 

etc.,  Co.  V.  Donnelly,  93  N.  Y.  557;  187;    93   Am.    St.  Rep.  20;    33   So. 

Copper  V.  Hermann,   6  Ohio  N.  P.  678. 


PUBLIC  COEPOEATIONS.  1639 

to  be  let  to  the  lowest  bidder,  if  reliable.*  When  bids  are 
offered  for  heating  apparatus,  each  for  a  different  patent,  the 
board  may  select  the  most  suitable  and  is  not  confined  to  the 
lowest.^  It  is  presumed  that  the  board  did  its  duty  in  award- 
ing bids.®  The  word  "  responsible  "  includes  ability  to  per- 
form the  contract  in  a  satisfactory  manner,  and  such  bidder  is 
not  necessarily  the  lowest.^  The  skill  and  integrity  of  the  bid- 
der are  to  be  considered  as  well  as  the  amount  of  the  bid.*  So 
where  the  contract  is  to  be  let  to  the  lowest  responsible  bidder 
who  can  do  satisfactory  work,  this  need  not  be  the  lowest  bid- 
der," but  is  the  lowest  responsible  bidder  offering  the  best 
terms,^°  and  the  lowest  bidder  cannot  enforce  the  letting  of  the 
contracts  to  himself.^^ 

Under  such  a  statute  extra  work  on  a  contract  may  be  let  to 
the  original  contractor,  though  not  the  lowest  bidder.^^ 

§1050.     Requirements  restricting  competition. —  Monopolies. 

Where  bids  must  be  let  to  the  lowest  responsible  bidder  the 
city  may,  if  public  interest  requires  it,  specify  articles  covered 
by  patents  so  that  competition  is  practically  impossible.^     The 

4  Colorado  Paving  Co.  v.  Murphy,  12  State  ex  rel.  Moreland  v.   Pas- 
78  Fed.  28;  2.3  C.  C.  A.  6.31;  37  L.  saic,  63  X.  J.  L.  208;  42  Atl.  10.58. 
E.  A.  630;  Peckham  V.  Watsonville,  1  Holmes    v.    Detroit,     120    Mich. 
138  Cal.  242;  71  Pac.  169;  Kelly  v.  226;  77  Am.  St.  Rep.  587;  45  L.  R. 
Chicago,  62  111.  279.  A,    121;    79   N.    W.   200;    Attorney 

5  State  V.  Board,  etc.,  of  Toledo,  General  v.  Detroit,  26  Mich.  263; 
14  Ohio  C.  C.  15;  7  Ohio  C.  D.  338.  Hobart  v.  Detroit,  17  Mich.  246;  97 

6  Neff  V.  Sand  Co.,  108  Ky.  457;  Am.  Dec.  185  (Xicholson  block  pav- 
55  S.  W.  697;  56  S.  W.  723.  ing)  ;   Verdin  v.  St.  Louis,  131  Mo, 

7  People  V.  Kent,  160  111.  655;  43  26;  33  S.  W.  480;  36  S.  W.  52; 
N.  E.  760;  Reutingv.  Titusville,  175  Barber,  etc.,  Co.  v.  Hunt,  100  Mo. 
Pa.  St.  512;  34  Atl.  916.  22:  18  Am.  St.  Rep.  530;  8  L.  R.  A. 

singe  V.  Mobile,  135  Ala.  187;  33  110;   13  S.  W.  98;  Harlem  Gaslight 

So.  678.  Co.   V.   Mayor,   etc.,    of   New   York, 

9Schefbauer  v.  Kearney,  57  N.  J.  33  N.  Y.  309;   Baird  v.  New  York, 

L.  588;  31  Atl.  454.  96    K    Y.    567      (a    patent    water 

10  State  ex  rel.  Van  Reipen,  meter)  ;  In  re  Dugro,  50  N.  Y.  513 
Mayor,  etc.,  of  Jersey  City,  58  X.  J,  (Xicolson  block  paving)  ;  Silsby 
L.  262;  33  Atl.  740.  Mfg.  Co.  v.  Allentown,   153  Pa.  St. 

11  State  ex  rel.  McGovern  v.  Tren-  319;  26  Atl.  646;  Kilvington  v.  Su- 
ton,  60  X.  J.  L.  402;  38  Atl.  636.  perior,  83  Wis.  222;  18  L.  R.  A.  45; 

53  X.  W.  487   (patent  crematory). 


1640  PAGE    ON    CONTRACTS. 

view  of  the  Wisconsin  courts  originally  was  that  such  contracts 
were  in  violation  of  the  statute.^  Special  statutes  were  passed 
thereupon  to  make  such  contracts  valid  and  these  statutes  were 
upheld.^  Some  states  hold  such  contracts  invalid.*  Some 
jurisdictions  hold  that  specifications  of  natural  material  of 
which  one  vendor  has  a  monopoly  are  valid  ;^  others  that  they 
are  invalid.^  If  the  article  is  manufactured  but  not  patented, 
specifications  designating  the  manufacturer  have  been  held  in- 
valid if  other  manufacturers  produced  as  suitable  an  article.'' 
In  jurisdictions  where  the  product  of  a  designated  factory  can- 
not be  specified  there  is  a  conflict  of  authority  as  to  whether 
specifications  can  call  for  articles  equal  to  a  specified  article.^ 
So  in  jurisdictions  where  patented  articles  may  be  specified, 
there  is  a  confiict  of  authority  as  to  whether  bids  should  be 
advertised  for  as  in  other  cases.® 

§1051.    Restricting  competition  in  labor. 

Provisions  which  restrict  free  competition  of  labor  violate 
the  spirit  of  the  statute  requiring  bids  to  be  let  to  the  lowest 
bidder.     A  resolution  of  a  municipality  to  exclude  from  com- 


2  Dean  v.  Charlton,  23  Wis.  590;  7  Smith  v.  Improvement  Co.,  161 
99  Am.  Dec.  205  (contracts  for  K  Y.  484;  55  N.  E.  1077.  (Speci- 
Nicholson  block  paving).  fications  for  "vitrified  paving  brick 

3  Dean  v.  Borchsenius,  30  Wis.  manufactured  by "  a  specified  man- 
236;    Mills    v.    Charelton,    29    Wis.  ufaeturer.) 

400;  9  Am.  Rep.  578.  s  That      they      can.     Mulrein      v. 

4Nicolson       Pavement       Co.      v.  Kalloch,    61    Cal.    522.     That    they 

Painter,    35    Cal.    699;    Fineran    v.  cannot.    Tucker  v.  Newark,  19  Ohio 

Paving  Co.,  —  Ky.  — ;    76   S.  W.  C.  C.  1 ;  10  Ohio  C.  D.  437. 

415.      (Bituminous  macadam)  ;  Bur-  o  That   bids   should   be   advertised 

gess  V.  Jefferson,  21  La.  Ann.   143  for.     Worthington     v.     Boston,     41 

(Xicolson  pavement).  Fed.  23;   Newark  v.  Bonnell,   57  N. 

5  Field   v.   Paving   Co.,    117    Fed.  J.  L.  424;  51  Am.  St.  Rep.  609;  31 

925;   Verdin  v.   St.  Louis,   131   Mo.  Atl.   408;    Ricketson   v.   Milwaukee, 

26;  33  S.  W.  480;  36  S.  W.  52.  105  Wis.  591;  47  L.  R.  A.  685;   81 

6Fishburn    v.    Chicago,    171    111.  N.    W.    864.     That    advertising    in 

338 ;  63  Am.  St.  Rep.  336 ;  39  L.  R.  such   cases  is  "  not  only  a   farcical 

A.  482;  49  N.  E.  532.     (Asphaltum  but    also    a   hazardous   proceeding." 

was   required  from  Pitch  Lake,   Is-  See   Baird   v.   Mayor,   etc.,   of   New 

land  of  Trinidad.)  York,  96  N.  Y.  567,  587. 


PUBLIC   CORrOKATIONS.  1641 

petition  all  j)ersons  excej^t  those  of  a  specified  class  is  void.^ 
A  provision  that  no  alien  or  convict  labor  is  to  be  employed/  or 
that  only  citizen  labor  shall  be  used  and  that  eight  hours  shall 
constitute  a  day's  work/  invalidates  a  contract  if  increasing  or 
tending  to  increase  the  contract  price.  So  a  city  cannot  require 
a  union  label  upon  all  printing  done  for  it  where  competitive 
bidding  is  necessary/  or  that  only  union  labor  shall  be  used  on. 
public  works.^  The  result  has  been  reached  in  some  cases, 
however,  that  as  such  provision  is  invalid,  it  is  to  be  regarded 
as  simply  void,  and  as  it  is  presumed  that  all  bidders  ignored 
it,  the  contract  is  valid.''  Under  some  statutes  provisions  not 
unfavorable  to  the  public  may  be  inserted  in  the  contract, 
though  not  in  the  specifications.  Thus  a  contract  has  been  held 
valid  which  contains  a  provision  that  no  Chinamen  shall  be 
employed  on  the  work,  and  that  eight  hours  shall  constitute  a 
day's  labor, '^  or  that  no  person  who  was  not  a  citizen  of  the 
United  States  should  be  employed  on  the  work  in  question,^  or 
that  only  citizens  of  the  United  States  should  be  employed  and 
that  eight  hours  should  constitute  a  day's  work,''  where  it  is  not 
shown  that  such  provisions  were  known  in  advance,  or  consid- 
ered in  making  bids ;  and  therefore  they  did  not  increase  the 
amount  of  such  bids.  Under  statutes  which  require  contracts 
to  be  let  to  the  lowest  bidder  the  proposals  for  bids  cannot  fix 
the  price  to  be  paid  for  labor,^"  nor  provide  that  all  rock  used 

iPaterson  Chronicle  Co.  V.  Pater-  5  Fiske   v.    People,    188    111.    206; 

son,  66  N.  J.  L.  129;  48  Atl.  589.  52  L.  P.  A.  291;  58  N.  E.  985. 

2  Inge  V.  Board  of  Public  Works,  g  Marshall  &  Bruce  Co.  v.  Nash- 
135  Ala.  187;  93  Am.  St.  Rep.  20;  ville,  —  Tenn.  — ;   71  S.  W.  815. 
33  So.  678.                                                         7Hellman  v.   Shoulters,    114   Cal. 

3  Glover  v.   People,   201   111.   545;  141;  44  Pac.  915;  affirmed  in  banc, 
66  N.  E.  820   (attack  on  validity  of  114  Cal.  136;  45  Pac.  1057. 
assessment).  8  Hamilton     v.     People,     194     111. 

4  City    of    Atlanta    v.    Stein,    111  133;  62  N.  E.  533. 

Ga.  789;  51  L.  R.  A.  335;  36  S.  E.  »  De  Wolf  v.  People,  202  111.  7S; 

932;  Holden  v.  Alton,  179  111.  318;  66    N.    E.    868;     (attack    on   assess- 

53    N.    E.    556;    Adams   v.    Brenan,  ment)  ;   Wells  v.  Raymond,  201   111. 

177  111.  194;  69  Am.  St.  Rep.  222;  435;    66    N.    E.    210    (objection    by 

42   L.   R.    A.    718;    52   N.    E.    314;  property  owner). 

Marshall  &  Bruce  Co.  v.  Nashville,  lo  Frame  v.  Felix,  167  Pa.  St.  47  j 

—   Tenn.   — ;    71    S.    W.    815.     See  27  L.  R.  A.  802;  31  Atl.  375. 
also  §  440. 


1642  PAGE    ON    CONTEACTS. 

must  be  dressed  in  the  state/^  as  such  provisions  restrict  bid- 
ding. A  provision  agreeing  to  comply  with  an  unconstitu- 
tional labor  law  has  been  held  not  to  invalidate  the  contract 
if  it  does  not  increase  the  cost/^ 

§1052.     Requiring  repair  of  streets. 

Under  authority  to  construct  streets  it  is  generally  held  that 
a  city  cannot  require  the  contractor  to  agree  to  keep  the  streets 
in  repair  for  a  certain  period  of  time.^  Several  reasons  exist 
for  this  rule.  It  prevents  letting  the  contract  for  constructing 
the  street  alone  to  the  highest  bidder;  it  involves  a  fixed  lia- 
bility for  making  future  repairs  which  may  never  be  made,  and 
it  throws  the  costs  of  repairs  upon  the  fund  or  the  persons 
who  have  to  pay  the  cost  of  the  street,  usually  the  abutting 
property  owners,  whereas  by  statute  such  repairs  usually  are 
payable  out  of  the  fund  raised  by  general  taxation.  These 
reasons  may  be  reduced  to  one,  namely,  that  the  power  to  con- 
tract for  constructing  a  street  is  not  power  to  contract  for 
constructing  and  repairing  it.  So  a  contract  that  "  all  loss  or 
damage  arising  from  the  nature  of  the  work  to  be  done  under 
the  specifications  shall  be  sustained  by  the  contractor  "  is  void.^ 
The  contract  may  require  the  contractor  to  repair  all  defective 
work,  even  if  the  street  is  paid  for  by  assessments,  as  this 
merely  provides  a  mode  of  performing  the  contract  to  construct 
the  street.^  So  it  has  been  held  that  a  contract  to  keep  the 
street  in  repair  for  a  fixed  period  is  in  the  nature  of  a  guaranty 
of  the  work  done,  and  not  a  contract  for  repairs  within  the 


11  St.  Louis,  etc.,  Co.  v.  Von  Ver-  v.  Paving  Co.,  33  Or.  307 ;  72  Am. 
sen,  81  Mo.  App.  519.  St.  Eep.  713;  44  L.  R.  A.  527;   52 

12  People  V.  Featlierstonhaugh,  Pac.  28;  McAllister  v.  Tacoma,  9 
172  N.  Y.  112;  60  L.  R.  A.  768;  64  Wash.  272;  37  Pac.  447,  658;  Boyd 
N.  E.  802.  V.  Milwaukee,   92  Wis.   456;    66  X. 

1  Alameda    Macadamizing    Co.    v.  W.  603. 
•Pringle,   130  Cal.   226;    80  Am.   St.  2  Blochman  v.  Spreckels,  135  Cal. 

Pep.  124;  52  L.  R.  A.  264;  62  Pae.  662:  57  L.  R.  A.  213:  67  Pac.  1061, 
394;    Brown  v.   Jenks,   98   Cal.   10;  3  Allen  v.   Portland,   35   Or.   420; 

32  Pac.  701;    Fehler  v.  Oosnell,   99  58  Pae.  509. 
Ky.  380;   .35  S.  W.  1125;   Portland 


PUBLIC   CORPORATIONS.  1643 

meaning  of  the  statute  that  re(;[uii-es  such  contracts  to  be  let 
to  the  lowest  bidder.*  On  this  theory  a  guaranty  of  paving  for 
five^  or  for  eight**  years  has  been  held  valid.  In  New  Jersey 
such  contracts  are  held  valid,  the  abutting  property  owners, 
however,  having  a  right  to  have  their  assessments  reduced  to 
a  reasonable  price  for  the  street  itself."  A  provision  that  the 
contractor  shall  assume  all  risk  of  damage  to  others  arising 
from  the  work  has  been  held  invalid.* 

§1053.     Effect  of  ultra  vires  contracts. —  Executory  contracts. 

The  effect  and  consequences  of  an  ultra  vires  contract  must 
next  be  considered.  We  must  first  consider  the  contract  which 
is  invalid  only  because  it  is  ultra  vires  —  that  is,  while  beyond 
the  power  of  the  corporation  it  is  not  forbidden  by  statute,  and 
does  not  violate  any  rules  of  public  policy  applicable  to  natural 
persons.  The  effect  of  such  contract  depends  upon  the  extent 
of  the  performance  thereof.  The  contract  presented  for  con- 
sideration in  any  given  case  may  be  (1)  executory  on  both 
sides;  (2)  performed  on  one  side  either  by  (a)  the  corporation 
or  (b)  the  adversary  party,  or  (3)  performed  completely  on 
each  side.  As  far  as  the  contract  is  executory  and  the  public 
corporation  has  received  nothing  of  value  thereunder,  an  ultra 
vires  contract  is  of  no  effect.  Either  party  may  repudiate  it 
without  liability  for  its  breach.^     Thus  an  executory  contract 

4  Kansas  City  v.  Hanson,  60  Kan.  s  Barber    Asphalt    Paving    Co.    v. 

833;   58  Pac.  474;   Barber,  etc.,  Co.  Goar,  —  Ky.  — ;    73   S.   W.    1106; 

V.  Hezel,  155  Mo.  391;  48  L.  R.  A.  McGlynn  v.  Toledo,   12  Ohio   C.  D. 

285;    56   S.   W.   449    (giving  a   his-  15. 

tory   of   the   litigation   in   Missouri  s  People      v.       Featherstonhaiigh, 

on  this  point)  ;   Barber,  etc.,  Co.  v.  172  N.  Y.  112;  60  L.  R.  A.  768;  64 

Ullman,    137    Mo.    543;    38    S.    W.  N.  E.  802. 

458;     and    see     Seaboard    National  7  Wilson  v.  Trenton,  61   N.  J.  L. 

Bank  v.  Woesten,  147  Mo.  467;   48  599;    68   Am.    St.   Rep.   714;    44   L. 

L.   R.   A.   279;    48   S.   W.   939;    St.  R.  A.  540;  40  Atl.  575. 

Louis,    etc.,    Co.    v.    Frost,    90    Mo.  «  Inge  v.  Board  of  Public  Works, 

App.    677.     Such    provision    is,    of  135  Ala.   187;   93  Am.  St.  Rep.  20; 

course,  valid  if  under  express  stat-  33  So.  678. 

utory  authority.     La  Veine  v.  Kan-  i  McKee  v.   Greensburg.   160   Ind. 

sas  City,  67  Kan.  239;  72  Pac.  774.  378;   66  N.  E.   1009;   Swift  v.  Fal- 


1644  PAGE    ON    CONTRACTS. 

to  keep  a  certain  watercourse  open,"  or  to  keep  a  road  fenced, 
in  return  for  a  right  of  way,^  or  to  exempt  certain  realty  from 
taxation,*  is  void.  Payment  of  a  debt  barred  by  tbe  statute 
of  limitations  is  held  to  be  ultra  vires.  Mandamus  will  there- 
fore be  refused  where  the  treasurer  declines  to  pay  a  warrant 
drawn  for  such  debt.^ 

§1054.    Performance  by  public  corporation. 

If  the  j)ublic  corporation  has  performed  the  contract  on  its 
side,  the  adversary  party  cannot  retain  the  benefits  and  plead 
vltra  vires.  The  objection  that  the  contract  was  originally 
ultra  vires  has  been  eliminated  by  performance/  Thus  a  city 
may  collect  a  loan  of  its  funds  and  enforce  a  mortgage  given 
therefor,  though  the  loan  is  ultra  vires.~  So  a  city  may  enforce 
payment  under  an  ultra  vires  contract  for  hiring  out  prisoners 
in  its  workhouse.^  This  view  is  not  entertained  in  all  jurisdic- 
tions, however.  The  view  is  entertained  by  some  courts  that 
performance  by  the  corporation  does  not  make  the  contract 
itself  enforceable,  the  right  of  the  corporation  being  only  to 
recover  what  it  has  parted  with  under  such  contract.  Thus 
it  has  been  held  that  if  a  city  loans  its  funds  to  a  private  cor- 
poration,   it    cannot    enforce    a    bond    given    therefor.*     Thus 

mouth,    167    Mass.    115;    45    N.    E.  166;     22    N.    E.     123;    Deering    v. 

184;     Spaulding    v.    Peabody,     153  Peterson,   75  Minn.   118;    77   N.  W. 

Mass.   129;   26  N.  E.  421;  Mead  v.  568;     St.    Louis    v.    Davidson,    102 

Acton,  139  Mass.  341;  1  N.  E.  413;  Mo.   149;   22  Am.  St.  Eep.  764;    14 

Greenougli  v.  Wakefield,   127  Mass.  S.  W.  825;  Mayor,  etc.,  of  Hoboken, 

275;    Halstead    v.    Mayor,    etc.,    of  v.  Harrison,   30  N.   J.   L.   73;    Buf- 

New  York,   3  N.  Y.  430;   Philadel-  falo  v.   Balcom,   134  N.  Y.  532;   32 

phia  V.  Flanigen,  47  Pa.  St.  21;  Al-  N.  E.  7;  Mayor,  etc.,  of  New  York, 

leghany  Co.  v.  Parrish,  93  Va.  615;  v,  Sonneborn,  113  N.  Y.  423;  21  N. 

25  S.  E.  882.  E.  121;   Hendersonville  v.  Price,  96 

2  Swift    V.    Falmouth,    167    Mass.  N.  C.  423;  2  S.  E.  155. 

115;  45  N.  E.  184.  2  City    of   Fergus    Falls   v.   Hotel 

3  Meek    v.    Meade    Co.,    12    S.    D.       Co.,  80  Minn.  165;  81  Am.  St.  Rep. 
162;   80  N.  W.  182.  249;  50  L.  R.  A.  170;  83  N.  W.  54. 

4McTwiggan  v.  Hunter,   19  R.  T.  3  St.  Louis  v.  Davidson,   102  Mo. 

265;  29  L.  R.  A.  526;  33  Atl.  5.  149;  22  Am.  St.  Rep.  764;   14  S.  W. 

5  Trowbridge      v.      Schmidt,      —  '  825. 

Miss.  — ;  34  So.  84.  4  City  Council  v.  Plank  Road  Co., 

iMiddleton    v.    State,    120    Ind.  31  Ala.  76. 


PUBLIC  COKPORATIOXS.  1645 

■where  as  part  of  an  ulti-a  vires  contract  the  corporation  takes 
a  bond  to  secure  performance,  it  has  been  held  that  it  cannot 
maintain  an  action  on  such  bond.^  The  remedy  of  the  corpora- 
tion is  to  avoid  the  contract  and  recover  whatever  it  has  parted 
with  thereunder.^ 

§1055.     Performance  by  adversary  party. —  Liability  on  contract. 

Performance  bj  the  adversary  party  usually  gives  something 
of  value  to  the  corporation  as  the  result  of  such  performance, 
but  it  leaves  the  ultra  vires  part  of  the  contract  executory. 
Accordingly  even  if  the  corporation  has  received  something 
of  value  under  the  contract,  it  is  not  thereby  estopped  from 
alleging  its  lack  of  capacity  in  order  to  avoid  liability.^  Thus 
if  a  contract  is  made  in  excess  of  the  statutory  limitation  with- 
out the  assent  of  three-fifths  of  the  voters"  performance  by  the 
adversary  party  does  not  estop  the  municipality  from  alleging 
ultra  vires.  A  covenant  by  a  city  in  consideration  of  a  con- 
versance to  it  of  a  strip  of  land,  whereby  it  agrees  to  leave  a 
street  open  for  its  whole  width,  is  ultra  vires  and  void.^ 

§1056.     Performance   by   adversary   party. —  Liability   in   quasi- 
contract. 

If  performance  by  the  adversary  party  gives  something  of 
value  to  the  public  corporation,  suitable  for  the  purposes  for 
which  it  was  formed,  it  is,  according  to  the  weight  of  authority, 
bound  to  pay  a  reasonable  compensation  therefor.^     Thus  where 

5  Kansas  City  v.  O'Connor,  82  2  state  v.  Pullman,  23  Wash. 
Mo.  App.  655;  Portland  v.  Paving  583;  83  Am.  St.  Rep.  836;  63  Pac. 
Co.,  33  Or.  307;  72  Am.  St.  Rep.  265  (contract  to  buy  a  water- 
713;  44  L.  R.  A.  527;  52  Pac.  28.  works). 

6  Kansas  City  v.  O'Connor,  82  3  Penley  v.  Auburn,  85  Me.  278; 
Mo.  App.  655.  21  L.  R.  A.  657;  27  Atl.  158. 

1  Mealey   v.   Mayor,   etc.,   Hagers-  1  Chapman    v.    Douglas    Co.,     107 

town,    92    Md.    741;    48    Atl.    746;  U.   S.   348;    Parkersburg  v.   Brown, 

Thomas    v.    Port   Huron,    27    Mich.  106  U.  S.  487;  City  of  Louisiana  v. 

320;    State    v.    Pullman,    23    Wash.  Wood,   102  U.  S.  294;   Pimental  v. 

583;  83  Am.  St.  Rep.  836;  63  Pac.  San    Francisco,    21    Cal.    351;    Ar- 

265;   Balch  v.  Beach,   119  Wis.  77;  genti  v.  San  Francisco,  16  Cal.  256; 

95  X.  W.  132.  National  Tube  Works  Co.  v.  Cham- 


1646 


PAGE    ON    CONTRACTS. 


the  corporation  receives  money,"  as  by  the  sale  of  void  "bonds,' 
and  it  is  used  for  a  lawful  purpose,*  or  it  borrows  money  without 
authority,  and  uses  it  for  a  lawful  purpose,  as  for  improving 
streets,^  or  in  buying  a  schoolhouse,®  or  where  a  corporation 
receives  a  water  supply,'  or  public  lights,^  it  must  make  com- 
pensation therefor.  So  where  a  bond  is  invalid,  because  for  a 
time  shorter  than  the  statutes  provide,  the  lender  may  recover 
on  debt*  So  if  property  is  transferred  to  a  public  corporation 
under  an  ultra  vires  contract^"  and  the  corporation  voluntarily 
retains  the  property  it  must  make  compensation  therefor.  So 
if  a  city  r-^ceives  certain  of  its  own  bonds  cancelled  and  given  up 
under  an  ultra  vires  contract  for  refunding  it  must  either  re- 
turn sach  bonds  and  recognize  them  as  valid,  or  else  account 
for  whatever  it  has  received  under  such  contract.^^  So  if  ultra 
vires  bonds  are  issued  for  work  done  in  laying  a  sidewalk,^^ 


herlain,  5  Dak.  54;  37  K  W.  761; 
Chicago  V.  McKechney,  205  111.  372; 
68  N.  E.  954;  affirming,  91  111.  App. 
442;  Schipper  v.  Aurora,  121  Ind. 
154;  6  L.  R.  A.  318;  22  N.  E.  878; 
Turner  v.  Cruzen,  70  la.  202;  30 
N.  W.  483;  Brown  v.  Atchison,  39 
Kan.  37;  7  Am.  St.  Eep.  515;  17 
Pac.  465;  Grand  Island  Gas  Co.  v. 
West,  28  Neb.  852;  45  N.  W.  242; 
Ward  V.  Forest  Grove,  20  Or.  355; 
25  Pac.  1020;  Livingston  v.  School 
District,  11  S.  D.  150;  76  N.  W. 
301;  Schneider  v.  Menasha,  —  Wis. 
— ;  95  N.  W.  94;  Paul  v.  Kenosha, 
22  Wis.  266;   94  Am.  Dec.  598. 

2  Bangor  Savings  Bank  v.  Still- 
water, 49  Fed.  721;  Allen  v.  La 
Payette,  89  Ala.  641;  9  L.  R.  A. 
497;  8  So.  30. 

3Geer  v.  School  District,  111  Fed. 
682;  49  C.  C.  A.  5.39;  Paul  v.  Ken- 
osha, 22  Wis.  266;  94  Am.  Dec. 
598. 

4  Thomson  v.  Elton,  109  Wis. 
589;  85  N.  W.  425. 

5  Bangor  Savings  Bank  v.  Still- 
water, 49  Fed.  721. 


6  Allen  V,  La  Fayette,  89  Ala. 
641;   9  L.  R,  A.  497;  8  So.  30. 

7  Higgins  V.  San  Diego,  131  Cal. 
294;  63  Pac.  470;  Higgins  v.  San 
Diego,  118  Cal.  524,  537;  45  Pac. 
824;  modified  on  rehearing,  50  Pac. 
670;  Nicholasville  Water  Co.  v. 
Xicholasville  (Ky.),  38  S.  W.  430; 
denying  rehearing  in  36  S.  W.  549. 

8  City  of  Kansas  City  v.  Gas  Co., 
9  Kan.  App.  325;  61  Pac.  317; 
Wellston  v.  Morgan,  59  O.  S.  147; 
52  N.  E.  127.  So  a  city  must  pay 
for  private  water  pipe  taken  for  the 
city's  system  and  kept  if  it  cannot 
restore  it.  Cleveland  v.  Denison, 
16  Ohio  C.  C.  541. 

9  People's  Bank  v.  School  Dis- 
trict, 3  N.  D.  496;  28  L.  R.  A.  642; 
57  N.  W.  787. 

10  Chapman  v.  Douglas  County, 
107  U.  S.  348;  Parkersburg  v. 
Brown,  106  U.  S.  487. 

11  Brown  v.  Atchison,  39  Kan. 
37;  7  Am.  St.  Rep.  515;  17  Pac. 
465. 

12  Hitchcock  V.  Galveston,  96  U. 
S.  341. 


PUBLIC   COEPOKATIONS.  1647 

or  if  ultr^a  vires  warrants  are  issued  in  payment  for  street  curb- 
ing and  jDaving,^^  reasonable  compensation  must  be  made  for 
such  labor.  A  purchaser  of  invalid  bonds  from  the  original 
holder  is  allowed  in  some  jurisdictions  to  recover  on  quantum 
meruit  as  assignee  of  such  claim,^*  in  others  not/^  One  who 
buys  void  warrants  can  recover  the  amount  originally  paid  in 
to  the  city  only  on  showing  that  such  funds  were  devoted  to 
proper  purposes/®  A  public  corporation  may  be  liable  in 
quantum  meruit  for  work  and  labor  furnished  under  a  void 
contract,  the  benefits  of  which  were  received  by  the  city.^^ 
Thus  if  a  city  makes  an  ulti'ci  vires  lease  of  land  by  the  terms  of 
which  the  lessee  is  to  fill  in  on  each  side  of  a  stone  gutter  which 
the  city  is  to  construct,  which  will  prevent  the  soil  from  wash- 
ing away,  and  the  city  does  not  construct  such  gutter,  and  there- 
fore the  lessee  cannot  use  the  realty  for  the  purpose  intended, 
the  city  is  at  least  liable  for  the  work  done  by  him  in  making 
such  fill/^  If  the  benefits  under  the  contract  have  been  re- 
ceived not  by  the  municipality  but  by  individuals  or  some  local 
body,  the  corporation  is  not  liable  for  what  the  adversary  party 
has  parted  with  under  an  ultra  vires  contract.  A  public  cor- 
poration is  not  liable  for  local  improvement  made  pursuant 
to  unauthorized  contracts.^®  So  a  city  is  not  liable  in  assumpsit 
for  money  received  by  it  from  the  sale  of  bonds  issued  to  aid  a 
railroad,  which  money  was  expended  in  constructing  a  railroad 
depot  and  tracks  within  the  city  limits.^"  Some  courts  have 
suggested  a  theory  which  is  in  some  respects  at  least  incon- 
sistent with  the  views  heretofore  expressed.  It  is  suggested 
as  a  proper  test  that  if  the  contract  is  within  the  scope  of  cor- 

13  Johnson  v.  Alderson.  33  W.  Va.  is  Schipper    v.    Aurora,    121    Ind. 

473;  10  S.  E.  815.  154;    6    L.    R.    A.    318;    22    N.    E. 

i4Geer    v.    School    District,     111  878. 
Fed.  682;  49  C.  C.  A.  539.  i9  Willis    v.    Wyandotte    Co.,    86 

isCoquard   v.    Oquawka,    192    111.  Fed.  872;  30  C.  C.  A.  445;  Wrought 

355;  61  N.  E.  660.  Iron   Bridge   Co.    v.   Hendricks   Co., 

16  Watson  V.  Huron,  97  Fed.  449;  19  Ind.  App.  672;  48  N.  E.  1050. 
38  C.  C  A.  264.  20  Travelers'   Ins.   Co.   v.   Johnson 

n  Chicago     v.     McKechney,     205  City,  99  Fed.  663 ;  49  L.  R.  A.  123; 

111.    372;    68   N.    E.   954;    affirming,  40  C.  C.  A.  58. 
91  111.  App.  442. 


1648  PAGE    ON    CONTEACTS. 

porate  power  and  the  power  is  merely  exercised  irregularly  so 
as  to  make  the  contract  itself  unenforceable,  recovery  should 
he  allowed  on  quantum  meruit.^^  On  the  other  hand,  if  the 
contract  is  entirely  without  the  powers  of  the  corporation,  there 
is  no  liability  for  work  done  thereunder  even  in  quantum 
meruit." 

§1057.     Performance  by  both  parties. 

If  an  ulti'a  vires  contract  is  performed  completely  by  both 
parties,  no  objection  can  thereafter  be  raised  on  the  ground 
of  its  original  invalidity.  So  a  statute  authorizing  a  county 
to  recover  money  paid  without  authority  of  law  does  not  apply 
where  the  county  has  received  the  benefits,  the  other  party 
acting  in  good  faith.^ 

§1058.    Effect  of  divisible  or  indivisible  contract. 

If  the  contract  is  divisible  in  its  nature  and  part  only  is 
ultra  vires,  the  valid  part  of  the  contract  is  enforceable.^  Thus 
a  contract  with  a  water  company  is  enforceable  as  to  payment 
for  water  and  hydrant  rentals,  though  ultra  vires  as  granting 

21  Recovery  for  constructing  and  andotte  County,  56  Kan.  577;  44 
furnishing  a  schoolhouse.  Union,  Pac.  17;  Pleasant  View  Township 
etc.,  Furniture  Co.  v.  School  Dis-  v.  Shawgo,  54  Kan.  742;  39  Pac. 
trict,  50  Kan.  727;  20  L.  R.  A.  136;  704.  Guaranty  that  sewer  will  not 
32  Pac.  368;  School  District  v.  flood  property.  Nashville  v.  Suth- 
Sullivan,  48  Kan.  G24;  29  Pac.  erland,  92  Tenn.  335;  36  Am.  St. 
1141;  Sullivan  v.  School  District,  Rep.  88;  19  L.  R.  A.  619;  21  S.  W. 
39  Kan.  347;   18  Pac.  287.     Recov-  674. 

ery    for   constructing   street.     Ryan  i  Sacramento    Co.   v.   Pacific   Co., 

V.  Coldwater,  46  Kan.  242;  26  Pac.  127    Cal.    217;    59    Pac.    568,    825. 

675;   Sleeper  v.  Bullen,  6  Kan.  300.  (The    railroad    rebuilt   roadway    on 

22  Newport  v.  Ry.,  58  Ark.  270;  its  bridge  and  turned  it  over  to  the 
24    S.    W.   427;    Perry    v.    Superior  county.) 

City,  26  Wis.  64.     Employment  as  i  Kimball    v.    Cedar    Rapids,    100 

attorney.      Hampton        v.        Logan  Fed.    802;     City    of    Greenville    v. 

County,   4   Ida.    646;    43   Pac.    324.  Waterworks   Co.,    125  Ala.   625;    27 

Construction  of  bridge.     Salt  Creek  So.   764;    Valparaiso  v.   Water   Co., 

Township   v.   King,    etc.,    Mfg.    Co.,  30  Ind.   App.   316;   65  N,   E.   1063; 

51    Kan.    520;    33    Pac.    303.     Con-  Coit    v.    Grand    Rapids,    115    Mich, 

struction    of    road.     Hovey   v.    Wy-  493;  73  N.  W.  811. 


PUBLIC  CORPORATIONS.  1G49 

an  exclusive  privilege.^  So  where  a  city  has  reached  its  limit 
of  indebtedness,  a  contract  for  the  construction  of  a  street, 
the  city  to  pay  the  cost  of  paving  intersections  and  to  assess 
the  cost  of  the  rest  of  the  street  on  the  abutting  property  is 
invalid  as  to  the  former  clause,  but  valid  as  to  the  latter.^  If 
the  contract  is  indivisible  and  part  of  it  is  ultra  vires,  no  part 
of  it  can  be  enforced.^  Thus  an  indivisible  contract  for  settling 
a  valid  judgment  and  purchasing  a  water  and  light  plant  is 
unenforceable  as  to  the  first  provision  if  the  latter  is  ultra 
vires.^  The  contract  cannot  be  so  modified  by  the  courts  as 
to  make  it  valid  if  it  is  indivisible.  A  contract  for  fire-alarm 
telegraph  system  which  was  void  as  in  excess  of  the  limit  of 
indebtedness  cannot  be  changed  so  as  to  give  the  contractor  a 
franchise  to  maintain  it,  where  part  of  the  apparatus  was  fur- 
nished by  the  city.^ 

§1059.     Contracts  in  violation  of  statutory  provisions. 

If  a  contract  is  entered  into  by  a  public  corporation  in  viola- 
tion of  some  specific  statute,  the  effect  of  such  contract  depends 
on  the  intent  of  the  legislature  in  enacting  such  statute.  If 
the  proceedings  are  irregular  but  not  in  violation  of  a  manda- 
tory statute,  recovery  may  be  had  on  the  contract  after  per- 
formance  thereof,^    or   on   quantum  meruit.'     Thus   where   a 

2]Vlonroe      Waterworks      Co.      v.  53    N.     E.    627;     Mound     City    v. 

Monroe,    110    Wis.    11;    85    N.    W.  Snoddy,  53  Kan.  126;  35  Pac.  1112; 

685.  State   v.    Moore,    46    Neb.    590;    50 

3  Ft.  Dodge,  etc.,  Co.  v.  Ft.  Am.  St.  Eep.  626;  65  N.  W.  193; 
Dodge,  115  la.  568;  89  N.  W.  7.  State  v.  Long  Branch,  59  N.  J.  L. 

4  Kansas  City  v.  O'Connor,  82  371;  35  Atl.  1070;  Portland,  etc., 
Mo.  App.  655.  Co.  V.  Portland,  18  Or.  21;  6  L.  R. 

5  Austin  V.  McCall,  95  Tex.  565;  A.  290;  22  Pac.  536  (notice  defec- 
67  S.  W.  192;  68  S.  W.  791.  tive). 

6  Gamewell,  etc.,  Co.  v.  Laporte,  -  City  of  Ellsworth  v.  Rossiter, 
102  Fed.  417;  42  C.  C.  A.  405.  46  Kan.  237;  26  Pac.  674;  Carey  v. 

1  Chapman     v.     Douglas     County.  East  Saginaw,   79  Mich.   73;   44  N. 

107    U.    S.    348;     Argenti    v.    San  W.      168;      Lincoln     Land     Co.     v. 

Francisco,    16    Cal.    255;    National  Grant.  57  Neb.  70;   77  N.  W.  349; 

Tube     Works     v.     Chamberlain,     5  Kramrath    v.    Albany,     127    N.    Y, 

Dak.   54;    37   N.   W.   761;    Sanitary  575;  28  N.  E.  400. 
District  v.   Mfg.  Co.,   179   111.   167; 
304 


1650  PAGE    ON    CON-TKACTS. 

contract  was  held  void  because  the  title  of  the  ordinance  where- 
by it  was  formed  did  not  show  its  true  purpose,  the  citj  was 
liable  for  rental  for  fifteen  hydrants  used  by  it.^  On  the  other 
hand,  if  the  contract  is  in  violation  of  a  mandatory  statute,  and 
is  contrary  to  public  policy,  no  recovery  can  be  had  either  on 
the  contract  or  on  quantum  meruit.'^  The  title  to  property 
delivered  under  an  irregular  bid  passes  to  the  public  corpora- 
tion, and  such  corporation  cannot  rescind  and  agree  to  treat 
the  property  as  delivered  under  a  second  and  valid  bid/ 

§1060.    Illustrations  of  particular  statutes. 

Different  statutes  of  the  same  general  class  differ  in  their 
phraseology.  Courts  differ,  further,  in  their  views  of  the 
intent  of  the  legislature  in  enacting  such  statutes.  There  is 
accordingly  a  hopeless  diversity  of  ojDinion  as  to  the  effect  of 
similar  statutes  upon  contracts  entered  into  in  violation  thereof. 
Statutes  which  forbid  public  corporations  to  incur  indebtedness 
in  excess  of  certain  limits  apply  in  their  spirit  and  terms  to 
liabilities  for  reasonable  compensation  as  well  as  to  express 
contracts.  Since  they  are  intended  to  compel  municipalities 
to  do  business  on  a  cash  basis,  no  recovery  can  be  had  for 


3  Lincoln  Land  Co.  v.  Grant,  57  N.  W.  206;  Maupin  v.  Franklin 
•j)feb.  70;  77  N.  W.  349;  distinguish-  County,  67  Mo.  327;  Atlantic  City 
ing,  TuUock  v,  Webster  Co.,  46  Water  Works  Co,  v.  Read,  50  N.  J. 
Neb.  211;  64  N.  W.  705,  L.   665;    15   Atl.    10;    McDonald   v. 

4  Litchfield  v.  Ballou,  114  U.  S.  Xew  York,  68  N.  Y.  23;  23  Am. 
190;  State  Trust  Co.  V.  Duluth,  104  Rep.  144;  Goose  River  Bank  v. 
Fed.  632;  Gamewell  Fire  Alarm  School  Township,  1  N.  D.  26;  26 
Telegraph  Co.  v.  Laporte,  102  Fed.  Am.  St.  Rep.  605;  44  N.  W.  1002; 
417;  Morton  v.  Nevada  City,  41  Capital  Bank  v.  School  District,  1 
Fed.  582;  City  Improvement  Co.  v.  N.  D.  479;  48  N.  W.  363;  Spring- 
Broderick,  125  Cal.  139;  57  Pac.  field  Milling  Co.  v.  Lane  County,  5 
776;  Zottman  v.  San  Francisco,  20  Or.  265;  Bryan  v.  Page,  51  Tex. 
Cal.  96;  81  Am.  Dec.  96;  Moss  v.  532;  32  Am.  Rep.  637;  McGillivray 
Sugar  Ridge  Township,  161  Ind.  v.  Joint  School  District,  112  Wis. 
417;  67  N.  E.  460;  Ryce  v.  354;  88  Am.  St.  Rep.  969;  58  L.  R. 
Osage,   88  la.  558;   55  N.  W.  532;  A.  100;  88  N.  W.  310. 

Niles     Waterworks     v.     Niles,     59  s  Office,  etc.,  Co.  v.  Washoe  Coun- 

Mich.  311;  26  N.  W.  525;  McBrian  ty,  24  Nev.  359;  55  Pac.  222. 
V.  Grand  Rapids,   56  Mich.   95;    22 


PUBLIC  COEPORATIONS.  1651 

reasonable  compensation  for  property  or  services  furnished  to 
the  corporation.^  If  the  statute  absolutely  forbids  incurring 
any  indebtedness,  no  liability  exists  if  property  is  bought  on 
credit,  even  for  a  reasonable  compensation  therefor."  So  if 
by  statute  the  dispenser  is  authorized  to  buy  and  sell  liquors 
for  cash  only,  the  city  is  not  liable  for  the  value  of  liquor 
sold  to  it  on  credit.^  This  rule  has  been  applied  even  where 
the  liquor  has  been  sold  and  the  city  retains  the  proceeds 
thereof.*  So  where  the  city  cannot  contract  obligations  in 
excess  of  its  annual  income  except  by  popular  vote,  it  is  not 
liable  for  a  reasonable  compensation  for  hydrant  rentals,  if  in 
excess  of  such  income.^  This  does  not  prevent  recovery  for 
property  retained  by  the  corporation  in  cases  where  it  can  bo 
surrendered  to  the  party  furnishing  it.  Where  an  installment 
contract  is  held  to  be  invalid  if  all  the  payments  to  be  made 
added  together  will,  when  added  to  the  other  debts  of  the 
public  corporation,  exceed  the  limit  of  indebtedness,  but  no  one 
installment  will  cause  such  excess,  such  a  contract  has  been 
held  good  from  year  to  year  until  renounced  by  either  party.*^ 
If  the  statute  or  constitution  requires  that  a  provision  for  a 
tax  must  be  made  to  meet  the  liability  imposed  by  the  contract, 
a  contract  entered  into  in  disregard  of  such  provision  is  a 
nullity.     No  recovery  can  be  had  for  a  reasonable  compensa- 

1  Litchfield  v.  Ballou,  114  U.  S.  La.  Ann.  154;  68  Am.  Dec.  766; 
190;  Prince  V.  Quincy,  128  111.  443;  Niles  Water  Works  v.  Niles,  59 
21  N.  E.  768;  Chicago  v.  McDonald,  Mich.  311;  26  N.  W.  525;  Detroit  v. 
176  111.  404;  52  N.  E.  982;  State  v.  Robinson,  38  Mich.  108;  Detroit  v. 
Helena,  24  Mont.  521;  81  Am.  St.  Paving  Co.,  36  Mich.  335;  Earles  v. 
Rep.  453;  51  L.  R.  A.  336;  63  Pac.  Wells,  94  Wis.  285;  59  Am.  St.  Rep. 
99;  Keller  v.  Scranton,  200  Pa.  St.  885;  68  N.  W.  964. 

130;   86  Am.   St.  Rep.  708;  49  Atl.  2  Bluthentlial    v.    Headland,    132 

781;    State   v.    Pullman,    23    Wash.  Ala.  249;   90  Am.  St.  Rep.  904;   31 

583;   83  Am.  St.  Rep.  836;   63  Pac.  So.  87. 

265;   Balch  v.  Beach,   119  Wis.   77;  4  Bluthenthal    v.    Headland,     132 

95  N.  W.  132;  Merchants'  National  Ala.  249;   90  Am.  St.  Rep.  904;   31 

Bank  v.  Spates,  41  W.  Va.  27;   56  So.  87. 

Am.  St.  Rep.  828;  23  S.  E.  681.  -  Niles  Water  Works  v.  Niles,  59 

2  Bluthenthal    v.    Headland.     132  Mich.  311 ;  26  N.  W.  525. 

Ala.  249;  90  Am.  St.  Rep.  904;   31  g  Dawson  v.  Waterworks  Co.,  106 

So.   87;   Mosher  v.   School   District,      Ga.  696;  32  S.  E.  907. 
44  la.  122;  Fox  v.  New  Orleans,  12 


1652  PAGE    ox    CONTRACTS. 

tion  for  property  furnished  under  such  a  contract.^  If  the 
statute  requires  a  contract  of  a  certain  class  to  be  in  writing,  an 
oral  executory  contract  is  unenforceable.®  On  the  question 
of  the  effect  of  performance  of  such  a  contract  there  is  a  con- 
flict of  authority.  In  some  jurisdictions  it  is  held  that  per- 
formance by  the  adversary  party  creates  no  liability  against 
the  public  corporation  in  quantum  valehat.^  Thus  if  by  statute 
extras  can  be  ordered  only  by  written  agreement  signed  by  both 
contractor  and  public  officers,  the  contractor  cannot  recover  in 
any  form  of  action  for  extras  furnished  on  oral  order.^''  In 
other  jurisdictions  performance  by  the  adversary  party  is  held 
to  create  a  liability  in  quantujn  valehat.^^  So  where  the  statute 
requires  a  contract  to  be  in  writing,  a  city  is  liable  in  quantum 
valebat  for  gas  furnished  after  the  written  contract  expired, 
a  tax  having  been  levied  which  was  available  only  for  paying 
for  gas.^^  So  extras  furnished  on  oral  order  of  the  proper 
public  officer  must  be  paid  for  even  if  the  statute  requires  a 
written  order  therefor.^^  So  if  no  written  acceptance  of  an 
ordinance  for  lights  is  made  as  provided  for  by  statute  the  city 
must  pay  for  benefits  received.^*  If  the  statute  requires  adver- 
tisement for  bids,  contracts  made  in  violation  of  such  provisions 
are  nullities.^^  If  advertisement  is  omitted  when  the  law  re- 
quires it,,  the  contractor  cannot  enforce  payment  of  his  warrant 

7  No  recovery  for  a  bridge.     Ber-  n  Cincinnati  v.  Cameron,  33  O.  S. 

lin  Iron  Bridge  Co.  v.  San  Antonio,  336. 

62  Fed.  882.  12  Memphis  Gaslight  Co.  v.  Mem- 

sSee  §  756,  phis.    93   Tenn.    612;    30   S.   W.   25. 

9  Murphy  v.  Louisville,  9  Bush  To  the  same  effect  see  San  Francisco 
(Ky.)  189;  Boston  Electric  Co.  v.  Gas  Co.  v.  San  Francisco,  9  Cal. 
Cambridge,  163  Mass.  64;  39  N.  E.  453. 

787;  McBrian  v.  Grand  Rapids,  56  i3  Cincinnati  v.  Cameron,  33  O.  S. 

Mich.    95;     sub    nomine     McBrian      335 

V.  Grand    Rapids,    22  N.    W.    206;  ,1  t>     +        o     •                  t  •  -u^     ». 

*■                      c^       '           o^  M    T    xp^  14  Baxter     Springs     v.     Light     & 

Schumm  v.  Seymour,  24  N.  J.  Eq.  ^      „    -r- 

143;     Dickinson    v.    Poughkeepsie.  Power  Co.,  64  Kan.  591 ;  68  Pae.  63. 

75   N.    Y.    65;    Addis   v.    Pittsburg,  1 5  state  v.  Butler,  —  Mo.  — ;  77 

85  Pa.  St.  379;  McManus  v.  Phila-  s.   W.   560;   McCloud  v.  Columbus, 

^tlF^'^'r   l^^    ^^-    ^Kr^'^t'-u^    w      54  O.  S.  439;  44  N.  E.  95;  Lancas- 
320;    Watterson   v.   Nashville,   106  r=Q  /^    o    k-o     ..i    t.^ 

Tenn.  410;   61  S.  W.  782.  *"'   "■'■  Miller,   58   O.   S.  5o8;   51   Is. 

10  Watterson     v.     Nashville.     106      ^-  ^-• 
Tenn.  410;  61  S.  W.  782. 


PUBLIC   CORPORATIONS.  1653 

by  mandamus,  if  a  warrant  is  given  him  after  performance/^ 
Statutes  which  require  advertisement  for  bids  are  intended  to 
protect  the  public  from  collusion  between  contractors  and 
public  officials,  and  to  secure  to  the  public  the  best  terms  possi- 
ble. The  policy  of  such  statutes  would  be  violated  as  well  by 
permitting  recovery  for  a  reasonable  compensation  as  by  allow- 
ing recovery  on  an  express  contract.  Accordingly  if  bids  are 
not  advertised  for  no  recovery  can  be  had  on  quantum  meruit.^^ 
^0  liability  attaches  to  a  municipal  corporation  by  reason  of 
a  contract  entered  into  by  it  for  the  construction  of  a  sewer, 
when  the  cost  exceeds  $500,  and  there  is  neither  advertisement 
for  bids  nor  certificate  that  there  is  sufficient  money  in  the 
treasury  to  the  credit  of  such  fund.^^  So  no  liability  exists 
for  supplies  bought  by  the  secretary  of  state  for  the  legislature 
and  used  by  the  state  if  bids  are  not  advertised  for.^^  So  if  the 
contract  is  not  let  to  the  lowest  and  best  bidder,^"  or  if  the 
contract- is  in  excess  of  the  amount  authorized  by  law,^^  or  is 
made  before  an  appropriation  is  made  for  the  contract,^'  where 
such  acts  respectively  are  mandatory,  no  recovery  can  be  had 
either  on  the  contract  or  on  quantum  meruit.  If  the  statute 
requires  an  election  as  a  condition  precedent  a  contract  made 
without  such  election  is  a  nullity.^^     It  cannot  be  ratified,"* 

16  State    V.    Yeatman,    22    0.    S.  i9  Mulnix  v.  Ins.  Co.,  23  Colo.  71; 

546.  33  L.  E.  A.  827;  46  Pac.  123. 


17  City  Improvement  Co.  v.  Brod 
erick,  125  Cal.  139;  57  Pac.  776 
Zottman  v.  San  Francisco,  20  Cal 
96;  81  Am.  Dee.  96;  Mulnix  v.  Ins 
Co.,  23  Colo.  71;  33  L.  R.  A.  827; 
46  Pac.  123 ;  McBrian  v.  Grand  Rap 
ids,  56  Midi.  95;  sub  nomine  Mc 
Brien  v.  Grand  Rapids,  22  N.  W 
206;  McDonald  v.  New  York,  68  N 


20  People  V.  Gleason,  121  N.  Y. 
631;  25  N.  E.  4. 

21  Black  V.  Detroit,  119  Mich. 
571;  78  N.  W.  660. 

22  Roberts  v.  Fargo,  10  N.  D.  230; 
86  N.  W.  726. 

23  Smith  V.  Dublin,  113  Ga.  833; 
39  S.  E.  327;  Grady  v.  Pruitt,  111 
Ky.    100;    63   S.   W.   283;    Harrods- 


Y.  23;  23  Am.  Rep.  144;  Buchanan  burg  v.  Water  Co.    (Ky.),  64  S.  W. 

Bridge    Co.    v.   Campbell,   60   O.    S.  658;    Painter   v.    Norfolk,    62    Neb. 

406;    54    N.    E.    372    (nor    was    the  330;     87     N.     W.    31;     Duncan    v. 

contracting  company  allowed  in  this  Charleston,  60  S.  C.  532;   39   S.  E, 

case    to    recover    the    material    fur-  265. 

nished).  24  state    v.    Pullman,    23    Wash. 

18  Lancaster   v.   Miller,    58    0.    S.  583;  83  Am.  St.  Rep.  836;  63  Pac. 

558;  51  N.  E.  52.  265. 


1654 


PAGE    ON    CONTKACTS. 


nor  is  there  any  liability  on  quantum  meruit.-^  But  a  contract 
is  valid  if  a  proposition  made  by  proper  authority  is  accepted 
by  the  water  company  to  which  it  is  made  and  a  favorable  vote 
is  then  taken  upon  it."^  Amendments  in  a  contract  made  by 
the  council  after  acceptance  do  not  avoid  the  contract,  but  are 
themselves  invalid.^^ 

§1061.     Estoppel. 

Since  all  are  bound  to  know  the  powers  of  a  public  corpora- 
tion and  the  formalities  necessary  to  valid  contracts^  there  can 
ordinarily  be  no  question  of  estoppel  to  deny  the  validity  of  an 
ultra  vires  contract."  I'ayment  of  interest  on  invalid  obliga- 
tions does  not  estop  the  corjwration  from  alleging  their  invalid- 
ity,^ even  if  the  payments  are  continued  for  twenty  years.*  So 
a  town  cannot  consent  to  a  compromise  judgment  by  which  it 
issues  a  smaller  amount  of  bonds  than  it  voted,  the  judgment 


25  state  V.  Pullman,  23  Wash. 
583;  83  Am.  St.  Rep.  836;  63  Pac. 
265;  Davis  v.  Wayne  Co.,  38  W.  Va. 
104;  18  S.  E.  373  (as  binding  fu- 
ture levies). 

26  Lexington  v.  Bank,  165  Mo. 
671;  65  S.  W.  943. 

27  Lexington  v.  Bank,  165  Mo. 
671 ;  65  S.  W.  943. 

1  See  §  1009. 

2  Lake  County  v.  Graham,  130  U. 
S.  674 ;  Stevens  v.  St.  Mary's  Train- 
ing School,  144  111.  336 ;  36  Am.  St. 
Rep.  438;  18  L.  R.  A.  832;  32  N.  E. 
962;  Seeger  v.  Mueller,  133  111.  86; 
24  N.  E.  513;  Pettis  v.  Johnson,  56 
Ind.  139;  Cedar  Rapids  Water  Co. 
V.  Cedar  Rapids,  117  la.  250;  90  N. 
W.  746;  Day  v.  Green,  4  Cush. 
(Mass.)  433;  Black  v.  Detroit,  119 
Mich.  571;  78  N^.  W.  660;  State  v. 
Ry.  Co.,  80  Minn.  108;  50  L.  R.  A. 
656 ;  83  N.  W.  32 ;  State  v.  Murphy, 
134  Mo.  548;  56  Am.  St.  Rep.  515; 
34  L.  R.  A.  369;  31  S.  W.  784;  34 
S.   W.   51;    35   S.   W.   1132;    Wash- 


ington County  V.  David  (Neb) ; 
89  N.  W.  737;  Syracuse  Wa- 
ter Co.  V.  Syracuse,  116  N.  Y. 
167;  5  L.  R.  A.  546;  22  N.  E. 
381;  Cleveland  v.  Bank,  16  O.  S. 
236;  88  Am.  Dee.  445;  Dube  v. 
Peck,  22  R.  I.  443.  467;  48  Atl.  477; 
McAleer  v.  Angell,  19  R.  I.  688;  36 
Atl.  588. 

3  Marsh  v.  Fulton  Co.,  10  Wall. 
(U.  S.)  676;  Town  of  South  Ottawa 
V.  Perkins,  94  U.  S.  260;  Lewis  v. 
Shreveport,  108  U.  S.  282;  Daviess 
Co.  V.  Dickinson,  117  U.  S.  657; 
Doon  Township  v.  Cummins,  142  U. 
S.  366;  Board,  etc.,  of  Oxford  v. 
Bank,  96  Fed.  293;  37  C.  C.  A.  493; 

•  Debnam  v.  Chitty,  131  N.  C.  657; 
43  S.  E.  3;  Glenn  v.  Wray,  126  N. 
C.  730;  36  S.  E.  167;  Buncombe  Co. 
V.  Payne,  123  N.  C.  432;  31  S.  E. 
711;  Xoel,  etc.,  Co.  v.  Mitchell  Co., 
21  Tex.  Civ.  App.  638;  54  S.  W. 
284. 

4  Clark  V.  Northampton,  105  Fed. 
312. 


PUBLIC   CORPOEATIONS.  1655 

not  involving  the  power  of  the  town  to  issue  such  bonds.^  So 
as  a  warrant  is  non-negotiable,  recitals  of  validity  of  its  purpose 
are  not  conclusive  even  in  the  hands  of  a  bona  fide  holder."  So 
performance  for  several  years  of  an  ultra  vires  contract  with  a 
railroad  company,  whereby  the  city  agrees  to  erect  and  main- 
tain a  bridge  over  the  railroad  track,  which  it  was  the  duty 
of  the  railroad  to  erect  and  maintain,  does  not  estop  the  city 
to  avoid  such  contract/  While  acquiescence  in  issuing  ultra 
vires  bonds  does  not  work  an  estoppel,  it  may  lead  the  court 
to  a  more  liberal  construction  of  the  statute  in  favor  of  the 
bondholders  than  would  otherwise  be  made.®  Payment  of  in- 
terest for  a  long  period  is  a  fact  to  be  considered,  if  in  the 
meantime  the  bonds  have  been  transferred  to  boiw  fide  holders, 
in  determining  whether  the  bond  was  originally  valid.  Thus 
where  bonds  are  issued  irregularly,  but  within  the  powers  of 
the  corporation,  jDayment  of  interest  for  nine  years  is  a  circum- 
stance tending  to  show  the  original  validity  of  such  bond.^ 
If,  however,  the  contract  is  one  which  on  its  face  is  within 
the  powers  of  the  corporation,  a  question  of  estoppel  may  arise 
if  by  reason  of  facts  not  known  to  the  adversary  party  such 
contract  is  in  fact  entered  into  for  an  ultra  vires  purpose.^** 
If  bonds  show  on  their  face  that  they  are  issued  for  a  lawful 
purpose,  they  are  not  invalidated  by  the  fact  that  they  were  in 
fact  issued  for  other  purposes/^  or  that  their  proceeds  were 
misapplied. ^^  So  if  a  building  is  contracted  for  for  a  lawful 
purpose,  the  fact  that  it  is  used  for  other  purposes  does  not 
defeat  the  right  of  the  contractor  to  recover.^^ 

5  Board,   etc.,  of  Oxford  v.  Bank.  »  Wetzell    v.    Paducah,    117    Fed. 
96  Fed.  293;  37  C.  C.  A.  493   (citing      647. 

Norton  v.  Shelby  Co..  118  U.  S.  425;  loFt.  Scott  v.  Brokerage  Co..  117 

Kelley    v.    Milan.    127    U.    S.    1.39;  Fed.  51 ;  54  C.  C.  A.  437. 

Doon  Township  v.  Cummins.  142  U.  n  Board  of  Education  v.  McLean, 

S.  366).  106    Fed.    817;    45    C.    C.    A.    658; 

6  Watson  V.  Huron.  97  Fed.  449 ;  Thompson    v.    Mecosta.     127    Mich. 
38  C.  C.  A.  264.  522;   86  N.  W.  1044. 

7  St.  Paul  V.  Ry.,  80  Minn.   108 ;  12  Jones  v.  City  of  Camden,  44  S. 
50  L.  R.  A.  656;  83  N.  W.  32.  C.  319;  51  Am.  St.  Rep.  819;   23  S. 

8  Washington  County  v.  Williams,  E.  141. 

Ill  Fed.  801;  49  C.  C.  A.  621.  is  Hubbell   v.   Custer  City,   15  S. 

D.  55 ;  87  X.  W.  520. 


1656 


PAGE    ON    CONTEACTS. 


§1062.     Estoppel  by  recitals. 

The  common  form  of  estoppel  in  contracts  of  public  corpora- 
tions is  found  in  cases  of  negotiable  instruments  in  the  hands 
of  bona  fide  holders,  where  such  instruments  contain  recitals 
of  fact  which,  if  true,  make  the  instrument  valid,  and  which 
are  made  by  officers  authorized  to  pass  upon  such  facts.  The 
public  corporation  in  such  case  is  estopped  to  deny  the  truth  of 
such  recitals  as  against  a  hona  fide  holder.^  Thus  where  the 
recital  was  that  the  instrument  was  issued  pursuant  to  an  elec- 
tion, the  instrument  is  valid,  though  the  vote  was  on  a  proposi- 
tion making  the  bonds  redeemable  after  ten  years,  which  pro- 
vision was  not  inserted  in  the  bond."  Where  the  recital  is  as 
to  the  amount  of  pre-existing  indebtedness,^  or  that  the  consti- 
tutional limit  has  not  been  exceeded  where  no  record  is  to  be 
inspected,  by  statute  or  constitution,  at  the  peril  of  the  pur- 
chaser,* or  where  it  shows  the  finding  of  a  board  authorized 
by  law  to  take  final  action  on  the  question  whether  the  limit  is 
exceeded,^  or  where  the  recitals  show  that  the  bonds  are  issued 


1  Mercer  Co.  v.  Hackett,  1  Wall. 
83;  Town  of  Coloma  v.  Eaves,  92 
U.  S.  484;  Commissioners,  etc.,  of 
Douglas  Co.  v.  BoUes.  94  U.  S.  104; 
Commissioners  v.  January,  94  U.  S. 
202 ;  San  Antonio  v.  Mehaffy,  96  U. 
S.  312;  Warren  Co.  v.  Marcy,  97  U. 
S.  96 ;  Hackett  v.  Ottawa,  99  U.  S. 
86;  Wilson  v.  Salamanca  Tp.,  99  U. 
S.  499;  Sherman  Co.  v.  Simons,  109 
U.  S.  735;  Andes  v.  Ely,  158  U.  S. 
312;  Commissioners,  etc.,  of  Gun- 
nison Co.  V.  Rollins,  173  U.  S.  255; 
Waite  V.  Santa  Cruz,  184  U.  S.  302; 
Fairfield  v.  School  District,  116 
Fed.  838;  reversing,  111  Fed.  453; 
Clapp  V.  Marice  City,  111  Fed.  103; 
49  C.  T5.  A.  251 ;  Independent  School 
District  v.  Rew.  Ill  Fed.  1;  55  L. 
R.  A.  364;  49  C.  C.  A.  198;  Hardy 
Township  v.  Bank,  106  Fed.  986; 
46  C.  C.  A.  66  (affirming  without 
opinion,  Brattleboro  Savings  Bank 
v;  Hardy  Tp.,  98  Fed.  524).    Clapp 


V.  Otoe  Co.,  104  Fed.  473;  45  C. 
C.  A.  579;  Hughes  Co.  v.  Living- 
ston, 104  Fed.  306;  43  C.  C.  A.  541; 
Board,  etc.,  of  Barber  Co.  v.  So- 
ciety, 101  Fed.  767;  41  C.  C.  A. 
667;    Brown    v.    Ingalls    Township, 

81  Fed.  485;  South  Hutchinson  v. 
Barnum,  63  Kan.  872;  66  Pac.  1035. 

2  Board,  etc.,  of  Cowley  Co.  v. 
Heed,  101  Fed.  768;  41  C.  C.  A. 
668;   affirming,  Heed  v.  Cowley  Co., 

82  Fed.  716,  which  disapproved, 
Lewis  V.  Bourbon  Co.,  12  Kan.  186. 

3  Dallas  Co.  v.  McKenzie,  110  U. 
S.  686;  Buchanan  v.  Litchfield,  102 
U.  S.  278;  Chaffee  Co.  v.  Potter.  142 
U.  S.  355;  Board,  etc.,  of  Gunnison 
Co.  V.  Rollins,  173  U.  S.  255;  E.  H. 
Rollins  &  Sons  v.  Gunnison  Co.,  80 
Fed.  692. 

•*  Board,  etc.,  of  Lake  Co.  v.  Sut- 
liff,  97  Fed.  270;  38  C.  C.  A.  167. 
5  Chilton  v.  Gratton,  82  Fed.  873. 


PUBLIC  COKPOKATIONS. 


165Y 


i(j  refund  debts,"  or  are  issued  in  satisfaction  of  judgments/ 
or  where  the  recitals  are  as  to  the  completion  of  a  railroad  by 
a  certain  date,  which  completion  is  a  condition  precedent  to 
the  validity  of  the  bonds,^  or  where  the  recitals  are  of  specific 
facts  showing  compliance  with  formalities,"  or  recite  in  general 
terms  that  the  provisions  of  the  statute,^*'  or  all  requirements 
of  the  constitution  and  statutes^^  have  been  complied  with,  the 
corporation  is  estopped  to  deny  the  truthfulness  of  such  re- 
citals. So  a  recital  in  a  bond  that  the  seal  of  the  city  is  at- 
tached estops  the  city  to  deny  that  the  clerk's  seal  attached  to 
the  bond  is  the  seal  of  the  city/"  However,  if  the  question  of 
fact  is  one  of  which  purchasers  are  bound  to  take  notice  at 
their  peril,^^  as  where  they  must  take  notice  of  amount  of 
indebtedness,^*  or  of  the  facts  apparent  on  the  assessment  roll, 
which  with  the  recitals  in  the  bonds  in  question  show  that  the 
limit  is  exceeded,^^  or  if  the  resolution  under  which  the  bonds 
were  issued  shows  on  its  face  that  they  exceed  the  constitutional 


6  Pierre  v.  Duscomb,  106  Fed. 
611;  45  C.  C.  A.  499;  Kiowa  Co.  v. 
Howard,  83  Fed.  296;  27  C.  C.  A. 
531;  Wesson  v.  Mt.  Vernon,  98  Fed. 
804;  39  C.  C.  A.  301;  Waite  v. 
Santa  Cruz,  89  Fed.  619;  Huron  v. 
Bank,  86  Fed.  272;  49  L.  R.  A.  534; 
30  C.  C.  A.  78;  State  v.  Wichita 
County,  62  Kan.  494;  64  Pac.  45. 

7  Geer  v.  Ouray,  97  Fed.  435 ;  38 
C.  C.  A.  250. 

8  Oregon  v.  Jennings,  119  U.  S. 
74. 

sEvansville  v.  Dennett,  161  U.  S. 
434;  Town  of  Coloma  v.  Eaves,  92 
U.  S.  484;  Wesson  v.  Saline  Co.,  73 
Fed.  917;  20  C.  C.  A.  227;  Ashman 
V.  Pulaski  Co.,  73  Fed.  927;  20  C. 
C.  A.  232;  South  St.  Paul  v.  Lam- 
precht  Bros.,  88  Fed.  449. 

10  Evansville  v.  Dennett,  161  U. 
S.  434;  Village  of  Kent  v.  Dana, 
100  Fed.  56;  40  C.  C.  A.  281;  Pick- 
ens Township  v.  Post,  99  Fed.  659; 
41  C.  C.  A.  1 ;  Meade  Co.  v.  Ins.  Co.. 
90    Fed.    237;     32    C.    C.    A.    600; 


Haskell  Co.  v.  Ins.  Co.,  90  Fed.  228 ; 
32  C.  C.  A.  591.  Examples  of  re- 
citals. "  In  pursuance  of "  the 
statute.  Grattan  Township  v.  Chil- 
ton, 97  Fed.  145;  38  C.  C.  A.  84; 
affirming,  82  Fed.  873 ;  "  full  com- 
pliance with  all  requirements  of " 
the  statute.  Miller  v.  Irrigation 
District,  99  Fed.  143. 

11  St.  Paul  Gaslight  Co.  v.  Sand- 
stone. 73  Minn.  225;  75  N.  W.  1050. 

12  Schmidt  v.  Defiance,  117  Fed. 
702. 

13  Gunnison  Co.  v.  Rollins,  173 
U.  S.  255. 

Instate  V.  Helena,  24  Mont.  521; 
63  Pac.  99. 

15  Geer  v.  School  District,  97  Fed. 
732;  38  C.  C.  A.  392;  Shaw  v.  Inde- 
pendent School  District,  77  Fed. 
277;  23  C.  C.  A.  169;  National  Life 
Ins.  Co.  V.  Mead,  13  S.  D.  37;  48  L, 
R.  A.  785 ;  82  N.  W.  78 ;  affirmed  on 
rehearing,  13  S.  D.  342;  83  N.  W. 
335;  Citizens'  Bank  v.  Terrell,  78 
Tex.  450;  14  S.  W.  1003. 


1658  PAGE    ON    CONTRACTS. 

limit  of  indebtedness/®  or  if  the  bond  shows  on  its  face  that  the 
election  was  held  so  soon  after  the  organization  of  the  county 
that  by  law  the  township  could  not  issue  the  bonds/^  or  if  the 
fact  recited  is  one  which  under  the  law  the  officers  are  not 
authorized  to  decide/^  no  estoppel  arises.  So  a  recital  of  full 
compliance  does  not  estop  the  corporation  from  showing  that 
no  ordinance  had  been  passed  authorizing  the  issue  of  bonds,  as 
required  by  statute.^®  No  recitals  can  prevent  even  a  hona  fide 
holder  from  being  charged  with  notice  of  the  statute  and  the 
construction  thereof,'"  or  the  validity  of  the  ordinanee^^  by 
virtue  of  which  the  bonds  are  issued.  Thus  if  the  recital  is  of 
an  election  on  a  given  day  and  the  statute  under  which  the 
bonds  are  issued  shows  that  no  legal  election  could  then  have 
been  held,  the  bonds  are  invalid.'" 

An  erroneous  recital  of  the  statute  authorizing  the  issue,^^ 
or  a  recital  of  both  a  valid  and  an  invalid  act  authorizing  such 
issue, ^*  do  not  invalidate  bonds.  Purchasers  are  chargeable 
with  notice  of  the  original  order  of  the  commissioners'  court  as 
to  the  purpose  for  which  the  bonds  are  to  be  used,  but  not  of  a 
subsequent    order  f^    and    with    notice    apparent    on    the    face 

16  Fairfield  V.  School  District,  111  Kirsch  v.  Braun,  153  Ind.  247;  53 
Fed.  453  (even  if  they  recite  that  N.  E.  1082;  Uncas  National  Bank  v, 
they  are  within  the  limit  of  indebt-  Superior,  115  Wis.  340;  91  X.  W. 
edness   and   issued   "  in   strict   com-  1004. 

pliance  with  the  laws  of  the  State."  21  Klamath  Falls  v.  Sachs,  35  Or. 

17  Sage  V.  Fargo  Township,  107  325;  76  Am.  St.  Rep.  501;  57  Pac. 
Fed.  383;  46  C.  C.  A.  361.  329   (citing  Barnett  v.  Denison.  145 

18  Crow  V.  Oxford.  119  U.  S.  215;  U.  S.  135:  Hackett  v.  Ottawa,  99  U. 
Geer  v.  School  District,  97  Fed.  S.  86;  Risley  v.  Howell,  57  Fed. 
732;  38  C.  C.  A.  392.  544)  ;    Peck  v.  Hempstead,   27   Tex. 

19  Swan     V.     Arkansas     City.     61  Civ.  App.  80;  65  S.  W.  653. 

Fed.  478.  22  Sage    v.    Fargo    Township.    107 

20  Hill  V.  Memphis.  134  U.  S.  198;  Fed.  383;  46  C.  C.  A.  361;  Manhat- 
Kelley  v.  Milan,  127  U.  S.  139;  tan  Co.  v.  Ironwood,  74  Fed.  535; 
Wells    V.    Supervisors    of    Pontotoc  20  C.  C.  A.  642. 

Co.,    102   U.    S.    625;    Township    of  23  D'Esterre    v.    New    York.     104 

East  Oakland  v.   Skinner,  94  U.  S.  Fed.  605;  44  C.  C.  A.  75. 

255;    McClure   v.   Township   of   Ox-  24  Evansville   v.    Dennett,    161    U. 

ford,   94  U.   S.  429;    Supervisors  of  S.  434. 

Marshal    Co.    v.    Cook,    38    111.    44;  2.5  Mitchell   Co.   v.   Bank,    91   Tex. 

87  Am.  Dec.  282;   Bissell  v.  Kanka-  361;    43    S.    W.    880;    reversing.    15 

kee,  64  111.  249;   16  Am.  Rep.  554;  Tex.  Civ.  App.  172;  39  S.  W.  628. 


PUBLIC  CORPORATIONS.  1659 

of  the  county  records  as  to  a  bond  election,  as  where  the  votes 
are  canvassed  by  a  board  having  no  authority  so  to  do/®  and 
as  to  the  fact  that  the  persons  signing  the  bonds  had  ceased 
to  be  public  officers  and  had  antedated  the  bonds.^^  A  bond 
is  valid  if  signed  by  a  de  facto  officer,^*  but  invalid  if  signed 
by  one  who  is  not  an  officer  at  all.^^  Where  there  is  no  recital 
of  compliance  with  the  statute,  the  registration  and  certification 
of  bonds  in  compliance  with  statute  does  not  effect  an  estoppel.^*^ 
Recitals  do  not  work  an  estoppel  as  against  one  who  acquires 
bonds  from  the  municipality  with  knowledge  of  the  facts  mak- 
ing such  bonds  invalid.  Thus  if  the  bond  issue  exceeds  the 
constitutional  limits  of  indebtedness,  and  one  purchaser  buys 
them  all,  he  is  charged  with  notice  of  their  invalidity.^^  So  if 
there  are  no  recitals  in  an  original  issue  of  bonds,  recitals  in 
refunding  bonds  given  to  take  up  the  original  issue  cannot 
work  an  estoppel  in  favor  of  holders  of  the  original  bonds 
who  receive  the  new  issue.^"  Estoppel  by  recitals  operates  only 
in  favor  of  the  holder  of  the  bonds.  The  holder  of  bonds  may 
contradict  recitals  therein  for  the  purpose  of  establishing  the 
validity  of  the  bonds.^^ 

§1063.     Ratification. 

If  a  contract  is  invalid  because  it  is  outside  of  the  power 
of  the  public  corporation,  or  not  in  compliance  with  a  manda- 
tory requirement  of  the  law  as  to  its  form,  ratification  is  impos- 
sible.^    Thus   the   allowance   by  county   commissioners   of   an 

26  Brown  v.  Ingalls  Township,  81  U.   S.  526;   Bolles  v.  Perry  Co.,   92 
Fed.  485.  Fed.  479;  34  C.  C.  A.  478. 

27  Lehman  v.   San  Diego,  73  Fed.  3i  Burlington     Savings     Bank     v. 
105.  Clinton,   111  Fed.  439. 

28  Balls  Co.  V.  Douglass,  105  U.  S.  32  Salmon    v.    Allison,     125     Fed. 
728;     National     Life     Ins.     Co.     v.  235. 

Huron,   62    Fed.    778;    10   C.   C.    A.  33  Chicago,    etc..    By.    v.    Dundy 

637.  County   (Neb.),  91  N.  W.  554. 

29Coler    V.    Cleburne,    131    U.    S.  i  Sage    v.    Fargo    Township.    107 

162.  Fed.  383;  46  C.  C.  A.  361:  Smeltzer 

30  Citizens,     etc..     Association     v.  v.  Miller,  125  Cal.  41;  57  Pac.  668 

Perry   Co.,   156  U.  S.   692;   German  Berka  v.  Woodward.   125  Cal.   119 

Savings  Bank  v.  Franklin  Co.,  128  73  Am.  St.  Rep.  31;  57  Pac.   777 


1660 


PAGE    ON    CONTRACTS. 


invalid  claim  does  not  make  it  valid,"  and  if  money  is  paid 
under  sucii  allowance  it  may  be  recovered.''  If  the  invalid  con- 
tract was  one  which  the  corporation  could  make,  and  is  not 
void  because  not  in  comiDliance  with  a  mandatory  provision  of 
the  law,  it  may  be  ratified.*  Thus  a  breach  of  condition  avoid- 
ing the  original  liability  may  be  waived  by  refunding  such 
liability,^  and  a  contract  invalid  because  no  appropriation  was 
made  therefor  may  be  ratified  by  an  appropriation."  Thus 
a  subsequent  resolution  may  make  valid  a  contract  void  for 
want  of  such  resolution.'^  A  contract  made  by  the  members 
of  a  board  of  education  acting  individually  may  be  ratified 
by  their  conduct  as  a  board  in  accepting  and  using  goods  deliv- 
ered thereunder.®  Ratification,  where  possible,  must  be  un- 
equivocal. Where  the  individual  members  of  a  city  council 
encouraged  an  attorney  to  bring  an  action,  and  the  council 
as  a  body  ordered  the  city's  attorney  to  aid  in  such  suit  and 


Paxton  V.  Bogardus,  201  111.  G28; 
66  N.  E.  853 ;  Indianapolis  v.  Wann, 
144  Ind.  175;  31  L.  R.  A.  743;  42  K 
K  901;  Gemmill  v.  Arthur,  125 
Ind.  258;  25  N.  E.  283;  Grady  v. 
Pruit,  111  Ky.  100;  63  S.  W.  283; 
Wadsworth  v.  Concord,  133  N.  C. 
587;  45  S.  E.  948;  McAleer  v.  An- 
gell,  19  R.  I.  688;  36  Atl.  588;  State 
V.  Pullman,  23  Wash.  583;  83  Am. 
St.  Rep.  836;  63  Pac.  265;  Balch  v. 
Beach,  119  Wis.  77;  95  N.  W.  132. 
(Distinguishing,  McGillivray  v. 
School  District,  112  Wis.  354;  88 
Am.  St.  Rep.  969;  58  L.  R.  A.  100; 
88  N.  W.  310,  as  a  case  where  the 
act  ratified  was  within  the  power  of 
the  corporation,  though  without  the 
power  of  the  agent  originally  mak- 
ing it.)  Uncas  National  Bank  v. 
Superior,  115  Wis.  340;  91  N.  W. 
1004.  "  When  a  corporation  or  an 
agent  thereof  does  an  act  or  makes 
a  promise  that  is  forbidden  by  its 
charter  or  is  not  authorized  there- 
by, either  expressly  or  by  fair  im- 
plication, the  act  or   promise   is   a 


nullity  and  cannot  be  binding  by  a 
subsequent  ratification."  City  of 
IMemphis  v.  Gas.  Co.,  9  Heisk. 
(Tenn.)  531,  543,  quoted  in  Wat- 
terson  v.  Nashville,  106  Tenn.  410, 
424;  61  S.  W.  782. 

2  Commissioners  v.  Heaston,  144 
Ind.  583;  55  Am.  St.  Rep.  192;  41 
N.  E.  457;  43  N.  E.  651;  Jones  v. 
Lucas  Co.,  57  O.  S.  189;  63  Am.  St. 
Rep.  710;  48  N.  E.  882. 

3  Gross  V.  Whitley  County,  158 
Ind.  531;  58  L.  R.  A.  394;  64  N.  E. 
25. 

4  Supervisors  v.  Schenck,  5  Wall. 
(U.  S.)  772;  State  v.  Milling  Co., 
156  Mo.  620;  57  S.  W.  1008;  Bell 
V.  Waynsboro,  195  Pa.  St.  299;  45 
Atl.  930. 

5  Graves  v.  Saline  Co.,  161  U.  S. 
359. 

6  Hill  V.  Indianapolis,  92  Fed. 
467. 

7  Cooper  V.  Cedar  Rapids,  112  la. 
367;  83  N.  W.  1050. 

8  Johnson  v.  School  Corporation, 
117  la.  319;  90  N.  W.  713. 


PUBLIC   CORPORATIONS.  1661 

appropriated  money  for  getting  testimony  therein,  such  official 
acts  are  not  a  ratification,  the  city  not  being  a  party  to  the 
action.®  Ratification  must  he  by  acts  as  formal  as  were  neces- 
sary to  make  the  original  contract  valid.  If  a  contract  must 
be  made  by  ordinance,  it  must  be  ratified  by  ordinance.^"  Rati- 
fication, if  valid,  makes  the  entire  contract  valid.  Thus  it 
validates  a  bond  given  by  the  contractor  to  the  city  to  protect 
laborers  and  material  men.^^ 

§1064.     Curative  legislation. 

The  legislature  may  ratify  and  validate  any  obligation  of  a 
public  corporation  which  it  had  power  to  authorize  in  advance.^ 
Thus  debts  in  excess  of  the  statutory  limit  may  be  made  valid 
by  subsequent  legislation.^  Thus  the  legislature  may  authorize 
a  vote  to  be  taken  to  validate  debts  incurred  in  excess  of  the 
limit  of  indebtedness  under  a  constitutional  provision  making 
void  debts  in  excess  of  the  limit  unless  pursuant  to  a  vote.'' 
So  a  statute  may  require  a  county  to  repay  the  amount  received 
from  the  sale  of  bonds,  invalid  because  their  proceeds  were  to  be 
devoted  to  a  state  armory,  though  most  of  the  proceeds  have  been 
expended  on  such  armory.*  So  the  legislature  may  validate 
a  debt  incurred  when  the  legislature  had  power  to  authorize 

9  Root  V.   Topeka,   63   Kan.    129;  216;  Coleman  v.  Broad  River  Town- 

65  Pac.  233.  ship,   50   S.   C.   321;   27   S.   E.   774; 

loMcCracken    v.    San    Francisco,  Bell  v.  R.  R.  Co.,  91  Va.  99;   20  S. 

16   Cal.    591;    Durango   v.    Penning-  E.   942;   State  v.  Winter,  15   Wash, 

ton,  8  Colo.  257;  7  Pac.  14.  407;  46  Pac.  644.     Contra,  Choisser 

11  Devers  v.  Howard,  88  Mo.  App.  v.  People,  140  111.  21;  29  N.  E.  546; 

253.  Post   V.   Pulaski   Co.,   49   Fed.   628; 

1  Steele    Co.    v.    Erskine,    98    Fed.  9  U.  S.'App.   1;   affirming,  47  Fed. 

215;  39  C.  C.  A.  173;    (affirming,  87  282. 

Fed.  630);  Yavapai  Co.  v.  McCord,  2  Erskine  v.  Nelson  Co.,  4   K  D. 

—  Ariz.  — ;  59  Pac.  99;  Schneck  v.  66;  27  L.  R.  A.  696;  58  N.  W.  348; 

Jeffersonville,   152   Ind.   204;    52  N.  Darke    v.    Salt    Lake    Co.,    15    Utah 

E.  212;   Board,  etc.,  of  Linn  Co.  v.  467;  49  Pac.  257. 

Snyder,   45   Kan.   636;    23   Am.    St.  3  West  v,  Chehalis,  12  Wash.  369; 

Rep.    742;    26   Pac.   21;    Erskine  v.  50  Am,  St.  Rep.  896;  41  Pac.  171. 

Nelson  Co.,  4  N.  D.  66;  27  L.  R.  A.  4  New   York,    etc.,    Co.   v.    Board, 

696;  58  N.  W.  348;  Mill  Creek,  etc.,  etc.,  106  Fed.  123;  45  C.  C.  A.  233. 
Ry.  Co.  v.  Carthage,  18  Ohio  C.  C. 


1662  PAGE    ON    CONTRACTS. 

it,  though  the  statute  is  not  passed  till  after  a  new  constitutional 
provision  is  adopted,  limiting  debts  so  as  to  make  the  amount 
unlawful.^  So  Congress  may  validate  a  bond  of  a  territory.® 
Such  a  curative  act  makes  bonds  valid,  even  if  after  the  passage 
of  such  act  a  judgment  is  rendered  in  a  suit  instituted  before 
such  act  was  passed  adjudging  such  bonds  invalid.''  Such 
curative  acts  must  be  complied  with  strictly.  A  statute  making 
valid  bonds  issued  in  compliance  with  a  certain  ordinance  does 
not  make  valid  any  bonds  not  so  issued.* 

5  Schneck  v.  Jeffersonville.  152  8  Lehman  v.  San  Diego,  83  Fed. 
Ind.  204;  52  N.  E.  212;  (distin-  669;  27  C.  C.  A.  668;  (where  the 
gnishing  Sykes  v.  Columbus,  55  denomination  of  the  bonds  was  not 
Miss.  115.  fixed   in   accordance  with   the  ordi- 

6  Utter  V.  Franklin.  172  U.  S.  416.  nance). 

7  Middleton  v.  St.  Augustine,  42 
Fla.  287;  29  So.  421. 


PRIVATE   COKPORATIONS.  1663 


CHAPTER  XLIX. 


PRIVATE    CORPORATIONS. 

§1065.    Nature  and  definition  of  private  corporation, 

A  private  corporation  is  in  fact  a  number  of  natural  persons 
acting  together  for  certain  purposes  under  a  definite  organiza- 
tion and  endowed  by  law  with  certain  attributes  different  from 
those  of  a  partnership,  a  voluntary  association,  or  any  other 
union  of  natural  persons.  The  most  characteristic  of  its  at- 
tributes are  the  so-called  perpetual  succession,  which  means 
that  the  death  or  withdrawal  of  one  or  all  of  the  natural  persons 
does  not  necessarily  dissolve  the  corporate  organization,  and 
the  right  to  contract,  sue  and  the  like  as  a  person.^ 

By  the  fiction  of  the  law  a  corporation  is  an  artificial  person, 
distinct  from  the  natural  persons  that  in  reality  compose  it,  and 
possessed  of  certain  limited  powers.^  Thus  a  change  in  stock- 
holders of  a  corporation  has  no  effect  upon  pre-existing  liability 
of  a  corporation.^  So  directors  who  have  taken  proj>erty  as 
security  for  a  corporation  may  convey  it  to  the  corporation  by 

iHome   Fire   Ins.   Co.   v.   Barber,  Lowell,  etc.,   R.   R.    Co.,   136  U.   S. 

—  Neb.  — ;    60  L.   R.   A.   927;    93  356;    Baltimore,   etc.,   R.   R.   Co.   v. 

N.  W.  1024.  Church,    108    U.    S.    317;    Bank   v. 

2BIackstone      calls      corporations  Earle,   13  Pet.    (U.  S.)    519;    Smith 

"artificial  persons,  who  may  main-  v.  Hurd,  12  Mete.   (Mass.)    371;   46 

tain  a  perpetual  succession,  and  en-  Am.   Dee.   690;    Landers  v.   Church, 

joy   a   kind    of   legal    immortality."  114  N.  Y.  626;  21  N.  E.  420;  Rudd 

Black.    Com.    I,    467.     Marshall,    C.  v.  Robinson,  126  N.  Y.  113;  22  Am. 

J.,   said  that  a  corporation  is  "an  St.  Rep.   816;   12  L.  R.  A.  473;   26 

artificial    being,    invisible,    intangi-  N.    E.    1046;    Weyeth,   etc.,    Co.    v. 

ble  and  immortal,  and  existing  only  James,  etc.,   Co.,   15  Utah   110;   47 

in  contemplation  of  the  law."  Dart-  Pac.  604;  State  v.  Ry.  Co.,  45  Wis. 

mouth     College     v.     Woodward,     4  579. 

Wheat.  (U.  S.)   518,  636.     Substan-  3  Andres  v.  Morgan,  62  0.  S.  236; 

tially   similar    definitions    are    com-  78  Am.  St.  Rep.  712;  56  N.  E.  87&. 
mon.    Nashua,   etc.,    R.   R.   Co.    v. 


1G64 


PAGE    ON    CONTKACTS. 


public  sale,  free  from  the  equity  of  redemption  of  the  credilx)?."* 
So  where  the  same  persons  own  all  the  stock  of  two  corpora- 
tions the  contract  of  one  is  not  the  contract  of  the  other.^  The 
existence  of  the  corporation  apart  from  its  stockholders  is  a 
legal  fiction.^  Thus  where  A  transferred  his  business  to  a  cor- 
poration in  which  he  owned  practically  all  the  stock  it  was  held 
to  be  substantially  a  transfer  to  himself/  and  a  corporation 
organized  without  capital  or  assets  to  cover  a  real  partnership 
was  treated  as  not  existing.®  This  contradiction  between  fact 
and  theory  is  the  cause  of  the  undoubted  confusion  that  now 
exists  in  the  law  of  corporations.  The  courts  vacillate  between 
a  desire  to  effect  justice  by  treating  contracts  and  other  trans- 
actions of  a  corporation  as  they  would  those  of  a  partnership  or 
other  association  of  individuals  as  far  as  rights  of  creditors 


4Copsey  V.  Bank,  133  Cal.  659; 
85  Am.  St.  Rep.  238;  66  Pac.  7. 

As  to  contracts  between  a  corpora- 
tion and  its  officers,  see  §  181. 

5  Way  Cross,  etc.,  E.  R.  Co.  v. 
R.  R.  Co.,  109  Ga.  827;  35  S.  E. 
275. 

6 "  The  general  proposition  that 
a  corporation  is  to  be  regarded  as  a 
legal  entity,  existing  separate  and 
apart  from  the  natural  persons  com- 
posing it,  is  not  disputed;  but  that 
the  statement  is  a  mere  fiction,  ex- 
isting only  in  idea,  is  well  under- 
stood." "  Now  so  long  as  a  proper 
use  is  made  of  the  fiction,  that  a 
corporation  is  an  entity  apart  from 
its  shareholders,  it  is  harmless,  and, 
because  convenient,  should  not  be 
called  in  question ;  but  where  it  is 
urged  to  an  end  subversive  of  its 
policy,  or  such  is  the  issue,  the  fic- 
tion must  be  ignored."  State  v. 
Standard  Oil  Co.,  49  O.  S.  137,  177; 
34  Am.  St.  Rep.  541;  15  L.  R.  A. 
145;  30  N.  E.  279.  "Modern  de- 
cisions are  tending  to  a  disregard 
of  the  mental  conception  that  a 
corporation  is  an  entity  separate 
from  its  corporators,  as  in  many  in- 


stances it  is  simply  a  *  stumbling 
block '  in  the  way  of  doing  justice 
between  real  persons."  Andres  v. 
Morgan,  62  O.  S.  236,  245;  78  Am. 
St.  Rep.  712;  56  N.  E.  875.  And 
see  People  v.  Refining  Co.,  121  N.  Y. 
582;  18  Am.  St.  Rep.  843;  9  L.  R. 
A.  33;  24  N.  E.  834. 

7 "  His  identity  as  owner  of  the 
property  was  no  more  changed  by 
his  conveyance  to  the  company  than 
it  would  have  been  by  taking  off 
one  coat  and  putting  on  another. 
He  was  as  much  the  substantial 
owner  of  the  property  after  the 
conveyance  as  before."  Bank  v.  Tre- 
bein,  59  O.  S.  316,  325;  52  N.  E, 
834;  (citing  Hibernia  Ins.  Co.  v. 
Transportation  Co..  13  Fed.  516; 
Kellogg  V.  Bank,  58  Kan.  43;  62 
Am.  St.  Rep.  596;  48  Pac.  587; 
Terhune  v.  Bank.  45  N.  J.  Eq.  344; 
19  Atl.  377;  Bennett  v.  Minott,  28 
Or.  339;  39  Pac.  997;  44  Pac.  288; 
Montgomery,  etc.,  Co.  v.  Drenelt,  133 
Pa.  St.  585;  19  Am.  St.  Rep.  663; 
19  Atl.  428). 

8  Christian,  etc.,  Co.  v.  Lun^ber 
Co.,  121  Ala.  340;  25  So.  566. 


PRIVATE   COEPOrvATIONS.  1665 

are  concerned,  and  a  desire,  in  conformity  to  precedent,  to  treat 
them  as  those  of  an  artificial  person  of  limited  powers,  distinct 
from  its  stockholders.  This  confusion  as  to  the  legal  effect 
of  contracts  of  corporations  is  increased  by  additional  causes. 
First,  rules  which  properly  apply  to  public  corporations  which 
exercise  governmental  powers  affecting  the  whole  public  have 
been  extended  to  private  corporations.  Second,  rules  which 
properly  determine  the  extent  of  corporate  power  as  between 
the  state  and  the  corporation  in  a  direct  proceeding  to  oust  the 
corporation  from  unlawful  exercise  of  franchises,  have  been 
extended  to  determine  the  validity  of  contracts  entered  into 
voluntarily  between  the  corporation  and  private  individuals. 
Third,  rules  which  properly  determine  the  rights  of  stockhold- 
ers who  actively  dissent  from  the  management  of  the  corpora- 
tion to  invoke  the  action  of  courts  of  equity  to  restrain  the 
directors  from  exceeding  their  authority,  have  been  extended 
so  as  to  determine  the  validity  of  contracts  entered  into  by  a 
corporation  without  objection  from  its  stockholders,  and  often 
with  their  active  assent ;  and  these  rules  have  been  so  applied  as 
to  render  invalid  contracts  which  the  stockholders  might  not 
have  been  able  to  prevent  the  directors  from  making 

§1066.     The  charter  of  the  corporation. 

The  charter  of  the  corporation  measures  the  powers  which 
it  may  exercise  lawfully.^  This  charter  is  given  by  the  state 
and  accepted  by  the  corporation.  Under  the  old  system  of 
incorporation  a  corporation  was  created  by  a  special  act  of  thp. 
legislature,  which  was  known  as  its  charter,  and  which  created, 
determined  and  limited  its  corporate  powers.  Many  state 
constitutions  now  provide  that  corporations  must  be  incorpo- 
rated under  general  laws.  Under  such  provisions  a  corpora* 
tion  is  usually  created  by  filing  articles  of  incorporation  in 
accordance  with  the  provisions  of  the  general  incorporation 
laws ;  and  when  its  charter  is  spoken  of  this  is  a  convenient 
and  stereotyped  form  of  expression  used  to  denote  its  articles^ 

1  Sturdevant    Bros.,    etc.,    Co.    v.       affirming  on  rehearing,  62  Neb.  472; 
Bank,  —   Neb.  — ;   95   N.   W.   819;       87  N.  W.  156. 
105 


1666  PAGE    ON    CONTRACTS. 

of  iucorporation,  together  with  the  general  laws  applicable  to 
a  corporation,  which  determine  its  corporate  powers."  A  cor- 
poration cannot  by  its  articles  of  association  assume  a  greater 
power  than  that  given  in  the  general  statute/  though  such  addi- 
tion does  not  invalidate  the  powers  authorized  by  statute.* 
Since  the  charter  of  a  corporation  is  given  by  the  state,  the 
members  of  a  corporation  cannot  alter  or  increase  the  powers 
of  the  corporation  as  the  members  of  a  partnership  can  alter  or 
increase  the  powers  of  the  partnership.  This  distinction  re- 
sults in  many  of  the  practical  differences  between  the  con- 
tracts of  partnerships  and  those  of  corporations. 

The  moment  at  which  a  corporation  de  jure  comes  into  exist- 
ence depends  on  local  statute.  In  Wisconsin  it  exists  as  soon 
as  its  articles  of  association  are  recorded  f  in  Ohio  it  does  not 
exist  until  it  organizes  by  electing  a  board  of  directors,  after 
the  stock  is  subscribed.® 

§1067.     Scope  and  construction  of  corporate  charters. 

The  original  rule  for  determining  the  powers  of  a  corpora- 
tion was  that  the  charter  must  be  construed  strictly  against  the 
corporation,^  and  this  is  still  repeated  by  some  courts."     It  is 

2  Danville  v.  Water  Co.,  178  111.  (U.  S.)  172;  Bartram  v.  Turnpike 
299;  69  Am.  St.  Rep.  304;  53  N.  Co.,  25  Cal.  283;  St.  Louis,  etc.,  Co. 
E.  118;  McLeod  v.  Medical  College,  v.  Haller,  82  111.  208;  Lincoln,  etc., 
—  Neb.  — ;  96  N.  W.  265.  Co.    v.    Lincoln,    61    Neb.    109;    84 

3  Oregon,  etc.,  Co.  v.  Ry.  Co.,  130  N.  W.  802;  Mayor  of  Jersey  City 
U.  S.  1;  People  v.  Gas  Trust  Co.,  v.  Morris  Canal,  etc.,  Co.,  12  N.  J. 
130  111.  268;  17  Am.  St.  Rep.  319;  Eq.  547;  Morris  Canal,  etc.,  Co.  v. 
8  L.  R.  A.  497;  22  N.  E.  798;  R.  R.,  16  N.  J.  Eq.  419;  Bank  v. 
Indiana  Bond  Co.  v.  Ogle,  22  Ind.  Swayne,  8  Ohio  257;  32  Am.  Dec. 
App.  593;  72  Am.  St.  Rep.  326;  54  707;  Bonham  v.  Taylor,  10  Ohio 
N.  E.  407.  108;   Straus  v.  Insurance  Co.,  5  O. 

4  Shoun  V.  Armstrong  (Tenn.  Ch.  S.  59;  State  v.  Cincinnati,  etc.,  Co., 
App.),   59   S.   W.   790.  18  0.  S.  262;  Dugan  v.  Bridge  Co., 

5  Badger  Paper  Co.  v.  Rose,  95  27  Pa.  St.  303;  67  Am.  Dec.  464; 
Wis.  145;  37  L.  R.  A.  162;  70  N.  Commonwealth  v.  R.  .R.  Co.,  27  Pa. 
W.   .302.  St.  339;  67  Am.  Dec.  471;  Talmadge 

estate  v.  Ins.  Co.,  49  0.  S.  440;  v.  Transportation,  3  Head.    (Tenn.) 

34  Am.  St.  Rep.  573;    16  L.   R.  A.  337. 

611;   31  N.  E.  6.58.  ~  2  Oregon,    etc.,    Co.    v.    Oregonian 

iPexrine    v.    Canal    Co.,    9    How.  Ry.,  130  U.  S.  1;  Louisville,  etc.,  Ry. 


PRIVATE  CORPORATIONS.  1667 

still  in  force  when  the  grant  construed  is  a  gift  of  franchises  or 
exclusive  privileges/  or  of  exemption  from  taxation,*  or  other 
gift  in  derogation  of  sovereign  authority ;  but  it  has  little  appli- 
cation to  the  construction  of  corporate  powers  when  the  rights 
and  liabilities  of  those  dealing  with  the  corporation  are  con- 
cerned. After  the  Supreme  Court  of  the  United  States  held, 
in  the  Dartmouth  College  case,^  that  the  charter  of  a  corpora- 
tion might  be  a  contract  between  the  state  and  the  corporation, 
and  accordingly,  under  the  clause  of  the  Federal  Constitution 
prohibiting  a  state  from  impairing  the  obligation  of  contracts, 
it  would  be  beyond  the  power  of  the  state  to  revoke  corporate 
powers  once  granted,  the  state  courts  were  more  than  ever  dis- 
posed to  adhere  to  the  old  rule.  But  when  by  express  reserva- 
tion in  state  constitutions  corporate  powers  remain  under  state 
control  the  tendency  is  toward  a  more  reasonable  construction 
of  grants  of  corporate  authority.^  In  determining  the  scope  of 
corporate  power  in  making  contracts  two  rules  have  been  ad- 
vanced, which  in  their  abstract  form  are  not  perfectly  consistent. 
The  first  is  that  corporate  power  includes  only  such  as  is  ex- 
pressly granted  by  the  corporate  charter,  together  with  those 
powers  which  are  necessary  to  carry  the  express  powers  into 
execution.'^  The  second  rule  is  that  corporate  power  includes 
express  powers  and  such  incidental  powers  as  are  proper  and 

Co.    V.    Kentucky,    161    U.    S.    677;  6  National  Bank  v.  Insurance  Co., 

Pearsall  v.  Ry.,  161  U.  S.  646;  re-  41  O.  S.  1. 

versing  73  Fed.  933;  American,  etc.,  7  Minturn  v.  Larue,  23  How.  (U. 
Co.  V.  R.  R.,  157  111.  641;  42  N.  E.  S.)  435;  Charles  River  Bridge  v. 
153;  Illinois  Health  University  v.  Warren  Bridge,  11  Pet.  420;.  Van- 
People,  166  111.  171;  46  N.  E.  737.  dall  v.  Dock  Co.,  40  Cal.  83;  People 

3  Covington,  etc.,  Co.  v.  Sandford,  ex  rel.  Moloney  v.  Pullman's,  etc., 
164  U.  S.  578;  Stein  v.  Water  Sup-  Co.,  175  111.  125;  51  X,  e.  664; 
ply  Co.,  141  U.  S.  67;  Indianapolis.  Chicago,  etc.,  Co.  v.  Coke  Co..  121 
etc.,  R.  R.  Co.  V.  R.  R.  Co.,  127  Ind.  Til.  5.30;  2  Am.  St.  Rep.  124;  13 
369;  8  L.  R.  A.  539;  24  N.  E.  10.54;  X.  E.  169;  People  ex  rel  Peabody 
26  N.  E.  893;  State  v.  Hamiltons.  v.  Trust  Co.,  130  111.  268;  17  Am. 
47  O.  S.  52;  23  N.  E.  935;  State  v.  St.  Rep.  319;  8  L.  R.  A.  497;  22  N. 
Cincinnati,  etc.,  Co.,  18  O.  S.  262.  E.   798;    National,   etc..  Association 

4  Chesapeake,  etc.,  Ry.  Co.  V.  Mil-  v.  Bank.  181  111.  35;  72  Am.  St. 
ler,  114  U.  S.  176.             ^  Rep.  245;    54  N.   E.  619;    Franklin 

5  Dartmouth  College  v.  Wood-  National  Bank  v.  \Vliitehead,  149 
ward,  4  Wheat.  (U.S.)  518.  Ind.    560;    63    Am.    St.    Rep.    302; 


16CS 


PAGE    ON    CONTRACTS. 


convenient  for  executing  the  express  powers  given  by  the  char- 
ter;* or  as  otherwise  expressed  it  has  within  the  limits  of  its 
general  grant  of  power  all  the  powers  that  an  individual  would 
have  in  executing  such  general  power.®  In  practical  applica- 
tion there  is  little  difference  between  these  two  rules,  as  the 
term  "  necessary  "  in  the  first  rule  is  usually  treated  as  equiva- 
lent to  "  suitable  "  or  "  appropriate."  "  An  incidental  power 
is  one  that  is  directly  and  immediately  appropriate  to  the  exe- 
cution of  the  specific  power  granted,  and  not  one  that  has  a 
slight  or  remote  relation  to  it."^° 

§1068.     Implied  powers. 

If  power  is  either  expressly  given  or  expressly  denied  to  a 
corporation  by  its  charter,  the  only  question  open  for  discus- 
sion is  the  meaning  of  the  express  terms  of  the  charter.  But 
where  a  corporation  attempts  to  exercise  power  neither  ex- 
pressly given  nor  withheld  by  its  charter  the  question  presented 


39  L.  R.  A.  725;  49  N.  E.  592; 
Bankers'  Union  v.  Crawford,  67 
Kan.  449;  73  Pac.  79;  Fulton  v. 
Land,  etc.,  Co.,  47  Kan.  621;  28 
Pae.  720;  State  v.  Xewman,  51 
La.  Ann.  833 ;  72  Am.  St.  Rep.  476 ; 
25  So.  408;  Lindenborough  Glass 
Co.  V.  Glass  Co.,  Ill  Mass.  315; 
State  ex  rel.  Crow  v.  Trust  Co.,  144 
Mo.  562;  46  S.  W.  593;  Equitable 
Trust  Co.  V.  Garis,  190  Pa.  St.  544; 
70  Am.  St.  Rep.  644;  42  Atl.  1022; 
Union  Bank  v.  Jacobs,  6  Humph. 
(Tenn.)  515;  Xorthside  Ry.  Co.  v. 
Worthington,  88  Tex.  562;  53  Am. 
St.  Rep.  778;  30  S.  W.  1055.  "It 
is  a  creature  of  the  law,  having  no 
powers  but  those  which  the  law  has 
conferred  upon  it.  A  corporation 
has  no  natural  rights  or  capacities 
such  as  an  individual  or  an  ordinary 
partnership,  and  if  such  a  power  is 
claimed  for  it,  the  words  giving  the 
power,  or  from  which  it  is  neces- 
sarily implied  must  be  found  in  the 


charter  or  it  does  not  exist."  Na- 
tional, etc..  Association  v.  Bank,  181 
111.  35,  40;  72  Am.  St.  Rep.  245; 
54  N.  E.  619. 

8  White  Water,  etc.,  Co.  v.  Val- 
lette,  21  How.  414;  McKiernan  v. 
Lenzen,  56  Cal.  61 ;  Gould  v.  Fuller, 
79  Minn.  414;  82  N.  W.  673;  Cen- 
tral, etc.,  Co.  v.  Dairy  Co.,  60  O.  S. 
96;  53  N.  E.  711 ;  Malone  v.  Lancas- 
ter, etc.,  Co.,  182  Pa.  St.  309;  37 
Atl.  932. 

9  Wright  V.  Hughes.  119  Ind.  324; 
12  Am.  St.  Rep.  412;  21  X.  E.  907: 
Thompson  v.  Lambert,  44  la.  239: 
Stockton  V.  Tobacco  Co.,  55  N.  J- 
Eq.  352;  36  Atl.  971;  Ohio,  etc.,  Co. 
V.  Merchants',  etc.,  Co.,  11  Humph. 

(Tenn.)   1;  53  Am.  Dec.  742. 

10  Hood  V.  Xew  York,  etc..  R.  R. 
Co.,  22  Conn.  1,  16;  quoted  in  Nic- 
collet  National  Bank  v.  Frisk-Tur- 
ner Co.,  71  Minn.  413,  418;  70  Am. 
St.  Rep.   3^4;   74  N.  W,  160, 


PRIVATE   CORPOE^VTIOXS. 


1669 


is  whether  the  power  is  implied  from  those  expressly  given.  An 
exhaustive  discussion  of  this  question  would  occupy  more  space 
than  can  be  given  to  it  here,  and  properly  belongs  to  corporation 
law.  The  following  propositions  are  given  rather  as  suggestive 
examples  than  as  an  exhaustive  enumeration  of  implied  powers . 

§1069.     Borrowing  money. 

A  corporation  has  an  implied  power  to  borrow  money  for 
corporate  purposes/  and  to  give  its  notes  for  its  debts/  to  pledge 
its  bonds  for  its  indebtedness/  and  to  secure  its  debts  by  mort- 
gage.* Thus  a  corporation  formed  to  buy  land  may  mortgage 
land  thus  bought  for  the  purchase  money/  and  after  acquired 
property  may  be  mortgaged.^  Under  a  statute  requiring  the 
consent  of  the  stockholders  at  a  regularly  called  meeting  as  a 
condition  precedent  to  the  validity  of  a  mortgage,  a  mortgage 
given  under  other  circumstances  is  said  to  be  ultra  vires.'' 
However,  such  a  statute  restricting  the  power  of  mortgage, 
requiring  a  majority  of  the  stockholders  to  acquiesce,  applies 
to  the  corpus  of  the  property,  not  to  the  output.^ 


iKneeland  v.  Ry.  Co.,  167  Mass. 
161;  45  N.  E.  86. 

2  Tod  V.  Land  Co.,  57  Fed.  47; 
Temple,  etc.,  Co.  v.  Hellman,  103 
Cal.  634;  37  Pac.  530;  Kneeland  v, 
Ry.  Co.,  167  Mass.  161;  45  N.  E 
86;  Merchants',  etc.,  Bank  v.  Gas 
light  Co.,  159  Mass.  505;  38  Am 
St.  Rep.  453 ;  34  N.  E.  1083 ;  Renin 
snlar,  etc..  Bank  v.  Hosie,  112  Mich 
351;  70  N.  W.  890;  Africa  v.  News 
Tribune  Co..  82  Minn.  283 ;  84  N.  W 
1019;  National  Bank  v.  Yovmg,  41 
N.  J.  Eq.  531;  7  Atl.  488. 

3  New  Memphis  Gaslight  Co. 
Cases,  105  Tenn.  268;  80  Am.  St. 
Rep.  880;  sub  nomine  Rawlings  v. 
Gaslight  Co.,  60  S.  W.  206. 

4  Jones  V.  Guaranty,  etc.,  Co.,  101 
U.  S.  622;  Wood  v.  Whelen,  93  111. 
153;  Wright  v.  Hughes,  119  Ind.  324; 
12  Am.  St.  Rep.  412;  21  N.  E.  907; 
Bell,  etc.,  Co.  v.  Glass-Works   Co., 


106  Ky.  7,  23;  50  S.  W.  2,  1092; 
51  S.  W.  180;  reversing  on  rehear- 
ing, 48  S.  W.  440;  Burrill  v.  Bank, 
2  Met.  (Mass.)  163;  35  Am.  Dec. 
395;  Hays  v.  Galion,  etc.,  Co.,  29 
O.  S.  330;  Hunt  v.  Gaslight  Co., 
95  Tenn.  136;  31  S.  W.  1006; 
Threadgill  v.  Pumphrey,  87  Tex. 
573;  30  S.  W.  356;  affirming  9 
Tex.  Civ.  App.  184;  28  S.  W.  450. 

5  Sheppard  v.  Mining  Co.,  25  Ont. 
305. 

6  Frank  v.  Hicks,  4  Wyom.  502; 
35  Pac.  475;  rehearing  denied,  4 
Wyom.  534;  35  Pac.  1025.  By  stat- 
ute in  Georgia,  a  corporation  cannot 
mortgage  future  income.  Lubroline 
Oil  Co.  V.  Bank,  104  Ga.  376;  30 
S.  E.  409. 

7  Southern,  etc..  Association  v. 
Stable  Co.,  128  Ala.  624;  29  So.  654. 

8  Alabama,  etc.,  Co.  v.  McKeever, 
112  Ala.  134;  20  So.  84. 


ICTO 


PAGE    0:X    CONTRACTS. 


§1070.    Borrowing  in  excess  of  limitation  of  indebtedness. 

If  a  corporation  borrows  money  in  excess  of  its  limitation 
of  indebtedness/ the  weight  of  anthoritj  is  that  the  corporation 
is  liable  therefor/  at  least  to  the  extent  of  benefits  received  in 
the  transaction,"  or  as  far  as  it  is  used  to  pay  pre-existing  in- 
debtedness.^ One  lending  money  is  subrogated  to  prior  debts 
as  far  as  they  are  discharged  by  the  new  loan,*  but  is  not  subro- 
gated to  the  security  or  priority  of  such  creditors.^  Subsequent 
creditors  who  knew  that  the  prior  indebtedness  exceeded  the 
limit  cannot  attack  the  validity  of  a  mortgage  given  to  secure 
such  debt.^  Its  mortgage  for  such  indebtedness  cannot  be  at- 
tacked by  subsequent  lienholders.'^  Some  jurisdictions  hold 
that  the  corporation  is  liable  only  up  to  the  amount  limited,* 
and  where  the  subsequent  creditors  do  not  know  of  the  prior 
debt  the  mortgage  is  void  as  to  the  excess  above  the  limit  of 
indebtedness  as  against  their  rights,  and  recording  the  mort- 
gage is  not  notice.* 


1  Weber  v.  Bank,  64  Fed.  208; 
Wood  V.  Water  Works  Co.,  44  Fed. 
146;  12  L.  R.  A.  168;  Warfield 
V.  Canning  Co.,  72  la.  666;  2  Am. 
St.  Eep.  263;  34  N.  W.  467;  Gar- 
rett V.  Plow  Co.,  70  la.  697 ;  59  Am. 
Rep.  461 ;  29  N.  W.  395 ;  Humphrey 
V.  Association,  50  la.  607. 

2  Peatman  v.  Centreville,  etc.,  Co., 
100  la.  245;  69  X.  W.  541;  Beach 
V.  Wakefield,  107  la.  567,  591;  76 
N.  W.  688;  modified  on  rehearing, 
78  X.  W.  197. 

3/>i  re  Cork,  etc.,  Co.,  L.  R.  4 
Ch.  App.  748;  Powell  v.  Blair,  133 
Pa.  St.  550;  19  Atl.  559. 

4  In  re  Cork,  etc.,  Co.,  L.  R.  4 ; 
Ch.  App.  748. 

5  In  re  Wrexham,  etc.,  Ry. 
(1899),  1  Ch.  440;  68  L.  J.  Ch. 
270. 


6  Central  Trust  Co.  v.  Columbus 
etc.,  Ey.  Co.,  87  Fed.  815;  (citing 
Union  National  Bank  v.  Matthews, 
98  U.  S.  621;  National  Bank  v. 
\^Tiitney,  103  U.  S.  99;  Fritts  v. 
Palmer,  132  U.  S.  282;  Logan,  etc.. 
Bank  v.  Townsend,  139  U.  S.  67)  ; 
Beach  v.  Wakefield,  107  la.  567, 
591;   76  N.  W.  688;   78  N.  W.  197. 

7  Beach  v.  Wakefield,  107  la. 
567,  591;  76  N.  W.  688;  78  N. 
W.  197. 

8  Covington  First  National  Bank 
v.*  Kiefer,  etc.,  Co.,  95  Ky.  97;  23 
S.  W.  675;  Kraniger  v.  Building 
Society,  60  Minn.  94;  61  N.  W. 
904. 

9  Bell,  etc.,  Co.  v.  Glass  Works, 
106  Ky.  7,  23;  50  S.  W.  2,  1092; 
51  S.  W.  180;  reversing  on  rehear- 
ing 48   S.  W.  440. 


PRIVATE   COEPORATIONS. 


1671 


§1071.     Accommodation  paper. 

A  corporation  has  no  power  to  issue  accommodation  paper.* 
Hence  a  corporation  cannot  guarantee  commercial  paper  exe- 
cuted by  another.^  So  a  corporate  note,  signed  for  the  cor- 
poration by  its  president,  payable  to  himself,  is  prima  facie 
void,  even  if  the  holder  of  the  note  requested  that  it  be  made 
payable  to  the  president.^  Some  authorities  seem  to  dissent 
from  this  view,  and  to  hold  that  the  assent  of  all  the  stockhold- 
ers and  directors  may  bind  the  corporation  on  accommodation 
paper.*  But  where  the  corporation  is  really  the  principal 
debtor  its  note  is  binding,  though  it  takes  the  form  of  accommo- 
dation paper.^  Thus  a  corporation  is  liable  on  an  indorsement 
made  in  part  for  the  benefit  of  corporation  and  in  part  for  the 
benefit  of  another,  where  the  corporation  received  and  retained 
benefits  f  it  may  buy  goods  by  indorsing  a  note  of  another  f 
and  it  is  liable  where  the  money  was  nominally  lent  to  its  stock- 
holders^ or  its  directors,^  but  really  to  the  corporation,  though 


iTod  V.  Land  Co.,  57  Fed.  47; 
Lyon,  etc.,  Co.  v.  Bank,  8.5  Fed. 
120;  29  C.  C.  A.  45;  Park  Hotel 
Co.  V.  Bank,  86  Fed.  742;  30  C.  C. 
A.  409;  Steiner  v.  Lumber  Co.,  120 
Ala.  128;  26  So.  494;  Hall  v.  Turn- 
pike Co.,  27  Cal.  255;  87  Am.  Dec. 
75;  Aetna,  etc.,  Bank  v.  Ins.  Co., 
50  Conn.  167;  Wheeler  v.  Bank, 
188  HI.  34;  58  N.  E.  598;  Lucas  v. 
Transfer  Co.,  70  la.  541;  59  Am. 
Eep.  449;  30  N.  W.  771;  Trapp 
V.  Bank,  101  Ky.  485;  41  S.  W. 
577;  modified  on  rehearing  43  S. 
W.  470;  M.  V.  Monarch  Co.  v. 
Bank,  105  Ky.  430;  88  Am.  St. 
Rep.  310;  49  S.  W.  317;  Monu- 
ment, etc..  Bank  v.  Globe  Works, 
101  Mass.  57;  3  Am.  Rep.  322; 
Preston  v.  Cereal  Co.,  —  Neb.  — ; 
93  N.  W.  136;  Blake  v.  Mfg.  Co. 
(N.  J.  Ch.),  38  Atl.  241;  National, 
etc.,  Bank  v.  German,  etc.,  Co.,  116 
N.  Y.  281 ;  5  L.  R.  A.  673;  22  N.  E. 
567;   Bank  of  Genesee  v.   Bank,   13 


N.  Y.  309;  Benedict  v.  Bank,  4 
Ohio  N.  P.  231;  6  Ohio  Dec.  320; 
Culver  V.  Reno,  etc.,  Co.,  91  Pa.  St. 
367 ;  Madison,  etc.,  Co.  v.  Road  Co., 
7  Wis.  59. 

2  M.  V.  Monarch  Co.  v.  Bank,  105 
Ky.  430;  88  Am.  St.  Rep.  310;  49 
S.  W.  317. 

3  Porter  v.  Grain  Co.,  78  Minn. 
210;  80  N.  W.  965. 

4  Murphy  v.  Improvement  Co.,  97 
Fed.  723;  Martin  v.  Mfg.  Co.,  122 
N.  Y.  165;  25  N.  E.  303   (obiter). 

5  Beacon  Trust  Co.  v.  Souther, 
183  Mass.  413;  67  N.  E.  345;  Bank 
V.  Flour  Co.,  41  O.  S.  552. 

6  Lyon,  etc.,  Co.  v.  Bank,  85  Fed. 
120;  29  C.  C.  A.  45. 

7  National  Bank  v.  Allen,  90  Fed. 
545;  33  C.  C.  A.  169. 

sStough  V.  Mill  Co.,  54  Neb.  500; 
74  N.  W.  868. 

9  Allen  V.  Hotel  Co.f  95  Tenn.  480; 
32  S.  W.  962, 


1672  PAGE    ON    CONTRACTS. 

the  transaction  takes  the  form  of  the  corporation's  securing 
their  personal  debts.  A  real  estate  company  may  give  its  note 
for  the  debt  of  another,  which  is  secured  by  attachment  on  land 
previously  purchased  by  such  corporation  ;^°  and  where  a  part- 
nership incorporates  and  the  corporation  becomes  liable  for 
partnership  obligations/^  a  note  for  such  obligation,  signed  by 
the  corporation  as  surety,  is  binding  on  the  corporation,  since 
as  to  the  payee  it  is  a  corporation  debt.^^  So  a  corporation  may 
buy  a  business,  and  assume  the  debts  thereof.^^  A  corporation 
is  liable  on  its  accommodation  paper  if  in  the  hands  of  a  bona 
fde  holder  for  value  and  before  maturity.^*  But  where  certain 
warehouse  receipts  were  given  by  a  corporation  as  collateral 
security  to  a  bank,  for  its  loan,  and  before  the  loan  was  entirely 
paid,  the  treasurer  of  the  corporation  notified  the  bank  that  the 
corporation  was  indebted  to  him  and  that  the  receipts  were 
to  remain  to  secure  his  existing  indebtedness  to  the  bank  and 
this  statement  was  false,  it  was  held  that  the  pledging  of  the 
receipt  for  his  debt  was  ultra  vires.^^ 

§1072.     Suretyship. 

A  contract  of  suretyship  in  no  way  beneficial  to  the  corpora- 
tion is  ultra  vires.^  The  courts  are  divided  as  to  the  power 
of  a  corporation  to  enter  into  contracts  of  guaranty  as  an  inci- 

10  Leonard,  etc.,  Co.  v.  Bank,  86  ing  Co.,  32  N.  B.  692;  Farmers' 
Fed.  502;  30  C.  C.  A.  221.  Bank    v.    Steamboat    Co.,    108    Ky. 

11  Pratt  V.  Mfg.  Co.,  64  Fed.  589;       447;  56  S.  W.  719. 

Schufeldt  V.  Smith,  139  Mo.  367;  40  "Jacobs,    etc.,    Co.    v.    Banking, 

S.  W.  887;  Reed  Bros.  Co.  v.  Bank,  etc.,  Co.,  97  Ga.  573;  25  S.  E.  171; 

46  Neb.  168 ;  64  N.  W.  701 ;  Andres  Monument  National  Bank  v.   Globe 

V.  Morgan,  62  O.  S.  236;  78  Am.  St.  Works,   101  Mass.   57;    3  Am.  Rep. 

Rep.  712;  56  N.  E.  875.     Apparent-  322;  American,  etc.,  Bank  v.  Gluck, 

ly   contra,  Lamkin  v.  Mfg.   Co.,   72  68  Minn.  129;   70  N.  W.  1085;  Na- 

Conn.  57;  44  L.  R.  A.  786;  43  Atl.  tional   Bank  of  Republic  v.  Young, 

593,  1042,  where  it  seems  to  be  held  41  N.  J.  Eq.  531;  7  Atl.  488. 

that    the    corporation    may    assume  is  Wheeler  v.   Bank,    188   111.   34; 

the   partnership    debts,    but    is    not  80  Am.  St.  Rep.  161;  58  N.  E.  598; 

otherwise*  liable.  reversing,  85  111.  App.  28. 

12  Andres  v.  Morgan,  62  O.  S.  2.36;  i  Wheeler  v.  Bank.  188  111.  34;  80 
78  Am.  St.  Rep.  712;  56  N.  E.  875.  Am.  St.  Rep.  161;  58  N.  E.  598. 

13  Dominion,  etc.,  Co.  v.  Publish- 


PEIVATE  CORPORATIONS.  1673 

dental  means  of  carrying  on  its  business.  It  is  often  stated 
as  an  abstract  proposition  that  a  corporation  may  guarantee 
performance  of  the  contracts  of  others  whenever  it  is  reason- 
ably necessary  or  proper  for  carrying  its  own  express  powers 
into  effect;^  but  like  other  abstract  rules  this  form  of  statement 
is  of  little  practical  value.  Some  authorities  hold  that  a  con- 
tract of  suretyship  is  invalid  where  not  expressly  authorized, 
even  if  on  an  independent  consideration^  or  if  very  beneficial 
to  the  corporation.  Thus  it  cannot  guarantee  performance  of 
a  contract  for  erecting  a  plant  to  get  the  sale  of  iron  work  for 
the  plant  to  the  contractor  whose  contract  it  guarantees;*  nor 
can  it  sign  an  appeal  bond  as  surety  in  order  to  keep  the  defend- 
ant in  business  so  that  he  can  continue  to  buy  beer  of  the  cor- 
poration,^ or  to  obtain  a  preference  in  collecting  claims  by  suit  f 
nor  can  a  bank  become  surety  on  a  replevin  bond;'  nor  can  a 
railway  guarantee  expenses  of  a  festival  to  induce  an  increase  in 
passenger  traffic.® 

Other  authorities  uphold  contracts  of  guaranty  which  are 
adapted  to  give  collateral  assistance  to  the  chief  business  of 
the  corporation.  Thus  it  has  been  held  that  a  corporation  formed 
for  the  purpose  of  selling  lumber  may  become  surety  on  the 
bond  of  a  contractor  in  order  to  secure  the  sale  of  lumber  to 
him.^     A  railroad,  to  obtain  consent  for  its  right  of  way,  may 

2  Zabriskie  v.  R.  R.  Co.,  23  How.  s  Best  Brewing  Co.  v.  Klassen, 
(U.  S.)  381;  Marbury  v.  Land  Co.,  185  111.  37;  76  Am.  St.  Rep.  26;  50 
62  Fed.  335;  10  C.  C.  A.  393;  Tod  v.      L.  R.  A.  765;  57  N.  E.  20. 

Land   Co.,   57   Fed.    47 ;    Mercantile  e  Kelly,   etc.,  v.   Varnish   Co.,   90 

Trust  Co.  V.  Kiser,  91  Ga.  636;   18  111.  App.  287. 

S.  E.  358 ;  Ellerman  v.  Chicago,  etc.,  7  Sturdevant    Bros.    v.    Bank,    — 

Co.,  49  N.  J.  Eq.  217;  23  Atl.  287;  Neb.  — ;  95  N.  W.  819;  affirming  on 

Holmes  v.   Willard,    125   X.   Y.   75;  rehearing,   62   Neb.   472;    87   N.   W. 

11  L.  R.  A.  170;  25  N.  E.  1083.  156.      (It   not  appearing  that   such 

3  Great    Northwest,    etc.,    Ry.    v.  course   of   action   was   necessary   to 
Charlebois    (1899),  App.   Cas.   114;  protect  the  bank's  interests.) 
Ward  V.   Joslin,    105   Fed.   224;    44  8  Davis   v.   R.   R.   Co.,    131    Mass. 
C.  C.  A.  456;  Rogers  v.  Belting  Co.,  258;  41  Am.  Rep.  221. 

184  111.  574;  56  N.  E.  1017;  revers-  9  Central   Lumber    Co.   v.    Kelter, 

ing,   Jewell    Belting   Co.   v.   Rogers,  201   111.  503;  66  N.  E.  543;   affirm- 

84  111.  App.  249.  ing,    102    111.    App.    333;    F.    Witt- 

4  Humboldt,  etc..  Co.  v.  Milling  mer,  etc.,  Co.  v.  Rice,  23  Ind.  App. 
Co.,  62  Fed.  356;  10  C.  C.  A.  415.  586;    55   N.    E.   868;    ^Yheeler,  etc.. 


1674  PAGE    ON    CONTRACTS. 

guarantee  the  value  of  lots  or  agree  to  pay  the  difference  between 
a  fixed  price  and  what  the  lots  will  bring  at  auction."  A  cor- 
poration formed  to  sell  land  may  agree  to  join  with  another  per- 
son in  repurchasing  land  sold  and  to  divide  the  profit  and  loss 
with  such  co-purchaser  in  order  to  diminish  its  own  losses;" 
a  guaranty  by  a  brewing  company  of  the  rent  of  a  hotel  in 
which  its  beer  is  sold  has  been  upheld  ;^^  a  hotel  may  subscribe 
toward  the  expenses  of  a  military  encampment  to  draw  trade;" 
a  corporation  formed  to  manufacture  and  deal  in  merchandise 
may  make  a  subscription  to  secure  the  location  of  a  post-office  in 
an  adjoining  building  in  order  to  increase  its  trade  ;^*  and  a 
lumber  company  may  guarantee  bonds  of  a  railroad  to  carry 
its  lumber  to  market.^^  A  corporation  formed  to  lay  out  and 
sell  lots  and  promote  a  town  may  guarantee  the  location  and 
operation  of  a  railway  in  order  to  induce  a  store  to  move  to  the 
town/''  and  a  street  railway  company  may  subscribe  to  induce 
a  baseball  company  to  locate  its  grounds  on  said  car  line.^^ 
So  where  a  debtor  corporation  had  given  a  creditor  corporation 
an  order  for  the  proceeds  of  the  sale  of  certain  articles  in 
process  of  manufacture,  it  was  held  that  the  creditor  corpora- 
tion might  guarantee  payment  for  finishing  such  articles.^*  A 
corporation  cannot  guarantee  the  bonds  of  another  corporation^® 

Co.  V.  Land  Co.,  14  Wash.  630;   45  is  Mercantile  Trust  Co.  v.  Riser, 

Pac.  316;  Interior  Woodwork  Co.  v.  91  Ga.  636;   18  S.  E.  358. 

Prasser,    108   Wis.   557 ;    84   N.   W.  is  Arkansas,   etc.,   Co.   v.   Lincoln, 

833.  56  Kan.  145;  42  Pac.  706. 

10  Vanderveer  v.  Ry.  Co.,  82  Fed.  it  Temple,  etc.,  Ry.  Co.  v.  Hell- 
355.  man,  103  Cal.  634;  37  Pac.  530. 

11  Bates  V.  Beach  Co.,  109  Cal.  is  Flint,  etc.,  Co.  v.  Mfg.  Co. 
160;  41  Pac.  855;  same  case.  Bates  (Ind.),  56  N.  E.  858. 

V.    Babcock,    95    Cal.   479;    30    Pac.  is  Louisville,    etc.,    Co.    v.    Ohio, 

605.  etc.,  Co.,  69  Fed.  431;  Northside  Ry. 

12  Winterfield  v.  Brewing  Co.,  96  Co.  v.  Worthington,  88  Tex.  562 ;  53 
Wis.  239;   71  N.  W.  101.  Am.   St.   Rep.   778;   30  S.   W.   1055. 

13  Richelieu  Hotel  Co.  v.  Encamp-  (A  land  company  was  not  allowed  to 
ment  Co.,  140  111.  248;  33  Am.  St.  guarantee  bonds  of  a  street  railway 
Rep.  234;  29  N.  E.  1044.  company  to  secure  passenger  service 

14  B.  S.  Green  Co.  v.  Blodgett.  150  to  the  addition  laid  out  by  the  labJ 
111.   169;    .50  Am.  St.  Rep.   146;   42  company.) 

N.  E.  176. 


PKIVATE   CORPOKATIONS.  1675 

nor  dividends  on  stock,""  though  it  may  guarantee  bonds  of 
another  company  which  it  has  taken  for  a  debt,  in  order  to 
effect  a  sale."^  A  corporation  which  may  lease  another  road 
may  guarantee  the  bonds  of  such  other  road  as  a  consid- 
eration for  the  lease.""  A  corporation  cannot  assume  indi- 
vidual debts  of  a  stockholder,^^  or  give  a  mortgage,^*  or  issue 
corporate  securities,^^  or  stock  therefor,"'^  though  where  a  corpo- 
ration receives  its  assets  in  fraud  of  the  creditors  of  the  chief 
stockholders  and  issues  stock  for  such  assets  it  may  buy  the  judg- 
ments and  secure  release  of  the  assets  from  attachment  f  and  it 
cannot  assume  the  debts  of  another  corporation  except  to  the  ex- 
tent of  the  assets  which  it  receives. ^^  While  the  conflict  in  some 
of  the  cases  cited  is  hopeless,  many  of  them  may  be  reconciled 
by  this  statement  of  the  rule.  Where  the  contract  of  guaranty 
is  the  consideration  of  a  valid  contract  of  sale,  to  or  by  the 
corporation,  it  is  valid.  The  corporation  may  agree  to  pay 
for  the  goods,  as  well  as  it  may  pay  cash  for  them,  and  it  makes 
no  difference  to  whom  the  money  is  to  be  paid.  But  where 
the  contract  of  guaranty  is  merely  collateral  to  the  authorized 
contract  of  sale,  and  forms  an  inducement  therefor,  the  conflict 
is  hopeless.  Wliere  power  is  given  to  one  corporation  to  aid 
another,  it  may  do  so  by  guaranteeing  its  bonds. ^® 

§1073.    Lending  money. 

A  corporation  has  usually  an  implied  power  to  lend  money 
where  this  is  an  appropriate  means  of  carrying  on  its  business.^ 

20  Rhorer  V.  Middlesboro,  etc.,  Co.,  25  Wheeler   v.   Bank,   188   111.   34; 

103  Ky.  146;  44  S.  W.  448.  80  Am.  St.  Rep.  161;  58  N.  E.  598; 

2iMarbury  v.  Land   Co.,   62   Fed.  Wilson  v.  Ry.  Co.,   120  N.  Y.   145; 

335;   10  C.  C.  A.  393;  Ellerman  v.  17  Am.  St.  Rep.,  625;  24  N.  E.  384. 

Chicago,  etc.,  Co.,  49  N.  J.  Eq.  217;  26  Farrington   v.    R.    R.    Co.,    150 

23    Atl.    287.     See    also    Broadway  Mass,  406;   15  Am,  St.  Rep.  222;  5 

National  Bank  v.  Baker,   176  Mass.  L,  R,  A.  849;  23  N.  E.  109. 

294;  57  N,  E.  603.  27  Sutton  v.  Dudley,  193  Pa.  St. 

22  Low  V.  R.  R.  Co.,  52  Cal,  53;  194;  44  Atl.  438. 

28  Am.  Rep.  629.  28  Kentucky,    etc..    Association    v. 

23  Gilbert    v.    Mfg.    Co.,    98    Fed.      Lawrence,    106    Ky,    88;    49    S.    W. 
208.  1059, 

2*  Singer   Piano   Co.  v.    Barnard,  29  Zabriskie  v.  R.  R.  Co.,  23  How. 

etc.,    113    la,    664;    83  N.    W.  -725  (U.  S.)   381. 

(the    debts    being   for  vinpaid    sub-  1  Brown  v.  El  well,  17  Wash,  442; 

scriptions  for  stock).  49  Pac.  1068. 


1G76  PAGE    ON    CONTRACTS. 

It  may  loan  undivided  profits."  So  a  mutual  benefit  society 
may  take  a  note  for  money  lent.^  A  statute  restricting  the  man- 
ner of  lending  on  the  security  of  chattels  "  or  otherwise,"  does 
not  apply  to  real  estate  mortgages.*  A  statute  forbidding  any 
corporation  except  a  building  and  loan  association  to  lend 
money  to  a  stockholder  prevents  an  insurance  company  from 
advancing  money  to  its  stockholders.^ 

§1074.     Power  to  acquire  real  property. 

A  corjKjration  may  acquire  and  hold  realty  which  is  proper 
for  the  exercise  of  its  corporate  powers.^  It  cannot  acquire 
land  for  purposes  not  connected  with  the  purposes  of  its  crea- 
tion." Thus  a  company  formed  to  build  cars  cannot  own  land 
to  build  a  town  on  and  operate  a  sewage  system  and  a  sewage 
farm.^  A  building  and  loan  association  cannot  buy  as  an  in- 
vestment realty  on  which  it  has  no  prior  lien.*  In  I^ew  Jersey 
it  was  held  that  a  cemetery  company  may  exchange  its  stock 
of  little  value  for  land  to  prevent  competition.^  A  corporation 
may  acquire  land  in  exchange  for  its  stock  of  merchandise 
when  it  is  going  out  of  business.''  A  corporation  authorized 
to  hold  land  may  contract  for  proper  easements  for  such  land: 

2  Dock  V.  Cordage  Co.,  167  Pa.  St.  Coleman    v.    Turnpike   Co.,   49    Cal. 

370;  31  Atl.  656.  517;  People  v.  Car  Co.,  175  111.  125; 

3Kripner  v.  Lincoln,  66  111.  App.  51  N.  E.  664;  Taber  v.  Ry.  Co.,  15 

532.  Ind.    459;    Cynthiana,    etc.,    Co.    v. 

4  Commercial,  etc..  Association  v.  Hutchinson    (Ky.),    60   S.  W.   378; 
Mackenzie,  85  Md.  132;  36  Atl.  754.  Thompson  v.  West,  59  Neb.  677;  49 

5  Fisher  v.  Parr,  92  Md.  245;   48  L.  R.  A.  337;  82  N.  W.  13;  State  v. 
Atl.  621.  Newark,  26  N.  J.  L.  519;  affirming, 

iLathrop  v.  Bank,  8  Dana    (Ky.)  25  N.  J.  L.  315. 

114;   33  Am.  Dee.  481;   Richardson  3  People  v.  Car  Co.,  175  111.  125; 

V.  Mechanic  Association,   131  Mass.  51  N.  E.  664. 

174;  Thompson  v.  Waters,  25  Mich.  4  National,     etc.,     Association     v. 

214;    12   Am.   Rep.   243;    People  v.  Bank,  181  111.  35;  72  Am.  St.  Rep. 

O'Brien,  111  N.  Y.  1 ;  7  Am.  St.  Rep.  245;  54  N.  E.  619. 

684;  2  L.  R.  A.  255;  18  N.  E.  692;  5  Rural  Homestead  Co.  v.  Wildes, 

Overmyer  v.  Williams,   15  Ohio  26;  54  X.  J.  Eq.  668;  35  Atl.  896. 

Covington,  etc.,  Co.  v.  Magruder,  63  6  Morisette    v.    Howard,    62    Kan. 

O.  S.  455;  59  N.  E.  216.  463;  63  Pac.  756. 

2  Case   V.    Kelly,    133    U.    S.    21; 


PRIVATE  CORPORATIONS.  1677 

as  a  bank  may  contract  for  an  easement  of  light  and  air/  and 
a  street  railway  company  which  has  acquired  a  right  to  operate 
a  road  by  horse-power  over  the  roadbed  of  a  turnpike  company 
may  contract  for  the  right  to  use  electricity  by  paying  an  extra 
amount  for  the  additional  servitude  ;^  or  a  corporation  formed 
to  lay  out  lots  and  sell  them  may  build  a  bridge  for  access  to 
such  lots.®  A  corporation  having  legal  capacity  to  hold  prop- 
erty may  hold  it  in  trust  as  an  individual  could  if  not  incon- 
sistent with  its  corporate  powers.^'' 

§1075.     Power  to  acquire  personal  property. 

The  power  of  a  corporation  to  acquire  personal  property 
suitable  for  its  business/  such  as  supplies  of  material  for  manu- 
facturing," or  means  of  transportation  for  its  materials  and 
product/  is  so  much  broader  than  its  power  to  acquire  realty 
that  it  is  rarely  questioned.  A  corporation  cannot,  however, 
buy  property  suitable  only  for  purposes  outside  the  scope  of 
the  corporate  business.  Thus  a  bank  cannot  buy  a  manufac- 
turing plant.*  So  a  corporation  formed  to  manufacture  and 
sell  cotton-seed  products,  including  fertilizer,  cannot  buy  a  dif- 
ferent kind  of  fertilizer  to  resell  at  a  profit.^  So  a  manufactur- 
ing or  trading  corporation  cannot  buy  up  claims  against  others 
as  a  SToecnlation.^  It  may  buy  up  claims,  however,  as  a  means 
of  carrying  its  own  powers  into  execution.  Thus  a  hardware 
company  may  buy  up  claims  against  its  debtor  for  its  own  pro- 
tection.'^    So  a  corporation  has  implied  power  to  purchase  all 

7  First,  etc.,  Church  v.  Bank,  57  3  Callaway,  etc.,  Co.  v.  Clark,  32 
N.  J.  L.  27 ;  29  Atl.  320.  Mo.  305. 

8  Little,  etc.,  Co.  v.  Ry.  Co.,  194  4  Harding  v.  Glucose  Co.,  182  111. 
Pa.  St.  144;  75  Am.  St.  Rep.  690;  551;  74  Am.  St.  Rep.  189;  55  N.  E. 
45  Atl.  66.  577. 

9  Fort  Worth  City  Co.  v.  Bridge  s  Richmond  Guano  Co.  v.  Oil  Mill 
Co.,  151  U.  S.  294.  &  Ginnery.  119  Fed.  709. 

10  White  V.  Rice,  112  Mich.  403;  «  Farwell  Co.  v.  Wolf,  96  Wis.  10; 
70  N.  W.  1024.                                             65   Am.   St.   Rep.   22;    37    L.   R.  A. 

1  Adams  Mining  Co.  v.  Senter,  26  138;  70  N.  W.  289;  71  N.  W.  109. 
Mich.  73.  TMahoney    v.    Hardware    Co.,    19 

2  National,  etc.,  Bank's  Appeal,  Mont.  377;  48  Pac.  545;  same  case, 
55  Conn.  469;  12  Atl.  646.  27  Mont.  463;  71  Pac.  674. 


1G78 


PAGE    ON    CONTRACTS. 


the  assets  of  a  partnership,   including  an  action  for  damages 
in  tort/ 

§1076.     Power  to  purchase  its  own  stock. 

Whether  a  corporation  can  buy  its  own  stock  is  another  dis- 
puted point.  The  greater  number  of  cases  hold  that  it  may 
except  when  it  is  insolvent  and  such  purchases  would  defraud 
creditors.^  In  some  of  the  cases  cited  on  this  point,  the  only 
power  involved  was  the  power  to  rescind  a  conditional  contract 
for  the  sale  of  stock  on  breach  of  that  condition,^  or  where  the 
purchaser  has  never  paid  for  his  stock,^  or  where  the  capital 
expended  for  stock  was  expended  under  a  statute  authorizing 
the  reduction  of  the  capital  stock.*  Other  authorities  deny  the 
right  of  a  corporation  to  buy  its  own  stock,^  except  where  it 
acquires  such  stock  to  secure  a  debt  due  to  the  corporation  from 
the  stockholder.     All  the  authorities  agree  that  it  may  then 


8  Central  Ohio  Nat'l  Gas  and  Fuel 
Company  v.  Dairy  Company,  60  O. 
S.  96;  53  N.  E.  711. 

1  Chicago,  etc.,  R.  R.  Co.  v.  Mar- 
sielles,  84  111.  145;  Clapp  v.  Peter- 
son, 104  111.  26;  Republic,  etc.,  Ins. 
Co.  V.  Swigert,  135  111.  150;  12  L. 
R.  A.  328;  25  N.  E.  680;  Iowa  Lum- 
ber Co.  V.  Foster,  49  la.  25;  31  Am. 
Rep.  140;  Rollins  v.  Wagon,  etc., 
Co.,  80  la.  380;  20  Am.  St.  Rep. 
427;  45  N.  W.  1037;  Davis  v.  Pro- 
prietors, etc.,  8  Met.  (Mass.)  321; 
Dupee  V.  Power  Co.,  114  Mass.  37; 
New  England  Trust  Co.  v.  Abbott, 
162  Mass.  148;  27  L.  R.  A.  271;  38 
N.  E.  432;  Oliver  v.  Ice  Co.,  64  N. 
J.  Eq.  596;  54  Atl.  460;  Berger  v. 
Steel  Corporation,  63  N.  J.  Eq.  809 ; 
53  Atl.  68;  reversing,  63  N.  J.  Eq. 
506;  53  Atl.  14;  Chapman  v.  Rheo- 
stat Co.,  62  N.  J.  L.  497;  41  Atl. 
690;  Strong  v.  R.  R.  Co.,  93  N.  Y. 
426;  City  Bank  v.  Bruce,  17  N.  Y. 
507;  Blalock  v.  Mfg.  Co.,  110  N.  C. 
99  J  14  S.  E.  501;  Eby  v.  Guest,  94 


Pa.  St.  160;  Dock  v.  Cordage  Co., 
167  Pa.  St.  370;  31  Atl.  656;  Howe, 
etc.,  Co.  V.  Jones,  21  Tex.  Civ.  App. 
198;  51  S.  W.  24;  Shoemaker  v. 
Lumber  Co.,  97  Wis.  585;  73  N.  W. 
333. 

2  Chicago,  etc.,  Co.  v.  Marseilles, 
84  111.  145  (subscription  condi- 
tioned on  completion  of  road  in  one 
year)  ;  Chapman  v.  Rheostat  Co.,  62 
N.  J.  L.  497;  41  Atl.  690. 

3  Shoemaker  v.  Lumber  Co.,  97 
Wis.  585;  73  N.  W.  333. 

4  Strong  V.  Ry.  Co.,  93  N.  Y. 
426. 

5Bellerby  v.  S.  S.  Co.  (1902),  2 
Ch.  14;  San  Luis  Obispo  Bank  v. 
Wickersham,  99  Cal.  655;  34  Pac. 
444;  Abeles  v.  Cochran,  22  Kan. 
805;  31  Am.  Rep.  194;  Price  v.  Coal 
Co.  (Ky.),  32.  S.  W.  267;  Coppin  v. 
Greenlees,  etc.,  Co.,  38  O.  S.  275;  43 
Am.  Rep.  425;  Adams,  etc.,  Co.  v. 
Deyette,  8  S.  D.  119;  59  Am.  St. 
Rep.  751;  31  L.  R.  A.  497;  65  N.  W. 
471;  same  ease,  5  S.  D.  418;  49  Am. 


PRIVATE   CORPORATIONS. 


1679 


ucquire  its  own  stock.*'  If  the  creditors  of  the  corporation  object 
such  purchase  may  be  avoided  as  far  as  concerns  their  interests.'^ 
A  loan  to  an  insolvent  corporation  to  enable  it  to  buy  its  own 
stock  was  held  to  be  illegal  and  void  as  in  fraud  of  its  creditors.* 

§1077.     Power  to  purchase  stock  in  other  corporation. 

It  is  usually  held  that  a  corporation  has  no  implied  power  to 
buy  and  hold  stock  in  another  corporation  ;^  as  where  the  incor- 
poration laws  gave  no  authority  to  a  manufacturing  corporation 
to  purchase  stock,  but  such  power  was  inserted  by  the  incor- 


St.  Rep.  887;  59  N.  W.  214;  Her- 
ring V.  Co-operative  Association 
(Tenn.  Ch.  App.),  52  S.  W.  327 
(orally  affirmed  by  Supreme  Court) . 

6  Union  National  Bank  v.  Hunt, 
7  Mo.  App.  42;  Taylor  v.  Exporting 
Co.,  6  Ohio  176;  Morgan  v.  Lewis, 
46  O.  S.  1 ;   17  N.  E.  558. 

7  Hall  V.  Henderson,  126  Ala.  449; 
85  Am.  St.  Rep.  53;  61  L.  R.  A.  621; 
28  So.  531. 

8  Adams,  etc.,  Co.  v.  Deyette,  8  S. 
D.  119;  59  Am.  St.  Rep.  751;  31 
L.  R.  A.  497;  65  N.  W.  471. 

1  De  La  Vergne,  etc.,  Co.  v.  Sav- 
ings Institution,  175  U.  S.  40;  Cali- 
fornia National  Bank  v.  Kennedy, 
167  U.  S.  362;  Pauly  v.  Coronado 
Beach  Co.,  56  Fed.  428;  Marbury  v. 
Land  Co.,  62  Fed.  335;  10  C.  C.  A. 
393 ;  Lanier  Lumber  Co.  v.  Rees,  103 
Ala.  622;  49  Am.  St.  Rep.  57;  16 
So.  637  (indirectly  through  a  trus- 
tee) ;  Lester  v.  Lumber  Co.,  71  Ark. 
379;  74  S.  W.  518;  Knowles  v.  San- 
dercock,  107  Cal.  629;  40  Pac.  1047; 
Chemical  National  Bank  v.  Haver- 
male,  120  Cal.  601 ;  65  Am.  St.  Rep. 
206;  52  Pac.  1071;  Glengary,  etc., 
Co.  V.  Boehmer,  28  Colo.  1 ;  62  Pac. 
839;  Hazelhurst  v.  Ry.,  43  Ga.  13; 
McCoy  V.  Columbian  Exposition, 
186  111.  356;  78  Am.  St.  Rep.  288; 
57   N.    E.    1043;    affirming,    87    111. 


App.  605;  People  ex  rel.  Moloney  v. 
Pullman's,  etc.,  Co.,  175  111,  125;  51 
N.  E.  664;  Martin  v.  Stove  Co.,  78 
111.  App.  105;  Franklin  Co.  v.  I^w- 
iston  Inst.,  68  Me.  43;  28  Am.  Rep. 
9;  Hunt  v.  Malting  Co.,  90  Minn. 
282;  96  N.  W.  85;  Bank  of  Com- 
merce V.  Hart,  37  Neb.  197 ;  40  Am. 
St.  Rep.  479;  20  L.  R.  A.  780;  55 
N.  W.  631;  Nebraska  Shirt  Co.  v. 
Horton  (Neb.),  93  N.  W.  225; 
Central  R.  R.  Co.  v.  R.  R.  Co.,  31 
N.  J.  Eq.  475;  Talmage  v.  Pell,  7 
N.  Y.  328;  Coler  v.  Power  Co.,  — 
N.  J.  Eq.  — ;  54  Atl.  413;  reversing, 
64  N.  J.  Eq.  117;  53  Atl.  680;  Val- 
ley Ry.  Co.  v.  Iron  Co.,  46  O.  S.  44 ; 
1  L.  R.  A.  412;  18  N.  E.  486;  Buck- 
eye, etc.,  Co.  V.  Harvey,  92  Tenn. 
115;  36  Am.  St.  Rep.  71;  18  L.  R. 
A.  252;  20  S.  W.  427;  Denny  Hotel 
Co.  V.  Schram,  6  Wash.  134;  36  Am. 
St.  Rep.  130;  32  Pac.  1002.  Con- 
tra, that  a  corporation  may  be  a 
stockholder  in  another  corporation. 
United,  etc.,  Co.  v.  Electric  Light 
Co.,  68  Fed.  673.  By  statute  in  In- 
diana a  corporation  cannot  purchase 
stock  in  another  corporation  with- 
out the  written  consent  of  all  the 
stockliolders  of  each  corporation. 
Midland  Steel  Co.  v.  Bank,  26  Ind. 
App.  71;  59  N.  E.  211. 


1680 


PAGE    ON    CONTRACTS. 


porators  in  the  articles  of  incorporation.^  Bnt  it  may  acquire 
stock  in  the  usual  course  of  its  business  as  it  may  other  proj^erty. 
Thus  a  bank  may  lend  money  on  stock  as  collateral,  and  sell 
the  stock,  buying  it  itself  f  or  may  take  it  in  payment  of  a  debt,* 
and  a  corporation,  formed  to  deal  in  jewelry,  may  trade  jewelry 
for  stock  in  another  corporation,^  or  a  corporation  lawfully  going 
out  of  business  may  take  the  stock  in  another  corporation  in  pay- 
ment for  its  assets.®  A  corporation  cannot  purchase  the  stock 
of  a  rival  in  order  to  suppress  competition."^  If  power  to  own 
stock  in  other  corporations  is  expressly  granted,  it  may  of  cours6 
be  exercised.^  So  power  to  consolidate  and  power  to  guarantee 
bonds  includes  power  to  buy  stock  f  as  does  power  to  buy,  sell 


2  People  V.  Trust  Co.,  130  111.  268; 
17  Am.  St.  Rep.  319;  8  L.  R.  A. 
497;  22  N.  E.  798, 

3  Chemical,  etc.,  Bank  v.  Haver- 
male,  120  Cal.  601 ;  65  Am.  St.  Rep. 
206;  52  Pac.  1071;  Calumet  Paper 
Co.  V.  Investment  Co.,  96  la.  147; 
59  Am.  St.  Rep.  362;  64  N.  W.  782; 
Talmage  v.  Pell,  7  N.  Y.  328. 

4  National  Bank  v.  Case,  99  U.  S. 
628;  First  National  Bank  v.  Ex- 
change Bank,  92  U.  S.  128 ;  Holmes, 
etc.,  Co.  v.  Metal  Co.,  127  N.  Y.  252; 
24  Am.  St.  Rep.  448 ;  27  N.  E.  831. 

5  White  V.  Marquardt  &  Sons,  105 
la.  145;  74  N.  W.  930;  affirming 
(on  rehearing),  70  N.  W.  193. 

eMetcalf  v.  Furniture  Co.,  122 
Fed.  115;  Holmes  v.  Metal  Co.,  127 
N.  Y.  252;  24  Am.  St.  Rep.  448;  27 
N.  E.  831. 

7De  La  Vergne,  etc.,  Co.  v.  Sav- 
ings Institution,  175  U.  S.  40;  Mem- 
phis, etc.,  Co.  V.  Woods,  88  Ala, 
630;  16  Am.  St.  Rep.  81;  7  L.  R. 
A.  605;  7  So.  108;  People  v.  Trust 
Co.,  130  111.  268;  17  Am.  St.  Rep. 
319;  8  L.  R.  A.  497;  22  N.  E.  798; 
Pearson  v.  R.  R.,  62  N.  H.  537 ;  13 
Am.  St.  Rep.  590 ;  State  v.  Distilling 
Co.,   29   Neb,    700;    46   N,   W.    155. 


Contra,  "under  our  liberal  corpora- 
tion laws,"  Trenton  Potteries  Co.  v^ 
Oliphant,  58' N,  J.  Eq.  507,  524;  78 
Am,  St.  Rep.  612;  46  L.  R.  A.  255; 
43  Atl.  723;  affirming  in  part  and 
reversing  in  part,  56  N.  J.  Eq.  680; 
39  Atl.  923.  It  depends  on  the  ob- 
jects to  be  attained,  agreements  to 
pool  stock  not  being  necessarily  il- 
legal. Chapman  v.  Bates,  61  N.  J, 
Eq.  658;  47  Atl.  638;  affirming,  60 
N.  J.  Eq.  17;  46  Atl.  591. 

8  Rogers  v.  Ry.  Co.,  91  Fed.  299; 
33  C.  C.  A.  517;  Tod  v.  Land  Co., 
57  Fed.  47;  Trust  Co.  v.  State,  109 
Ga.  736;  48  L.  R.  A.  520;  35  S.  E. 
323 ;  Atchinson,  etc.,  R.  R.  Co.  v. 
Cochran,  43  Kan.  225;  19  Am.  St, 
Rep.  129;  7  L.  R.  A.  414;  23  Pac. 
151;  Atchison,  etc.,  R.  R.  Co.  v. 
Davis,  34  Kan.  209;  8  Pac.  530; 
Atchison,  etc.,  R.  R.  Co.  v.  Fletcher, 
35  Kan.  236;  10  Pac.  596;  Rubino 
V.  Car  Co.,  —  N.  J.  Eq.  — ;  53  AtL 
1050;  Ditman  v.  Distilling  Co.,  64 
N.  J.  Eq.  537;  54  Atl.  570;  North- 
ern Central  Ry.  Co.  v.  Walworth, 
193  Pa.  St.  207;  74  Am.  St.  Kep. 
683 ;  44  Atl.  253. 

9  Louisville,  etc.,  Co.  v.  Ry.  Co.,. 
75  Fed.  433. 


PEIVATE   COEPOKATIONS.  1681 

and  deal  in  public  and  private  stock  ;^"  or  power  to  buy  "  bonds, 
other  securities  and  personal  property."^^  Authority  to  buy 
stock  does  not  include  the  right  to  get  control  of  a  corporation 
so  as  to  prevent  payment  of  interest  on  bonds,  and  resistance 
to  a  foreclosure  suit/"  nor  to  manage  such  other  corporation/* 
But  power  to  "  take  stock  "  is  not  power  to  sell  all  its  assets  in 
e»!hange  for  stock  of  other  corporation/*  Even  where  the  stat- 
ute forbids  a  corporation  to  buy  stock  in  another  it  may  take 
stock  in  a  building  and  loan  association  as  a  means  of  borrowing 
money,  where  such  borrowing  is  proper/^ 

§1078.     Partnership  contracts. 

A  corporation  cannot  enter  into  a  partnership,  since  this 
places  in  the  hands  of  others  than  the  corporation's  agents  power 
to  incur  obligation  due  from  the  corporation,^  though  it  may  be 
co-owner  with  another,"  and  a  purchaser  of  land  by  a  corporation 
and  another,  the  appointee  of  the  corporation  taking  the  legal 
title  and  managing  the  property,  is  valid.^  A  contract  between 
corporations  supplying  a  city  with  water  to  work  together,  a 
director  of  each  corporation  acting  together  as  trustees  with 
limited  powers  of  management,  is  valid  since  it  is  not  a  part- 

10  Market,  etc.,  Co.  v.  Hellman,  v.  Preservers'  Co.,  157  111.  284;  48 
109  Cal.  571;  42  Pac.  225.  Am.   St,   Eep.   317;    41   N.   E.   765; 

11  Calumet  Paper  Co.  v.  Invest-  Whittenton  Mills  v.  Upton,  10  Gray 
ment  Co.,  96  la.  147;  59  Am.  St.  (Mass.)  582;  71  Am.  Dee.  681 ;  Peo- 
Eep.  362;  64  N.  W.  782.  pie  v.  Refining  Co.,  121  N.  Y.  582; 

12  Farmers',  etc.,  Co.  v.  Ry.  Co.,  18  Am.  St.  Rep.  843;  9  L.  R.  A. 
150  N.  Y.  410;  55  Am.  St.  Rep.  33;  24  N.  E.  834;  Geurinck  v.  Al- 
689;  34  L.  R.  A.  76;  44  N.  E.  1043.  cott,   66   O.   S.   94;    63    N.   E.   714; 

13  State  v.  Newman,  51  La.  Ann.  Merchants'  National  Bank  v.  Wagon 
833;  72  Am.  St.  Rep.  476;  25  So.  Co.,  6  Ohio  N.  P.  264;  Boyd  v.  Car- 
408.  bon-Black  Co.,  182  Pa.  St.  206;    37 

14  Elyton  Land  Co.  v.  Dowdell,  Atl.  937 ;  Mallory  v.  Oil  Works.  86 
113  Ala.  177;  59  Am.  St.  Rep.  105;  Tenn.  598;  8  S.  W.  396;  Sabine, 
20  So.  981.  etc.,   Co.  v.  Bancroft,    16  Tex.  Civ. 

isNorwalk,  etc.,   Co.  v.  Norwalk,  App.  170;  40  S.  W.  837. 

etc.,  Co.,  14  Ohio  C.  C.  1 ;  7  Ohio  C.  2  Calvert  v.  Stage  Co.,  25  Or.  412; 

D.  275;  reversing,  6  Ohio  Dec.  70.  36  Pac.  24. 

iPearce  V.  R.  R.,  21  How.  (U.  S.)  3  Bates    v.    Beach    Co.,    109    CaL 

441;  Central,  etc.,  Co.  v.  Smith,  76  160;  41  Pac.  855. 
Ala.  572;  52  Am.  Rep.  353;  Bishop 
106 


1682 


PAGE    ON    CONTEACTS. 


nership.*  Accordingly  a  corporation  cannot  be  held  liable  for 
acts  of  a  person  whom  it  has  held  out  as  a  partner.^  Some  juris- 
dictions hold  that  such  a  partnership  is  valid  as  to  third  parties, 
either  to  enable  them  to  recover  against  such  partnerships/ 
or  to  enable  the  partnership  to  recover  against  them.'  It  has 
'also  been  suggested  that  the  corporation  is  estopped  to  deny 
the  partnership :  though  the  final  disposition  of  the  case  made 
discussion  of  this  question  unnecessary.^ 

§1079.    Power  to  dispose  of  corporate  property. 

The  power  of  a  corporation  to  dispose  of  its  property  may 
be  considered  under  three  general  heads.  First,  its  power  to 
dispose  of  such  property  as  does  not  interfere  with  the  continu- 
ance of  its  corporate  functions  is  an  implied  one.^  Thus  a 
corporation  formed  to  establish  a  soldiers'  home  and  to  hold 
land,  may  sell  land  not  needed  by  it.^  A  corporation  may  sell 
surplus  cteam  for  heating  purposes  f  or  may  lease  property  not 
then  used  ;*  or  may  temporarily  lease  all  its  plant  in  order  to 
get  money  to  conduct  its  business,^  even  if  the  minority  stock- 


4  San  Diego,  etc.,  Co.  v.  Flume 
Co.,  108  Cal.  549;  29  L.  R.  A.  839; 
41  Pac.  495.  But  in  Mallory  v. 
Oil  Works,  86  Tenn.  598;  8  S.  W. 
396,  a  similar  arrangement  in  which 
the  trustees  had  more  extensive  pow- 
ers of  management  was  held  a  co- 
partnership. 

5  Murray,  etc.,  Co.  v.  Bank  (Tex. 
Civ.  App.),  61  S,  W.  508. 

6  Johnson  v.  Mfg.  Co.,  10.3  Wis. 
291;  79  N.  W.  236. 

7  Wilson  V.  Oil  Co.,  46  W.  Va. 
469;  33  S.  E.  249. 

sWilley  v.  Bank,  141  Cal.  508; 
75  Pac.  106;  reversing  in  banc,  72 
Pac.  832. 

1  State  V.  Canal  Co.,  40  Kan.  96 
10  Am.  St.  Rep.  166;  19  Pac.  349 
State  v.  Warehouse  Co.,  109  La.  64 
33  So.  81 ;  Joy  v.  Road  Co..  11  Mich 
155;    Stockton   Attorney-General  v, 


Tobacco  Co.,  55  N.  J.  Eq.  352;  36 
Atl.  971;  Holmes,  etc.,  Mfg.  Co.  v. 
Metal  Co.,  127  N.  Y.  252;  24  Am. 
St.  Rep.  448;  27  N.  E.  831;  Ben- 
bow  V.  Cook,  115  N.  C.  324;  44  Am. 
St.  Rep.  454;  20  S.  E.  453;  Rey- 
nolds v.  County,  5  Ohio  204;  Davis 
v.  Lee  Camp   (Va.),  18  S.  E.  839. 

2  Davis  V.  Lee  Camp  (Va.),  18 
S.  E.  839. 

3  People  V.  Car  Co.,  175  111.  125; 
51  N.  E.  664. 

4  Simpson  v.  Hotel  Co.,  8  H.  L. 
Cas.  711;  People  v.  Car  Co.,  175 
111.  125;  51  N.  E.  664;  Brown  v. 
Winnisimmet  Co.,  11  All.  (Mass.) 
326;  Temple  Grove  Seminary  v. 
Cramer,  98  N.  Y.  121. 

5  Plant  V.  Macon,  etc..  Ice  Co., 
103  Ga.  666;  30  S.  E.  567;  citing 
Simpson  v.  Hotel  Co.,  8  H.  L.  Cas. 
711;   Hancock  v.  Holbrook,   9   Fed. 


PRIVATE  CORPORATIONS.  1683 

holders  object.^  A  corporation  authorized  to  hold  land  may 
lease  it  to  be  used  for  purposes  for  which  the  corporation  could 
not  itself  have  used  itJ  Thus  a  steamship  company  may  lease 
its  land  for  hotel  purposes,  reserving  a  certain  cash  rent  and 
a  per  cent  of  the  income  from  the  hotel  in  excess  of  a  fixed 
sum.^  So  a  lease  may  be  valid  where  the  business  of  the  lessee 
is  incidental  to  the  business  of  the  lessor.  A  railroad  company 
may  lease  property  not  needed  in  its  own  business  to  a  public 
warehouse  company,^  Second,  as  to  property  essential  to  carry- 
ing on  its  business,  a  corporation  may  dispose  of  such  property 
on  going  out  of  business,^**  and  a  solvent  water  power  company 
going  out  of  business  may,  by  consent  of  all  interested,  convey 
its  land  in  satisfaction  of  its  own  stock.^^  Franchises  for  use 
of  streets  may  be  alienated.^^  A  corporation  formed  to  deal 
in  plate  glass,  etc.,  may  sell  its  stock  of  glass,  and  agree  not  to 
compete  for  twenty  years.^^  Third,  a  corporation  cannot  retain 
its  corporate  existence  and  transfer  its  property  to  another  cor- 
poration, not  as  a  means  of  winding  uj),  but  as  a  permanent 
investment.^^  Such  transactions  are  contrary  to  public  policy 
as  by  such  means  the  corporation  maintains  a  corporate  exist- 

353;  Treadwell  v.  Mfg.  Co.,  7  Gray  Am.  St.  Rep.  166;  19  Pac.  349;  Mor- 

(Mass.)   393;  66  Am.  Dec.  490;  dis-  isette  v.  Howard,  62  Kan.  463;    63 

tinguishing,   Thomas   v.   R.   R.    Co.,  Pac.   756;    Detroit  v.   Gaslight   Co., 

101    U.    S.    71;    Pennsylvania,    etc.,  43  Mich.  594;   5  N.  W.   1039;   Rey- 

Co.  V.  Ry.  Co.,  118  U.  S.  290;  Cass  nolds  v.  Stark  Co.,  5  Ohio  204. 

V.  Steel  Co.,  9  Fed.  640.  n  Dupee  v.  Power  Co.,  114  Mass. 

6  Bartholomew  v.  Rubber  Co.,  69  37. 

Conn.  521;  61  Am.  St.  Rep.  57;  38  12  Michigan  Telephone  Co.  v.  St. 

Atl.  45.  Joseph,  121  Mich.  502;  47  L.  R.  A. 

7  Nye  V.  Storer,  168  Mass.  53;  46  87;  80  N.  W.  383;  Detroit  v.  Gas- 
N.  E.  402;  Benton  v.  Elizabeth,  61  light  Co.,  43  Mich.  594;  5  N.  W. 
N.  J.  L.  693;  40  Atl.  1132;   affirm-  1039. 

ing,  61  N.  J.  L.  411 ;  39  Atl.  683.  i3  McCausland    v.    Hill,    23    Ont. 

sNantasket  Beach  Steamboat  Co.  App.  738. 

V.  Shea,  182  Mass.  147;  65  N.  E.  57.  i^McCutcheon  v.  Merz  &  Co.,   71 

9  State  V.  Warehouse  Co.,  109  La.  Fed.  787;  31  L.  R.  A.  415;  affirm- 
64;  33  So.  81.  ing,  67  Fed.  414;  Byrne  v.  Mfg.  Co., 

10  Miners'  Ditch  Co.  v.  Zellerbach,  65  Conn.  336;  28  L.  R.  A.  304;  31 
37  Cal.  543;  99  Am.  Dec.  300;  War-  Atl.  833;  People  v.  Ballard,  134  N. 
field  V.  Canning  Co.,  72  la.  666;  Y.  269;  17  L.  R.  A.  737;  32  N.  E. 
2  Am.  St.  Rep.  263 ;  34  N.  W.  467 ;  54. 

State  V.  Canal  Co.,  40  Kan.  96;   10 


1684 


PAGE    OX    CONTRACTS. 


ence  and  yet  makes  it  impossible  for  the  corporation  to  exercise 
those  functions  for  which  it  was  created  by  the  state/''  This 
principle  applies  with  especial  force  to  contracts  whereby  cor- 
porations of  a  public  character  attempt  to  transfer  their  powers 
and  functions/^  Thus  neither  a  turn-pike  company"  nor  a  gas 
company^^  can  transfer  their  property  so  that  they  disable  them- 
selves from  serving  the  public.  Under  a  statute,  however,  which 
authorizes  a  corporation  to  lease  its  property  or  franchises  a 
lease  may  be  made  for  so  long  a  time  as  to  amount  practically 
to  a  conveyance  in  fee.^^ 

§1080.     Examples  of  powers  of  particular  corporations. 

A  corporation  formed  "  to  encourage  immigration  "  may  ad- 
vertise ;^  a  railroad  may  establish  a  relief  fund  for  its  employees, 
to  insure  them  against  accidents  and  relieve  itself  from  liability 
therefor ;"  a  corporation  may  defend  its  employee  in  a  libel  suit, 


15  Central  Transportation  Co.  v. 
Palace  Car  Co.,  139  U.  S.  24; 
Thomas  v.  E.  R.  Co.,  101  U.  S.  71; 
People  V.  Sugar  Refining  Co.,  121 
N.  Y.  582;  18  Am.  St.  Rep.  843;  9 
L.  R.  A.  33;  24  N.  E.  834;  Mallory 
V.  Hanaur  Oil  Works,  86  Tenn.  598 ; 
8  S.  W.  396. 

16  Smith  V.  Cornelius,  41  W.  Va. 
59;  30  L.  R.  A.  747;  23  S.  E.  599. 

17  Lancaster,  etc.,  Co.  v.  Rhoads, 
116  Pa.  St.  377;  2  Am.  St.  Rep. 
608 ;  9  Atl.  852. 

18  Chicago,  etc.,  Co.  v.  Gas  Light 
Co.,  121  111.  530;  2  Am.  St.  Rep. 
124;  13  N.  E.  169. 

19  Dickinson  v.  Traction  Co.,  119 
Fed.  871. 

1  Colorado  Springs  Co.  v.  Publish- 
ing Co.,  97  Fed.  843;  38  C.  C.  A. 
433. 

2  Beck  V.  R.  R.  Co..  63  N.  -J.  L. 
232;  76  Am.  St.  Rep.  211;  43  Atl. 
908 ;  citing  and  following.  Owens  v. 
Ry.  Co.,  35  Fed.  715;  1  L.  R.  A.  75; 
State  V.  Ry.  Co.,  36  Fed.  655;  Otis 


V.  Ry.  Co.,  71  Fed.  136;  Vickers  v. 
Ry.  Co.,  71  Fed.  139;  Eckman  v. 
R.  R.  Co.,  169  111.  312;  38  L.  R.  A. 
750;  48  X.  E.  496;  Pittsburg,  etc., 
Ry.  Co.  V.  Moore,  152  Ind.  345;  44 
L.  R.  A.  638;  53  N.  E.  290;  Lease 
V.  Pennsylvania  Co.,  10  Ind.  App. 
47 ;  37  N.  E.  423 ;  Donald  v.  Ry.  Co., 
93  la.  284;  33  L.  R.  A.  492;  61  N. 
W.  971;  Fuller  v.  Relief  Associa- 
tion, 67  Md.  433;  10  Atl.  237;  Chi- 
cago, etc.,  R.  R.  Co.  V.  Bell,  44  Neb. 
44;  62  N.  W.  314;  Pittsburg,  etc., 
Co.  V.  Cox,  55  O.  S.  497 ;  35  L.  R.  A. 
507;  45  N.  E.  641;  Ringle  v.  R.  R., 
164  Pa.  St.  529;  44  Am.  St.  Rep. 
628;  30  Atl.  492;  and  disapproving. 
Miller  v.  Ry.  Co.,  65  Fed.  305; 
Pittsburg,  etc.,  Ry.  Co.  v.  Montgom- 
ery, 152  Ind.  1;  71  Am.  St.  Rep. 
301;  49  N.  E.  582.  This  is  not 
ultra  vires,  and  is  not  engaging  in 
the  insurance  business.  State  v. 
Ry.,  68  O.  S.  9;  96  Am.  St.  Rep. 
635;  67  N.  E.  93. 


PRIVATE   CORPORATION'S.  1685 

where  the  paper  was  published  in  the  usual  course  of  business  f 
a  bridge  company  may  acquire  land  for  the  bridge  and  its 
approaches  ;*  and  a  land  company  may  employ  a  surveyor.^ 
A  mutual  insurance  company,  if  not  forbidden  by  statute,  may 
write  ordinary  insurance."^  On  the  other  hand,  a  boom  com- 
pany,^ or  a  corporation  formed  to  improve  the  navigation  of  a 
stream,^  cannot  handle  or  drive  logs.  A  corporation  formed 
for  "  manufacturing  and  selling  heating  and  ventilating  appa- 
ratus "  cannot  act  as  a  broker  of  bonds  f  one  formed  to  make 
insulated  cables  cannot  contract  to  lay  an  electric  conduit, 
taking  risk  of  liability  for  damages  ;^''  and  a  corporation  formed 
for  the  purpose  of  "  discussing  arbitrating  and  settling  all  mat- 
ters pertaining  to  the  prosperity  and  promotion  of  the  jobbing 
plumber's  supply  business,",  cannot  engage  in  notifying  creditors 
of  delinquencies  of  debtors.^^  Since  a  bank  cannot  conduct  a 
manufacturing  business,  a  mortgage,  in  which  the  bank  under- 
takes to  carry  on  such  business  is  invalid.^" 

§1081.     Contracts  collateral  to  corporate  business. 

A  corporation  may  make  valid  contracts  in  a  business,  collat- 
eral to  that  for  which  it  was  incorporated,  if  such  business  is  a 
reasonably  proper  method  for  carrying  on  the  principal  business. 
A  corporation  may  bind  itself  by  an  offer  of  reward  ;^  or  by  a 
contract  which  extends  over  a  period  of  time  beyond  the  charter 
of  the  contracting  corporation,"  and  it  may  make  a  deposit  of  se- 

3  Breay  v.  Nurses'  Association,  9  Peck- Williamson,     etc.,     Co.     v. 

(1897),  2  Ch.  272;  66  L.  J.  Ch.  N.  Board,   etc.,    6    Okla.    279;    50   Pac. 

S.  587.  236. 

4  Covington,  etc.,  Co.  v.  Magrnder,  lo  Safety,  etc.,  Co.  v.  Mayor,  etc., 
63  O.  S.  455;  59  N.  E.  216.  of  Baltimore,  74  Fed.  363;  20  C.  C. 

5  Heinze  v.  Dock  Co.,  109  Wis.  99;  A.  453. 

85  N.  W.  145.  11  Hartnett     v.     Plumbers',     etc., 

6  Continental  Fire  Association  v.  Association,  169  Mass.  229;  38  L.  R. 
Masonic   Temple  Co.,   26   Tex.    Civ.      A.  194;  47  N.  E.  1002. 

App.  139;  62  S.  W.  930.  12  Louis    Bletz    &    Co.    v.     Bank 

7  Bangor  Boom  Co.  v.  Whiting,  29       (Ky.),  55  S.  W.  697. 

Me.  123.  1  Norwood,  etc.,   Co.  v.   Andrews, 

8  Northwestern,  etc.,       Co.       v.      71  Miss.  641 ;  16  So.  262. 
O'Brien,    75   Minn.  335;    77   N.   W.          2  Union  Pacific  Pvy.  Co.  v.  Ry.  Co., 
989.  163  U.  S.  564. 


1686  PAGE    ON    CONTRACTS. 

curities  in  order  to  obtain  permission  to  do  business  in  another 
state,  as  required  by  the  laws  of  such  state.^  It  may  give  a 
bonus  in  stock,  to  induce  buyers  to  take  bonds,  and  a  dissenting 
stockholder  cannot  have  the  value  of  the  stock  bonus  deducted 
from  bonds,*  or  may  pay  reasonable  commission  to  brokers  for 
placing  shares.^  Thus  a  mining  corporation,  with  power  to  build 
or  subscribe  to  the  stock  of  a  railroad  necessary  to  facilitate  the 
transportation  of  its  produce  to  market,  may  join  with  a  rail- 
road company  in  a  mortgage  to  obtain  money  for  the  purpose 
of  enlarging  the  facilities  of  the  railroad  to  transport  the  coal  f 
a  gas  company  may  buy  the  right  to  use  steam  heater,  radiating 
mantel  and  gas  consuming  appliances,  if  propre  for  the  gas  busi- 
ness f  and  a  railroad  company,  authorized  to  erect  all  convenient 
buildings  for  the  accommodation  and  use  of  its  passengers,  may 
lease  a  summer  hotel  and  covenant  to  insure  it,®  or  may  operate 
steam-boats  as  part  of  its  line  of  transportation.^  A  corporation 
may  make  a  bona  fide  contract  for  future  purchase  of  material 
necessary  to  its  business,^"  though  it  cannot  deal  in  futures 
regularly,  unless  specially  authorized  ;^^  nor  can  a  manufactur- 
ing corporation  buy  in  order  to  sell  at  a  profit."  Thus  a  cor- 
poration formed  to  manufacture  and  sell  ready-made  clothing 
has  no  implied  power  to  buy  ready-made  clothing  to  resell  it  at 
a  profit. ^^     The  right  of  a  mining  or  manufacturing  corporation 

3  Lewis  V.  American,  etc.,  Associa-  182  Pa.  St.  309;  37  Atl.  932;  citing 

tion,  98  Wis.  203;  39  L.  R.  A.  559;  Brown  v.  Winnisimmet  Co.,  11  All. 

73  N.  W.  793.  (Mass.)     326;    Lyndeboroiigh    Glass 

4Dickerman  v.  Trust  Co.,  176  U.  Co.  v.  Glass  Co.,  Ill  Mass.  315. 

S.  181.  8  Jacksonville,  etc.,  Co.  v.  Hooper, 

5  Metropolitan,     etc.,     Association  160  U.  S.  514. 

V.  Scrimgeour   (1895),  2  Q.  B.  604.  » Green    Bay,    etc.,    Co.    v.    R.    R. 

6  Central  Trust  Co.  v.  Columbus,      Union,   etc..   Steamboat  Co.,    107   U. 
etc.,  Co.,  87  Fed.  815;  citing  Attor-      S.  98. 

ney-General  v.  Ry.  Co.,  L.  R.  5  App.  lo  Sampson    v.    Cotton    Mills,    82 

Cas.    473;    Green    Bay,    etc.,    R.    R.  Fed.  833. 

Co.   V.    Union,   etc.,    Steamboat   Co.,  ^  Jemison    v.    Bank,    122    N.    Y. 

107  U.  S.  98;  Zabriskie  v.  R.  R.  Co.,  135;   19  Am.  St.  Rep.  482;   9  L.  R. 

23   How.    (U.   S.)    381;    Vandall   v.  A.  708;  25  N.  E.  264. 

Dock  Co.,  40  Cal.  83;  Hill  V.  Nisbet,  12  Day    v.    Buggy    Co.,    57    Mich. 

100  Ind.  341;  Whetstone  v.  Univer-  146;    58  Am.   Rep.   352;    23   N.   W. 

sity,  13  Kan.  320.  628. 

7  Malone  v.    Lancaster,    etc.,   Co.,  i3  Xicollet      National      Bank      v. 


PKIVATE   COKPORATIONS.  1687 

to  operate  a  store  for  its  employees  is  thus  open  to  question/* 
though  a  manufacturing  company  may  undoubtedly  sell  its  own 
goods  at  a  retail  store/^  and  a  corporation  formed  to  do  "  a 
general  brewing  and  malting  business,  and  manufacture  and 
sell  soda  water,"  may  lease  a  "  saloon,"  as  it  could  not  be 
said  as  a  matter  of  law  that  a  saloon  was  not  a  place  for  the 
sale  of  soda  water.^^  The  mere  fact,  however,  that  a  branch  of 
business  is  profitable  or  advantageous  to  a  corporation  does  not 
make  it  one  of  the  implied  powers  of  a  corporation.  "  The  ex- 
ercise of  a  power  that  might  be  beneficial  to  the  principal  busi- 
ness is  not  necessarily  incident  to  it."^^  A  land  company  cannot 
operate  a  street  car  line,  and  a  street  car  company  cannot  buy 
land  and  sell  it  in  lots/^  It  has  been  held  that  a  corporation 
formed  for  the  purpose  of  manufacturing  and  selling  electricity 
cannot  engage  in  the  business  of  selling  electrical  appliances/^ 
The  power  to  increase  the  capital  stock  is  not  implied.""  A  cor- 
poration cannot  change  its  principal  ofiice  without  amending  its 
fundamental  law  and  articles  of  association."^  There  is,  it  must 
be  admitted,  some  lack  of  harmony  in  the  cases  discussed  in  this 
section. 


Frisk-Turner  Co.,  71  Minn.  413;   70  the   business   of    a    corporation,   are 

Am.  St.  Rep.  334;  74  N.  W.  160.  too    remote    from    its    general    pur- 

14  That    it    can,    see    Searight    v.  poses  to  be  denied  reasonably  within 

Payne,    6    Lea     (Tenn.)     283.     That  its    implied    powers.     Wliat    is    and 

it  cannot,  see  Chewacla  Lime  Works  what  is  not  too  remote  must  be  de- 

V.  Dismukes,  etc.,  87  Ala.  344 ;  4  L.  termined   according  to   the   facts   of 

R.  A.  100;  6  So.  122.  each    case."     Best    Brewing    Co.    v. 

isDauchy  v.  Brown,  24  Vt.  197.  Klassen,  185  111.  37,  40;   76  Am.  St. 

16  Brewer,  etc.,  Co.  v.  Boddie,  181  Rep.  26;  50  L.  R.  A.  765;  57  N.  E. 
111.  622;  55  N.  E.  49;  affirming,  80  20. 

111.  App.  353.  18  Northside    Ry.    Co.    v.    Worth- 

17  Nicollet      National      Bank      v.  ington,    88    Tex.    562;    53    Am.    St. 
Frisk-Turner    Co.,     71     Minn.     413,  Rep.  778;  30  S.  W.  1055. 

418;  70  Am.  St.  Rep.  3.34;  74  N.  W.  i9  Burke  v.   Mead,   159   Ind.   252; 

160;  quoted  in  Burke  v.  Mead.  159  64  N.  E.  880. 

Ind.  252;  64  N.  E.  880.     "It  cannot  20 Cooke  v.  Marshall,   191   Pa.  St. 

be  held  that  every  act  in  furtherance  315;  43  Atl.  314. 

of  the  interests  of  a  corporation  is  21  Bastian    v.    Modern    Woodmen, 

inter  vires.     Many  acts  can  be  sug-  106  111.  595;  46  N.  E.  1090;  revers- 

gested    which,    though    beneficial   to  ing,  68  111.  App.  378.              * 


1688  PAGE    ON    CONTRACTS. 

§1082.     The  origin  of  the  doctrine  of  ultra  vires. 

When  it  is  once  ascertained  that  a  given  contract  is  in  excess 
of  corporate  power,  only  the  first  step  has  been  taken  to  deter- 
mine its  legal  effect.  As  with  contracts  of  infants  and  insane 
persons,  rights  and  liabilities  may  grow  out  of  contracts  made 
by  corporations  which  have  not  the  legal  capacity  to  bind  them- 
selves thereby  fully  and  completely. 

The  rules  determining  the  legal  effect  of  such  contracts  are 
grouped  under  the  general  head  of  the  doctrine  of  ultra  vires. 
This  term  means  "  beyond  the  powers  "  of  the  corporation ;  that 
the  contract  in  question  is  beyond  and  outside  of  the  scope  of 
the  powers  conferred  by  its  founders.^  The  use  of  the  technical 
Latin  phrase  has  probably  helped  to  obscure  the  real  meaning 
of  the  doctrine.  Rules  have  been  formulated  as  to  the  effect 
of  ultra  vires  contracts  which  could  scarcely  have  been  applied 
had  the  subject  been  discussed  under  its  English  name.^  The 
real  difficulty  of  this  topic  is  that  there  was  practically  no  foun- 
dation for  it  at  Common  Law,  eince  no  business  corporations 
existed ;  and  that,  without  such  foundation  and  without  oppor- 
tunity to  observe  the  practical  working  of  the  rules  that  they 
were  laying  down,  the  courts  were  forced,  by  reason  of  the 
sudden  growth  of  manufacturing,  trading  and  transportation 
corporations,  to  develop  new  rules,  and  to  elaborate  a  subject 
whose  fundamental  principles  were  not  understood.  Early 
precedents,  hastily  decided,  present  difficulties  in  many  jurisdic- 
tions, as  they  do  not  harmonize  with  the  modem  trend  of 
judicial  decision ;  and  the  courts,  unwilling  to  overrule  them, 
follow  them  blindly,  or  distinguish  them  in  cases  often  indis- 
tinguishable. The  modern  cases  are  therefore  in  hopeless 
confusion.  There  are  conflicting  views,  not  only  upon  isolated 
rules,  but  upon  the  whole  theory  of  the  subject;  upon  the 
question  of  what  facts  are  operative  as  well  as  upon 
the  question  of  what  decision  is  to  be  rendered  upon  the  facts 
given.     K^o  general  statement  can  therefore  be  made   of  the 

1  Citizens'  Savings  Bank  v.  Hawk-  -  National    Bank    v.    Porter,    125 

ins,   71   Fed.   369;    18  C.   C.   A.   78;       Mass.  333;  28  Am.  Rep.  235. 
^Miners'  Ditch  Co.  v.  Zellerbach,   37 
Cal.  543;  99  Am.  Dec.  300. 


PRIVATE  COEPOEATIONS. 


1689 


present  scope  of  the  doctrine  of  ulti-a  vires,  except  that  ultra  vires 
contracts  do  not,  under  some  circumstances,  have  the  validity  of 
contracts  entered  into  within  the  limits  of  corporate  power. 
In  its  early  form,  the  doctrine  of  ultra  vires  was  severely  simple. 
Contracts  which  were  ultra  vires  were  void.^  Thus  where  an 
insurance  company  engaged  in  the  banking  business  and  dis- 
counted notes,  it  could  not  recover  upon  such  notes,  though  it 
might  on  the  loan.*  This  rule  proved  so  disastrous  in  its  effects 
on  modern  business  that  it  was  promptly  "  barnacled  over  with 
exceptions,  and  muzzled  by  estoppels,"^  and  practically  dis- 
carded in  many  jurisdictions.® 

§1083.     Preliminary  considerations. 

All  persons  dealing  with  a  corporation  must  take  notice  of 
its    charter,^    and    of    statutory    limitations    on    its    corporate 


sPearce  v.  R.  R.,  21  How.  (U. 
S.)  441?  Rock  River  Bank  v.  Sher- 
wood, 10  Wis.  230;  78  Am.  Dec. 
669. 

4  Philadelphia  Loan  Co.  v.  Town' 
er,  13  Conn.  249;  Utica  Insurance 
Co.  V.  Scott,  19  Johns  (N.  Y.)  1; 
Life,  etc.,  Ins.  Co.  v.  Insurance  Co., 
7  Wend.   (N.  Y.)   31. 

5  Walker's  Am.  Law,  p.  242n 
<10th  ed.). 

6 "  The  safety  of  men  in  their 
•daily  contracts  requires  that  this 
doctrine  of  ultra  vires  should  be 
confined  within  narrow  bounds." 
Directors,  etc.,  of  the  Eastern,  etc., 
Ry.  Co.  V.  Hawkes,  5  H.  L.  Cas. 
331,  371;  quoted  in  Bath  Gaslight 
Co.  V.  Claffy,  151  N.  Y.  24,  34;  36 
L.  R.  A.  G64;  45  N.  E.  390. 

iMcCormick  v.  Bank,  165  U.  S. 
538;  Salt  Lake  City  v.  Hollister, 
118  U.  S.  256;  Pearce  v.  R.  R.,  21 
How.  (U.  S.)  441;  Sherwood  v. 
Alvis,  83  Ala.  115;  3  Am.  St.  Rep. 
695 ;  3  So.  307 ;  National,  etc..  Asso- 
ciation V.  Bank,  181  111.  35;  72  Am. 


St.  Rep.  245;  54  N.  E.  619;  Durkee 
V.  People,  155  111.  354;  46  Am.  St. 
Rep.  340;  40  N.  E.  626;  affirming, 
53  111.  App.  396;  Humphrey  v.  As- 
sociation, 50  la.  607;  New  Orleans, 
etc.,  Co.  V.  Dock  Co.,  28  La.  Ann. 
173;  26  Am.  Rep.  90;  Franklin  Co. 
V.  Lewiston  Inst.,  68  Me.  43;  28 
Am.  Rep.  9;  Davis  v.  R.  R.,  131 
Mass.  258;  41  Am.  Rep.  221;  Kran 
iger  V.  Building  Society,  60  Minn 
94;  61  N.  W.  904;  Nicollet  National 
Bank  v.  Frisk-Turner  Co.,  71  Minn 
413;  70  Am.  St.  Rep.  334;  74  N.  W 
160;  Jemison  v.  Bank,  122  N.  Y 
135;  19  Am.  St.  Rep.  482;  9  L.  R 
A.  708;  25  N.  E.  264;  Elevator  Co 
v.  Memphis,  etc.,  Co.,  85  Tenn.  703 
4  Am.  St.  Rep.  798;  5  S.  W.  52 
Franco-Texan  Land  Co.  v.  McCor 
mick,  85  Tex.  416;  34  Am.  St.  Rep 
815;  23  S.  W.  123;  Smith  v.  Cor 
nelius,  41  W.  Va.  59;  30  L.  R.  A 
747 ;  23  S.  E.  599.  "  A  party  deal 
ing  with  a  corporation  having  lim- 
ited and  delegated  powers  conferred 
by  law  is  chargeable  with  notice  of 


1690  PAGE    ox    CONTEACTS. 

power."  Why  this  rule  aj^plies  to  corporations  and  not  to  part- 
nerships/ is  by  no  means  clear  on  principle.  It  is  not  limited  to 
those  cases  of  general  laws  alone,  but  extends  to  private  acts  of 
the  legislature,  foreign  laws  which  are  a  part  of  the  charter  of 
the  foreign  corporatioif  in  question  and  to  the  articles  of  incor- 
poration.* A  rigid  application  of  this  rule  would  charge  per- 
sons with  knowledge  which  it  might  be  absolutely  impossible 
for  them  to  acquire,  and  would  seriously  affect  the  validity  of 
contracts  of  corporations.^ 

It  will  not  be  presumed  that  a  corporation  has  exceeded  its 
powers  in  making  a  contract.®  This  is  merely  an  application 
of  the  broader  principle  that  capacity  is  always  presumed,  and 
that  a  lack  of  it  must  be  shown  affirmatively. 

Furthermore,  while  persons  may  be  arbitrarily  required  to 
take  notice  of  the  powers  of  a  corporation,  they  cannot  be 
required  to  know  all  the  facts  and  circumstances  connected  with 
the  business  of  the  corporation.^  Accordingly,  if  a  contract 
may,  under  some  states  of  fact,  be  within  the  power  of  the 
corporation,  persons  dealing  with  the  corporation  may  assume 
that  the  proper  facts  exist  which  are  requisite  to  the  validity 

them  and  their  limitations,  and  can-  s  See  §§  1066,  1067. 

not  plead  ignorance  in  avoidance  of  e  Ohio,  etc.,  Ry.  Co.  v.  McCarthy, 

the   defense."     National,   etc.,  Asso-  96    U.    S.    258;    Internatiofial,   etc., 

eiation  v.  Bank,  181  111.  35,  44;   72  Association  v.  Wall,   153  Ind.   554; 

Am.  St.  Rep.  245;  54  N.  E.  619.  55  N.  E.  431;  Wardner,  etc.,. Co.  v. 

2  National,  etc.,  Association  v.  Jack,  82  la.  435;  48  N.  W.  729; 
Bank,  181  111.  35;  72  Am.  St.  Rep.  West  v.  Grocery  Co.,  109  la.  488; 
245;  54  N.  E.  619.  80   N.   W.    555;    Gorder   v.    Platts- 

3  See  §  950.  mouth,  etc.,  Co.,  36  Neb.  548 ;  54  N. 
4McCormick  v.   Bank,    165   U.   S.       W.  830;    Elkins  v.  R.  R.,  36  N.  J. 

538.     The     rule     applies     "  whether  Eq.  241. 

such  charter  be  a  private  act  or  a  7  Kennedy  v.  Bank,   101  Cal.  495; 

general    law    under    which    corpora-  40  Am.  St.  Rep.  69;   35  Pac.  1039; 

tions    of   this   class   are   organized."  Monument  National  Bank  v.  Globe 

De  La  Vergne,  etc.,  Co.  v.   Savings  Works,   101   Mass.   57;    3  Am.  Rep. 

Institution,  175  U.  S.  40,  59;   (citing  322;  Bissell  v.  R.  R.,  22  N.  Y.  258; 

Zabriskie  v.  R.  R.,  23  How.   (U.  S.)  Miller  v.  Ins.  Co.,  92  Tenn.  167;  20 

381;  Thomas  v.  R.  R.,  101  U.  S.  71;  L.  R.  A.  765;  21  S.  W.  39;   North 

Pennsylvania  Co.  v.  R.  R.,  118  U.  S.  Hudson,   etc..   Association  v.   Bank, 

290,  630;  Oregon  Ry.  Co.  v.  Ry.  Co..  79  Wis.  31;  11  L.  R.  A.  845;  47  N. 

130  U.   S.    1;    Pittsburgh,   etc..   Ry.  W.  300. 
Co.  V.  Bridge  Co.,  131  U.  S.  371). 


PRIVATE   CORPORATIONS.  1691 

of  the  contract,®  and  it  is  no  defense  to  an  action  on  the  con- 
tract that  it  was  under  the  existing  facts  ultra  vires,  unless  it 
can  be  shown  that  the  contracting  party  knew  the  facts  which 
rendered  it  uU?'a  vires.  This  doctrine  is  applied  generally  to 
contracts  performed  by  one  party,^  as  where  one  who  does  not 
know  that  the  limit  of  corporate  indebtedness  has  been  reached, 
loans  money  to  the  corporation  f^  or  where  a  corporation  pur- 
chases property  which  it  might  buy  for  a  given  purpose  from 
one  who  does  not  know  that  it  is  to  be  used  for  other  purposes.^'- 

§1084.     What  ultra  vires  includes. 

Ultra  vires  contracts  are,  strictly  speaking,  only  those  which 
are  defective  solely  because  they  are  beyond  the  power  of  the 
corporation.^  Where  the  legislature  has  forbidden  a  corpora- 
tion to  engage  in  certain  transactions,  by  statutes  either  de- 
claratory of  the  Common  Law,  or  modifying  it,  such  transac- 
tions are  in  some  respects  decided  on  different  principles  from 
ultra  vires  contracts.^  Ultra  vires  is  also  loosely  used  by  some 
authorities  to  cover  two  classes  of  contracts  which  do  not  belong 
to  it.  First:  Contracts  which  the  corporation  might  lawfully 
have  made,  but  which  the  agents  making  them  were  not  author- 
ized to  make,  are  not  properly  iilti'a  vires  contracts.  Their 
validity  turns  on  questions  of  agency  as  affected  by  the  nature 
of  the  corporation.^     Second :  If  the  contract  is  one  which  is 


8  Colorado  Springs  Co.  v.  Pub 
lishing  Co.,  97  Fed.  843;  38  C.  C.  A 
433;  Kennedy  v.  Bank,  101  Cal 
495;  40  Am.  St.  Rep.  69;  35  Pac 
1039;  Miners'  Ditch  Co.  v.  Zeller 
bach,  37  Cal.  543;  99  Am.  Dec.  300; 


10  Humphrey  v.  Association,  50  la. 
607;  Auerbach  v.  Mill  Co.,  28  Minn. 
291;  41  Am.  Rep.  285;  9  N.  W.  799; 
Ellsworth  V.  St.  Louis,  etc.,  Co.,  98 
N.  Y.  553. 

11  Coweil  V.  Springs  Co.,  100  U.  S. 


Monument  National  Bank  v.   Globe  55;    Thompson   v.   Lambert,   44    la. 

Works,   101   Mass.   57;   3  Am.  Rep.  239;   Luttrell  v.  Martin,   112  N.   C. 

322;  Bissell  v.  R.  R.,  22  N.  Y.  258;  593;  17  S.  E.  573. 

Miller  v.  Ins.  Co.,  92  Tenn.  167;  20  i  Kadish   v.   Association,    151    111. 

L.   R.  A.  765;   21   S.  W.  39;   North  531;   42  Am.  St.  Rep.  256;  38  N.  E. 

Hudson,    etc.,   Association   v.    Bank,  236;   Leslie  v.  Lorillard,  110  N.  Y. 

79  Wis.  31;   11  L.  R.  A.  845;  47  N.  519;  1  L.  R.  A.  456;  18  N.  E.  363. 

W.  300.  2  See  §  327  et  seq. 

9  Tourtelot   v.   \^niithed,    9   N.   D.  3  Kelley.   etc.,  v.  Varnish   Co.,  90 

407;  84  N.  W.  8.  111.  App.  287. 


1692 


PAGE    ON"    CONTRACTS 


treated  as  illegal  if  made  hy  a  natural  person,  it  is  as  illegal 
if  made  by  a  corporation,  but  as  a  rule,  no  more  so  and  no  less. 
These  contracts  are  treated  elsewhere/  An  ultra  vires  contract 
in  the  proper  sense,  is  "  nothing  criminal  or  against  good 
morals."^  In  many  cases  it  is  however  said  that  an  ultra  vires 
contract  is  "  unlawful  and  void."^  This  is  undoubtedly  a  loose 
use  of  the  terms  "  unlawful  "  and  "  void."  This  confusion  in 
terms  often  arises  in  cases,  such  as  contracts  tending  to  create 
monopolies,'^  or  transferring  the  performance  of  duties  toward 
the  public,^  where  the  contract  is  both  ultra  vires  and  illegal. 
If  the  contract  is  illegal  as  in  violation  of  established  principles 
of  public  policy  it  cannot,  of  course,  be  enforced.^ 

If  the  contract  is  not  merely  ultra  vires  but  is  also  forbidden 
by  statute,  no  action  can  be  brought  on  such  contract.^"  Thus, 
if  the  statute  provides  an  exclusive  method  of  giving  a  mort- 


4  See  Ch.  XV-XXXI. 

5  Illinois,  etc.,  Bank  v.  Ry.  Co., 
117  Cal.  332,  343;  49  Pac.  197; 
■"  ultra  vires  and  illegality  repre- 
sent totally  different  and  distinct 
ideas."  Bissell  v.  R.  R.,  22  N.  Y. 
258,  269. 

GMcCormick  v.  Bank,  165  U.  S. 
538,  549;  quoted  in  California,  etc.. 
Bank  v.  Kennedy,  167  U.  S.  362; 
368. 

7  People  V.  Gas  Trust  Co.,  130  111. 
268;  17  Am.  St.  Rep.  319;  8  L.  R. 
A.  497;  22  N.  E.  798;  Harding  v. 
Olucose  Co.,  182  111.  551;  74  Am. 
St.  Rep.  189;  55  N.  E.  577;  Inter 
Ocean  Publishing  Co.  v.  Associated 
Press,  184  111.  438 ;  75  Am.  St.  Rep. 
184;  48  L.  R.  A.  568;  56  N.  E.  822. 
(Holding  that  the  Associated  Press 
cannot  give  a  monopoly  of  its  news 
to  one  paper.) 

8  Central  Transportation  Co.  v. 
Car  Co.,  139  U.  S.  24;  Oregon,  etc., 
R.  R.  V.  Oregonian,  etc.,  R.  R.,  130 
U.  S.  1;  Chicago,  etc.,  Co.  v.  Gas- 
light Co.,  121  111.  530;  2  Am.  St. 
Rep.  124;   13  N.  E.  169;  Brunswick 


Gas  Light  Co.  v.  Gas,  etc.,  Co.,  85 
Me.  532;  35  Am,  St.  Rep.  385;  27 
Atl.  525;  Stockton  v.  R.  R.,  50  N. 
J.  Eq.  52;  17  L.  R.  A.  97;  24  Atl. 
964;  Smith  v.  Cornelius,  41  W.  Va. 
59;  30  L.  R.  A.  747;  23  S.  E.  599. 

9  Contract  by  one  insurance  com- 
pany to  buy  out  another.  MeClure 
V.  Levy,  147  N,  Y.  215;  41  N.  E. 
492. 

loVisalia  Gas  Co.  v.  Sims,  104 
Cal.  326;  43  Am,  St.  Rep.  105;  37 
Pac,  1042;  McNulta  v.  Bank,  164 
HI.  427;  56  Am.  St,  Rep.  203;  45 
N.  E.  954;  In  re  Assignment  Mu- 
tual, etc..  Ins,  Co.,  107  la.  143;  70 
Am.  St.  Rep,  149;  77  N.  W.  143; 
Beecher  v.  Mill  Co.,  45  Mich.  103; 
7  N.  W.  695;  New  York,  etc..  Trust 
Co.  v.  Helmer,  77  N,  Y,  64.  The 
United  States  Supreme  Court  cases 
cited  in  the  next  paragraph  are 
many  of  them  cases  involving  con- 
tracts forbidden  by  statute  or  in- 
valid as  against  public  policy.  The 
court,  however,  places  its  decision 
on  the  broad  ground  of  ultra  vires. 


PRIVATE  COKPOEATIOlirS.  1693 

gage,  a  mortgage  executed  in  any  other  manner  and  under  any 
other  circumstances  is  void/^  So  if  the  statute  provides  a 
limit  to  the  rate  of  interest  which  a  corporation  may  agree  to 
pay,  a  contract  for  a  higher  rate  is  void/"  But  the  purpose  of 
a  statute  restricting  the  exercise  of  corporate  power  must 
always  be  considered  in  construing  it,  and  if  intended  to  pro- 
tect those  dealing  with  the  corporation,  as  where  a  corporation 
is  forbidden  to  transact  business  until  its  stock  subscription  is 
made,^^  or  a  foreign  insurance  company  is  forbidden  to  write 
policies  until  it  complies  with  certain  statutory  provisions  in- 
tended for  the  security  of  policy  holders,^*  such  provisions  will 
not  make  such  contracts  void.  I^Tor  can  a  statute  as  to  the 
mode  of  pledging  property,  enacted  for  benefit  of  stockholders, 
be  taken  advantage  of  by  creditors/^ 

§1085.     The  reasons  underlying  the  doctrine  of  ultra  vires. 

"  The  doctrine  of  ultra  vires  by  which  a  contract  made  by  a 
corporation  beyond  the  scope  of  its  corporate  powers  is  unlaw- 
ful and  void,  and  will  not  support  an  action,  rests  as  this  court 
has  often  recognized  and  affirmed  upon  three  distinct  grounds: 
The  obligation  of  anyone  contracting  with  a  corporation  to  take 
notice  of  the  legal  limits  of  its  powers;  the  interest  of  the 
stockholders  not  to  be  subject  to  risks  which  they  have  never 
undertaken ;  and,  above  all,  the  interest  of  the  public  that  the 
corporation  shall  not  transcend  the  powers  conferred  upon  it 
by    law."^     These    reasons    cannot    be    considered    conclusive. 

11  Southern,  etc.,  Association  v.  i  McCormick  v.  Bank,  165  U.  S. 
Stable  Co.,  128  Ala.  624;  29  So.  538,  549;  citing  Pearce  v.  R.  R.,  21 
654.  How.   (U.  S.)   441;  Pittsburgh,  etc., 

12  Southern,  etc..  Association  v.  Co.  v.  Bridge  Co.,  131  U.  S.  371; 
Stable  Co.,  119  Ala.  175;  24  So.  Central,  etc.,  Co.  v.  Car  Co.,  139  U. 
886.  S.    24;    quoted    in    California,    etc., 

13  City  of  Spokane  v.  Amster-  Bank  v.  Kennedy,  167  U.  S.  362, 
damsch  Trustees,  etc.,  22  Wash.  172;  368,  which  cites  on  this  point  the 
60  Pac.  141.  English    cases,    Mann   v.    Tramways 

"Union,  etc.,  Co.  v.  McMillan,  24  Co.   (1893),  App.  Cas.  69;  Ooregum 

O.  S.  67.  Mining  Co.   v.   Roper    (1892),   App. 

15  Anderson    v.    Bank,    122     Ala.  Cas.    125;    Directors,   etc.,    Iron   Co. 

27^;  2^  So.  523.  v.   Richs,   L.  R.    7   H.   L.   653.     So 


1G94  PAGE    ON    CONTBACTS. 

Even  if  all  persons  are  required  to  take  notice  of  the  powers  of 
a  corporation,  it  is  hard  to  see  why  ultra  vires  contracts  should 
be  nullities,  any  more  than  the  contracts  of  an  infant 
should  be  nullities.  All  persons  are  bound  to  take  notice  of 
the  contractual  powers  of  an  infant  and  of  the  fact  of  infancy,^ 
yet  his  contracts  are  not  unlawful  or  void.  Stockholders  who 
acquiesce  in  ultima  vires  contracts  cannot  rightfully  complain 
that  they  never  undertook  the  risk ;  and  the  interest  of  the  state 
would  be  better  subserved  by  a  greater  willingness  to  take 
away  charters  for  abuse  of  corporate  powers,  than  by  treating 
as  void  a  contract  of  which  the  corporation  has  had  the  full 
benefit.  Accordingly,  many  courts  place  the  doctrine  on  dif- 
ferent grounds,  with  different  practical  results.^ 

§1086.     Who  can  take  advantage  of  ultra  vires. 

To  have  the  question  of  the  validity  of  ultra  vires  contracts 
raised  at  all,  there  must  be  some  one  in  a  position  to  raise  such 
question.  The  first  point  in  any  proceeding  to  determine  the 
validity  of  an  ultra  vires  transaction  is  to  determine  whether 
the  party  attacking  the  contract  can  be  allowed  to  raise  the 
question.^  While  this  principle  does  not,  any  more  than  any 
other  that  has  been  suggested,  solve  all  difficulties  or  reconcile 
all  cases,  it  is  a  very  material  help  in  determining  the  validity 
of  any  given  contract.  First,  the  state  can  attack  the  validity 
of  any  ultra  vires  transaction  by  a  direct  proceeding  in  quo 
ivarranto,'  although  it  may  decline  through  its  courts  to  revoke 
a  charter  because  of  isolated  ultra  vires  acts,  since  the  essential 
purpose  and  object  of  such  a  suit  is  the  determination  of  a 
private  right.^  Second,  persons  not  parties  to  the  con- 
Lucas  V.  Transfer  Co.,  70  la.  541;  State  v.  Standard  Oil  Co.,  49  O.  S. 
59  Am.  Rep.  449;   .30  X.  W.  771.  137:  34  Am.  St.  Eep.  541;   15  L.  R. 

2  See  §  893.  A.  145;  30  X.  E.  279;  State  v.  Dairy 

3  See  §  1086,  et  seq.  §  1097.  Co.,  62  O.  S.  350;  57  L.  R.  A.  181; 

1  Benton  v.  Elizabeth,  61  N.  J.  L.  57  N.  E.  62;  State  v.  Water  Co., 
693;  40  Atl.  1132;   affirming,  61  N.       107  Wis.  441;  83  N.  W.  697. 

J.  L.  411;   39  Atl.  683,  906.  s  People  v.  Cooper,   139   111.   461; 

2  See  §§  1093,  1097.  State  v.  Oil  29  N.  E.  872;  Cupit  v.  Bank,  20 
Co.,  153  Ind.  483;   74  Am.  St.  Rep.      Utah  292;  58  Pac.  839. 

314;  53  L.  R.  A.  413;  53  N.  E.  1089; 


PRIVATE  CORPORATIONS. 


1695 


tract  cannot  attack  it,  where  not  directly  prejudiced  thereby.* 
Thus,  where  a  corporation  laid  oil  pipes  in  a  street,  claiming 
under  a  transfer  of  property  rights,^  or  had  obtained  leave  of 
the  city  to  cross  the  streets,''  third  persons  cannot  question  its 
power  to  do  so.  Where  a  bank  bought  notes,^  or  a  judgment 
and  a  certificate  of  sale,*  or  land,^  as  where  a  foreign  corpora- 
tion acquired  land  and  then  conveyed  it  without  complying 
with  the  local  statutes,^^  persons  not  parties  to.  the  transfer 
cannot  resist  the  enforcement  of  rights  thus  acquired.  Thus 
even  if  a  corporation  bought  property  in  an  ultra  vires  transac- 
tion, a  lessee  from  such  corporation  cannot  attack  the  validity 
of  such  conveyance ;  nor  can  a  guarantor  of  such  rent.^^  So 
the  right  of  a  corporation  to  acquire  realty  cannot  be  inquired 
into  in  an  action  brought  by  it  to  enforce  payment  of  a  debt.^^ 
A  creditor  of  a  corporation  cannot  attack  a  transaction  as  ultra, 
vires  unless  the  effect  of  such  transaction  is  to  divert  corporate 
assets  from  the  payment  of  his  debt.^^     The  judgment  creditor 


4  "  None  but  a  person  directly  in- 
terested in  the  corporation,  or  the 
state,  can  question  such  authority." 
John  V.  Farwell  Co.  v.  Wolf,  96 
Wis.  10,  14;  65  Am.  St.  Rep.  22; 
37  L.  R.  A.  138;  70  N.  W.  289;  71 
N.  W.  109  (citing  Fritts  v.  Palmer, 
132  U.  S.  282;  National  Bank  v. 
Whitney,  103  U.  S.  99;  National 
Bank  v.  Matthews,  98  U.  S.  621; 
Natoma,  etc.,  Co.  v.  Clarkin,  14 
Cal.  544;  Alexander  v.  Tolleston 
Club,  110  111.  65;  Shewalter  v.  Pir- 
ner,  55  Mo.  218;  Ragan  v.  McElroy, 
98  Mo.  349;  11  S.  W.  735).  To  the 
same  effect  see  Springer  v.  Trust 
Co.,  202  111.  17;  66  N.  E.  850;  af- 
firming, 102  111.  App.  294;  Beach 
V.  Wakefield,  107  la.  567,  591;  76 
N.  W'.  688;  78  N.  W.  197;  Leazure 
V.  Hillegas,  7  Serg.  &  R.  (Pa.)  313; 
Read  v.  Ey.,  110  Tenn.  316;  75  S.  W. 
1056. 

5  Benton  v.  Elizabeth.  61  N.  J.  L. 
693;  40  Atl.  1132;  affirming,  61  N. 
J.  L.  411;  39  Atl.  683,  906. 


6  Pennsylvania,  etc.,  R.  R.  Co.  v. 
R.  R.  Co.,  160  Pa.  St.  277;  28  Atl. 
784. 

7  Prescott  National  Bank  v.  But- 
ler, 157  Mass.  548;  32  N.  E.  909. 

8  Hennessy  v.  St.  Paul,  54  Minn. 
219;  55  N.  W.  1123  (citing  Na- 
tional Bank  v.  Matthews,  98  U.  S. 
621 ;  National  Bank  v.  Whitney,  103 
U.  S.  99;  Fortier  v.  Bank,  112  U.  S. 
439;  Merchants'  National  Bank  v. 
Hanson,  33  Minn.  40;  53  Am.  Rep. 
5;    21   N.  W.  849). 

9  Bank  v.  Matthews,  98  U.  S. 
621. 

10  Fritts  V.  Palmer,  132  U.  S. 
282. 

11  Nantasket  Beach  Steamboat 
Co.  V.  Shea,  182  Mass.  147;  65  N. 
E.  57. 

12  Advance  Thresher  Co.  v.  Rock- 
afellow,  —  S.  D.  — ;  93  N.  W.  652. 

13  Force  v.  Age-Herald  Co.,  136 
Ala.  271;  33  So.  866. 


1696  PAGE    ON    CONTRACTS. 

of  the  j)resident  of  a  corporation  cannot  attack  the  title  of  such 
corporation  to  property  bought  by  it  on  an  execution  sale  of 
such  president's  property/*  So  a  third  person/^  such  as  a 
subsequent  judgment  creditor/'*  cannot  attack  a  mortgage 
given  by  a  corporation  as  ultra  vires.  One  liable  on  a  claim 
for  damages  cannot  attack  the  purchase  of  such  claim  by  a 
corporation  if  it  is  assignable/^  and  one  liable  to  a  lessee  of 
a  railroad  cannot  attack  the  validity  of  the  lease  in  a  suit  by 
lessee/^  So  one  liable  on  a  note  cannot  attack  the  transfer  of 
it  by  the  payee  corporation  incident  to  a  genuine  sale  of  its 
business,  as  ultra  vires.^^  One  who  with  full  knowledge  of 
the  material  facts  has  accepted  an  assignment  of  a  chattel 
mortgage  given  by  a  corporation  cannot  subsequently  avoid  the 
assignment  on  the  ground  that  the  mortgage  was  ultra  vires.'^'* 
So  if  a  stockyards  corporation  has  erected  a  railroad  and  used 
it  for  an  ultra  vires  purpose,  it  can  resist  its  unauthorized 
removal  by  a  city.^^  A  trustee  created  in  a  trust  deed  given 
by  a  corporation  cannot  attack  a  conveyance  to  the  corporation 
as  ult7^a  vires.^'  Up  to  this  point  the  courts  are  practically 
unanimous  in  their  decisions  as  to  who  can  plead  ultra  vires. 
These  holdings  show  absolutely  that  an  ultra  vires  contract  is 
not,  properly  speaking,  void ;  since  a  void  contract  or  transac- 

14  Scott  V.  Bank,  —  Tex.  — ;  75  the  corporation  his  claim  against 
S.  W.  7;  reversing  (Tex.  Civ.  App.),  the  city  for  damages  to  such  lots 
67  S.  W.  343,  which  denied  rehear-  due  to  the  construction  of  a  viaduct 
ing  of  66  S.  W.  485.  and  these  facts  appeared  on  the  pe- 
ls Collins  V.  Rea,  127  Mich.  273;  tition,  it  was  held  that  demurrer 
86  N.  W.  811;  Smith  v.  Bank,  45  would  lie.  Pueblo  v.  Investment 
Neb.  444;  63  N.  W.  796.  Co.,  28  Colo.  524;   89  Am.  St.  Rep. 

16  Beels   V.   Park   Association,    54  221 ;  67  Pac.  162. 

Neb.  226;  74  N.  W.  581.  is  Southern  Pacific  Co.  v.  United 

17  Central  Ohio,  etc.,  Co.  v.  Dairy      States,  28  Ct.  CI.  77. 

Co.,  60  O.  S.  96;  53  N.  E.  711;  John  i9  Ehrman  v.    Ins.   Co.,   35   O.   S. 

V.  Farwell  Co.  v.  Wolf,  96  Wis.  10;  324. 

65   Am.   St.   Rep.  22;    37  L.  R.   A.  20  Woodcock  v.   Bank,    113    Mich. 

138;    70   N.   W.   289;   rehearing  de-  236;  71  N.  W.  477. 

nied,   37  L.   R.  A.   142;    71   N.  W.  21  Chicago  v.  Transit  Co.,  164  111. 

109    (this   claim    was   held   not   as-  224;  35  L.  R.  A.  281;  45  N.  E.  430. 

sigiiable).     Contra,     where     a     cor-  22  Hagerstown,  etc.,  Co.  v.  Keedy, 

poration    bought    certain    lots    and  91  Md.  430;  46  Atl.  965. 

thereafter   the    grantor   assigned   to 


PRIVATE  CORPORATIONS.  1697 

tion  may  be  attacked  by  any  one  whose  interests  are  adverse 
to  the  validity  of  the  transaction.  In  all  these  cases,  it  will 
be  noticed  that  the  person  who  seeks  to  invoke  the  doctrine  of 
ultra  vires  is  not  in  any  way  prejudiced  by  the  ultra  vires 
transactions,  as  it  makes  no  difference  to  him  whether  the 
corporation  or  the  other  party  to  the  transaction  asserts  the 
rights  in  question.  This  rule,  therefore,  extends  no  farther 
than  its  reason.  A  third  person  who  is  prejudiced  by  an  ultra 
vires  contract  may  attack  it,  as  creditors  when  their  rights  are 
endangered  by  the  ultra  vires  contract.^^  Thus  where  a  cor- 
poration has  borrowed  money  in  excess  of  its  limit  of  borrow- 
ing, a  subsequent  creditor  who  did  not  know  of  such  excessive 
debt,  may  attack  the  transaction  as  fa»'  a-«  hi*  claim  is  thereby 
diminished."*  Thus  a  policy  holder  in  a  corporation  may 
raise  the  question  of  ultra  vires,  where  such  corporation  ha? 
acquired  his  notes  to  use  them  as  a  set-off. ^^  Stockholders  wha 
act  promptly  may  restrain  the  officers  of  the  company  from 
entering  into  ultra  vires  contracts,^*^  though  they  cannot  compel 
the  directors  to  avoid  the  contract  while  retaining  the  benefits," 
and  they  must  act  promptly."^  This  leaves  the  question  of 
the  validity  of  the  contract  as  far  as  the  corporation  itself  is 
concerned,  as  the  only  remaining  question  to  consider  under 
ulti'a  vires.  In  discussing  the  right  of  a  corporation  to  avoid 
an  ultra  vires  contract  in  order  to  protect  non-assenting  stock- 
holders, it  must  first  be  determined  whether  the  contract  is 
•purely  uUr-a  vires,  or  whether  it  is  also  subject  to  attack 
because  beyond  the  power  of  the  agents  who  made  it  on  behalf 

23  Washington  Mill  Co.  v.  Lumber  the  contract  is  ultra  vires  and  also 
Co.,  19  Wash.  165;  52  Pac.  1067.  illegal,    as   creating   a   monopoly,    a 

24  See  §   1070.  stockholder    may    enjoin     execution 

25  Hart  V.  Insurance  Co.,  21  Mo.  and  performance.  Harding  v.  Glu- 
01;  Straus  v.  Insurance  Co.,  5  O.  S.  cose  Co.,  182  111.  551;  74  Am.  St- 
59;  though  it  will  not  be  presumed  Rep.  189;  55  N.  E.  577. 

that    the    notes    were    so    acquired,  27  Alexander    v.    Searcy,    81    Ga^. 

flart  V.  Insurance  Co.,  21  Mo.  91.  536;  12  Am.  St.  Rep.  337;  8  S.  E. 

26  Pratt  V.  Pratt,  etc.,  33  Conn.  630;  Wright  v.  Hughes,  119  Ind. 
446;  Harding  v.  Glucose  Co.,  182  324;  12  Am.  St.  Rep.  412;  21  N.  E. 
111.   551;    74  Am.   St.  Rep.   189;    55  907. 

N.  E.  577 ;  Teachout  v.  Ry.,  75  la.  28  Boyce  v.   Coal  Co.,  37   W.   Va. 

722;    38    N.    W.    145.     Thus    where      73;   16  S.  E.  501. 
107 


1698  PAGE    ON    CONTRACTS. 

of  the  corporation.  In  so  far.  as  it  is  free  from  questions  of 
agency  and  illegality,  the  legal  effect  of  the  contract  depends 
upon  how  far  it  has  been  performed ;  whether  it  is  wholly 
executory,  wholly  executed,  or  partly  executed. 

§1087.     Executory  contracts. 

If  a  contract  is  executory  on  both  sides,  it  is  subject  to  the 
defense  of  ultra  vires  by  the  corporation.^  If  the  doctrine  of 
ultra  vires  has  any  force  at  all,  it  applies  to  cases  like  this 
where  the  adversary  party  as  as  yet  parted  with  nothing  of 
value  in  reliance  on  the  contract.  Thus  notes  given  by  an 
insurance  company  under  a  contract  whereby  it  was  to  pur- 
chase another  insurance  company  are  void,"  The  other  party 
,  may  also  treat  the  contract  as  invalid.  Since  the  only  con- 
sideration for  his  promise  is  the  invalid  promise  of  the  cor- 
poration, his  promise  is  in  legal  effect  without  consideration.^ 
The  foregoing  principles  are  necessarily  based  on  the  proposi- 
tion that  an  ultra  vires  contract,  while  executory  on  both  sides, 
is  more  than  merely  voidable.  For  many  purposes  it  may  be 
treated  as  absolutely  void. 

1  Thomas  v.  R.  R.,  101  U.  S.  71;  Co.,  38  O.  S.  275;  43  Am.  Rep.  425. 
First  National  Bank  v.  Winchester,  2  McClure  v.  Le\y,  147  N.  Y.  215; 

119  Ala.  168;  72  Am.  St.  Rep.  904;  41  N.  K  492. 

24  So.  351 ;  Simmons  v.  Iron  Works,  s  Governor,  etc.,  v.  Fox,  16  Q.  B. 
92  Ala.  427;  9  So.  160;  Coleman  v.  229;  71  E.  C.  L.  227;  First  Na- 
Turnpike  Co.,  49  Cal.  517;  Me-  tional  Bank  v.  Winchester,  119  Ala. 
Nulta  V.  Bank,  164  111.  427;  56  168;  72  Am.  St.  Rep.  904;  24  So. 
Am.  St.  Rep.  203;  45  N.  E.  954;  351;  Screven  Hose  Co.  v.  Philpot, 
affirming,  63  111.  App.  593;  Wright  53  Ga.  625.  Thus  the  court  held 
V.  Hughes,  119  Ind.  324;  12  Am.  St.  that  "an  executory  contract,  the  en- 
Rep.  412;  21  N.  E.  907;  Sherman,  forcement  of  which  by  the  plaintiff 
etc.,  Co.  V.  Morris,  43  Kan.  282;  19  could  be  successfully  resisted  by  the 
Am.  St.  Rep.  134;  23  Pac.  569;  Gar-  defendant  on  the  ground  that  the 
rett  V.  Mining  Co.,  113  Mo.  330;  35  former  was  not  authorized  by  its 
Am.  St.  Rep.  713;  20  S.  W.  965;  charter  to  enter  into  it,"  was  formed 
Nassau  Bank  v,  Jones,  95  N.  Y.  by  the  acceptance  by  a  corporation 
115;  47  Am.  Rep.  14;  Jemison  v.  of  a  proposition  to  enter  into  an 
Bank,  122  N.  Y.  135;  19  Am.  St.  ultra  vires  contract  and  bound 
Rep.  482;  9  L.  R.  A.  708;  25  N.  E.  neither  while  executory.  Boss- 
264;  Simpson  v.  Association,  38  0.  hardt.  etc.,  Co.  v.  Oil  Co.,  171  Pa. 
S.    349;    Coppin   v.    Greenlees,    etc.,  St.  109,  120;  32  Atl.  1120. 


PEIVATE  COKPORATIONS.  1691) 

§1088.     Contracts  performed  by  one  party. —  Performance  by  the 
corporation. 

If  a  contract  is  fully  performed  by  the  corporation,  so  that 
whatever  was  to  be  done  in  excess  of  corporate  power  has  been 
done,  the  corporation  can  recover  on  the  contract  and  the 
adversary  party  cannot  defend  on  the  ground  that  the  contract 
was  ultra  vires.^  Thus  a  lessee  of  gas  works  from  a  corpora- 
tion was  held  liable  for  rent  on  the  lease  during  the  time  for 
which  the  lessee  used  it."  This  was  a  contract  between  two 
corporations ;  and  many  authorities  hold  that  part  performance 
of  such  contract  can  give  it  no  validity.^  The  opposite  result 
from  that  reached  in  Bath  Gaslight  Co.  v.  ClafFy  was  reached 
in  Brunswick,  etc.,  Co.  v.  Light  Co.*  The  court  said :  "  We 
do  not  doubt  that  the  plaintiff  company  is  entitled  to  recover  a 
reasonable  rent  for  the  time  the  defendant  company  actually 
occupied  the  works ;  but  do  not  think  the  amount  can  be  meas- 
ured by  the  ultra  vires  agreement.  We  think  that  in  such 
cases  the  recovery  must  be  had  upon  an  implied  agreement  to 
pay  a  reasonable  rent ;  and  that  while  the  ultra  vires  agreement 
may  be  used  as  evidence,  in  the  nature  of  an  admission  of 
what  is  a  reasonable  rent,  it  cannot  be  allowed  to  govern  or 


1  Union  Gold  Mining  Co.  v.  Bank,  low,  6.3  X.  Y.  62 ;  20  Am.  Rep.  504 ; 

96  U.  S.  640;  Union  National  Bank  Woodruff  v.  Erie  Ry.  Co.,  93  N.  Y. 

V.  Matthews,   98  U.   S.  621;   Union  609;    Bath    Gaslight   Co.   v.   Claffy, 

Water  Co.  v.  Fluming  Co.,  22   Cal.  151  N.  Y.  24;  36  L.  R.  A.  664;  45 

620;  Eckman  v.  R.  R.,  169  111.  312;  X.   E.   390;    Oil   Creek,    etc.,   R.   R. 

38  L.  R.  A.  750;  48  N.  E.  496;  Lur-  Co.    v.    Transportation    Co.,    83    Pa. 

ton  V.  Building  Association,  187  HI.  St.  160. 

141;  58  X.  E.  218;  affirming.  87  111.  2  Bath  Gaslight  Co.  v.  Claffy,  151 

App.  395;   Poock  v.  Association,  71  X.  Y.  24;  36  L.  R.  A.  664;  45  X.  E. 

Ind.    357;    Chicago,    etc..    R.    R.    v.  390. 

Derkes,  103  Ind.  520;   3  X.  E.  239;  3  Oregon,  etc.,  R.  R.  v.  Oregonian, 

Bowditch  V.  Ins.  Co.,  141  Mass.  292;  etc.,  R.  R.,  130  U.  S.  1;  Brunswick 

55  Am.  Rep.  474;  4  N.  E.  798;  Mc-  Gas  Light  Co.  v.  Light  Co.,  85  Me. 

Indoe  V.  St.  Louis,  10  Mo.  575;  Ash-  532;   35  Am.  St.  Rep.  385;   27  Atl. 

enbroel  Club  v.  Finlay,  53  Mo.  App.  525.     See  post  this  section,  decisions 

256;    Equitable,  etc.,  Association  v.  of  U.  S.  Supreme  Court. 

Bidwell,  60  Xeb.  169;  82  X.  W.  384;  *  85    Me.    532;    35    Am.    St.    Rep. 

Same  v.  Baird.  60  Xeb.  173;   82  X.  385;  27  Atl.  525. 
W.  385;  Whitney  Arms  Co.  v.  Bar- 


1700  PAGE    ON    CONTRACTS. 

control  the  amount."^  A  sub-contract  was  assigned  to  a  na- 
tional bank,  which  was  obliged  to  complete  the  performance 
of  such  contract.  In  an  action  by  the  bank  on  such  contract 
neither  the  owner  nor  the  original  contractor  can  set  up  ultra 
vires.^  A  corporation  which  has  issued  accommodation  paper 
may  recover  on  an  indemnity  mortgage  given  to  protect  it  in 
becoming  surety.^  An  ultra  vires  loan,  made  by  a  corpora- 
tion,* as  a  loan  to  an  officer  of  the  corporation,^  a  loan  for  a 
period  of  two  years  made  by  a  corporation  authorized  to  loan 
money  for  one  year  only,^"  or  a  discount  by  a  safe  deposit  com- 
pany of  a  note,"  may  be  recovered.  A  loan  to  an  individual 
in  excess  of  a  twenty-five  per  cent  limit  imposed  by  law,  is 
good  at  least  to  such  limit.^^  Thus,  where  a  national  bank 
made  an  nltra  vires  loan  on  real  estate  mortgage  security,  the 
party  receiving  the  money  can  not  use  ultra  vires  as  a  defense.^' 
A  corporation  which  has  sold  and  delivered  goods  in  which 
it  is  not  authorized  by  its  charter  to  deal,  can  recover  the  con- 
tract price  ;^*  and  where  a  corporation  made  an  ultra  vires  con- 
tract to  construct  a  railroad  in  reliance  upon  subscriptions,  and 
did  so  construct  it,  it  can  enforce  such  subscriptions.^^  This 
view  is  not  unanimously  entertained,  however.  Some  authori- 
ties insist  that  no  liability  exists  by  reason  of  the  contract,  but 
only  on  a  quantum  meruit.  Thus,  where  a  corporation  bought 
stock  in  another  corporation,  paid  for  it  and  had  it  trans- 
ferred, the  vendor  agreeing  to  indemnify  the  vendee  against 
such  judgments  as  might  be  rendered  in  suits  then  pending 

5  85  Me.  541.  43    Wis.    420;    28    Am.    Rep,    549. 

6  Security      National      Bank      v.  n  Pratt  v.   Short,   79  N.  Y.  437; 
Power  Co.,  117  Wis.  211;  94  N.  W.      35  Am.  Rep.  531. 

74.  i2McClintock   v.    Bank,    120    Mo. 

7  Butterworth,     etc..     v.     Milling      127 ;  24  S.  W.  1052. 

Co.,  115  Mich.  1;   72  X.  W.  990.  i3  Union   National    Bank   v.   Mat- 

8  Union    Water    Co.    v.    Pluming      thews.  98  U.  S.  621. 

Co.,  22  Cal.  620.  i*  Chester  Glass  Co.  v.  Dewey,  16 

9  Bowditeh  v.  Ins.  Co.,  141  Mass.      Mass.  94;  8  Am.  Dec.  128;  Whitney 
292;  55  Am,  Rep.  474;  4  N.  E.  798,      Arms  Co.  v.  Barlow,  63   N,  Y.  62; 

(Enforcing  a  pledge  by  a  third  per-      20  Am.  Rep.  504. 

son.  of  bonds  to  secure  such  debt.)  I'J  Chicago,  etc..  R.   R.  v.  Derkes, 

10  Germantown.  etc.,  Co.  v.  Dhein,      103  Ind.  520;  3  N.  C.  239, 


PRIVATE  CORPORATIONS. 


1701 


against  the  corporation  whose  stock  was  sold,  it  was  held  that 
the  vendee  corporation  could  not  enforce  the  contract  of  in- 
demnity.^^ At  any  rate  the  corporation  may  recover  on 
quantum  meruit  for  the  property  received  under  such  contract 
by  the  adversary  party.^^ 

§1089.    Performance  by  adversary  party. —  Liability  on  contract. 

If  the  adversary  party  to  the  contract  has  performed  his  part 
thereof  and  by  such  performance  the  corporation  has  received 
something  of  value,  some  liability  exists/  though  the  courts  are 
divided  as  to  its  nature.  Many  jurisdictions  hold  that  in  such 
case  the  liability  is  on  the  contract."     The  corporation  cannot 


16  Buckeye,  etc.,  Co.  v.  Harvey, 
92  Tenn.  115;  36  Am.  St.  Rep.  71; 
18  L.  R.  A.  252;  20  S.  W.  427.  The 
eases  here  cited  and  followed  are 
many  of  them  cases  arising  on  con- 
tracts between  two  corporations, 
ultra  vires  as  to  each,  so  that  noth- 
ing but  full  performance  on  each 
«ide  could  eliminate  the  ultra  vires 
feature  of  the  contract,  and  on  prin- 
ciple are  different  from  this  case. 

17  Even  if  such  contract  is  for- 
bidden by  statute,  as  long  as  it  is 
not  illegal.  Philadelphia  Loan  Co. 
V.  Towner.  13  Conn.  249;  Vanatta 
V.  State  Bank,  9  O.  S.  27. 

1  Kadish  v.  Association,  151  111. 
531;  42  Am.  St.  Rep.  256;  38  N.  E. 
236;  Williams  v.  Bank,  71  Miss. 
858;  42  Am.  St.  Rep.  503;  16  So. 
238. 

-  Poole  V.  Association,  30  Fed. 
513;  Wood  v.  Corry,  etc.,  Works,  44 
Fed.  146;  12  L.  R.  A.  168;  Bowman 
V.  Hardware  Co.,  94  Fed.  592;  Il- 
linois, etc..  Bank  v.  Ry.  Co.,  117 
Cal.  332;  49  Pac.  197;  People  v.  R. 
R.  Co.,  178  HI.  594;  49  L.  R.  A. 
650;  53  N.  E.  349;  Kadish  v.  Asso- 
ciation, 151  111.  .531;  42  Am.  St. 
Rep.  256;   38  N.  E.   236;   Ward  v. 


Johnson.  95  111.  215;  Peoria,  etc., 
R.  R.  Co.  V.  Thompson,  103  111.  187; 
Thomas  v.  Ry.  Co.,  104  111.  462;  R. 
R.  Co.  V.  Flanagan,  113  Ind.  488; 
3  Am.  St.  Rep.  674;  14  N.  E.  370; 
Wright  V.  Hughes,  119  Ind.  324;  12 
Am.  St.  Rep.  412;  21  N.  E.  907; 
Bedford  Belt  Ry.  Co.  v.  McDonald,  17 
Ind.  App.  492;  60  Am.  St.  Rep.  172; 
46  N.  E.  1022;  White  v.  Marquardt, 
etc.,  105  la.  145;  74  N.  W.  930; 
Twiss  v.  Association,  87  la.  733;  43 
Am.  St.  Rep.  418;  55  N.  W.  8; 
Humphrey  v.  Association,  50  la. 
607;  Alexandria,  etc.,  R.  R.  Co.  v. 
Johnson,  58  Kan.  175;  48  Pac.  847; 
Sherman,  etc.,  Co.  v.  Morris,  43 
Kan.  282;  19  Am.  St.  Rep.  134;  23 
Pac.  569;  Louisville  Tobacco  Ware- 
house Co.  V,  Stewart  (Ky.),  70  S. 
W.  285;  Carson  City,  etc..  Bank  v. 
Elevator  Co.,  90  Mich.  550;  30 
Am.  St.  Rep.  454;  51  N.  W.  641; 
Auerbaeh  v.  Mill  Co.,  28  Minn.  291; 
41  Am.  Rep.  285;  9  N.  W.  799; 
Winscott  V,  Investment  Co.,  63  Mo. 
App.  367;  Manchester,  etc.,  R.  R.  v. 
R.  R..  66  N.  H.  100;  49' Am.  St. 
Rep.  582 ;  Chapman  v.  Rheostat  Co., 
62  X.  J.  L.  497;  41  Atl.  690;  Cam- 
den, etc.,  R.  R.  Co.  v.  R.  R.,  48  N.  J. 


1702 


PAGE    ON    CONTRACTS. 


receive  the  benefits  of  a  transaction  and  repudiate  liability 
arising  out  of  the  same  transaction.^  It  is  said  to  be  "  a 
general  rule  that  undertakings,  though  they  be  ultra  vires,  will 
be  enforced  against  quasi  public  corporations,  if  said  corpora- 
tions retain  and  enjoy  the  benefits  of  concessions  granted  on 
condition  such  undertakings  should  be  performed."*  It  is 
properly  said  that  this  rule  "  may  not  be  strictly  logical,  but  it 
prevents  a  great  deal  of  injustice."^  Thus  where  a  corporation 
borrows  money,*'  as  by  selling  bonds,^  and  such  money  has  come 
into  the  possession  of  the  corporation,  it  cannot  retain  the 
money  and  plead  ultra  vires.     If  a  corporation  buys  property 


L.  530;  7  Atl.  523;  Seymour  v. 
Cemetery  Association,  144  N.  Y. 
333;  26  L.  R.  A.  859;  39  N.  E.  365; 
Linkauf  v.  Lombard,  137  N,  Y.  417; 
33  Am.  St.  .Rep.  743;  20  L.  E.  A. 
48;  33  N.  E.  472;  Duncomb  v.  R.  R., 
84  N.  Y.  190;  Whitney  Arms  Co.  v. 
Barlow,  63  N.  Y.  62;  20  Am.  Rep. 
504;  Jones  v.  Building  Association, 
94  Pa.  St.  215;  Wright  v.  Pipe  Line 
Co.,  101  Pa.  St.  204;  47  Am.  Rep. 
701;  Pittsburgh,  etc.,  R.  R.  Co.  v. 
R.  R.  Co.,  196  Pa.  St.  452;  46  Atl. 
431;  Northside  Ry.  Co.  v.  Worth- 
ington,  88  Tex.  562;  53  Am.  St. 
Rep.  778;  30  S.  W.  1055;  Texas, 
etc.,  R.  R.  Co.  V.  Gentry,  69  Tex. 
625;  8  S.  W.  98;  City  of  Spokane 
V.  Amsterdamsch  Trustees,  etc.,  22 
Wash.  172;  60  Pac.  141;  Horton  v. 
Long,  2  Wash.  435 ;  26  Am.  St.  Rep. 
867;  27  Pac.  271;  North  Hudson, 
etc..  Association  v.  Bank,  79  Wis. 
31;  11  L.  R.  A.  845;  47  N.  W.  300; 
McElroy  v.  Horse  Co.,  96  Wis.  317 ; 
71  N.  W.  652;  Bullen  v.  Trading 
Co.,  109  Wis.  41;  85  N.  W.  115. 

3  Marion  Trust  Co.  v.  Investment 
Co.,  27  Ind.  App.  451;  87  Am.  St. 
Rep.  257;  61  N.  E.  688.  "That 
kind  of  plunder  which  holds  onto 
the  property,  but  pleads  the  doc- 
trine of  ultra  vires  against  the  obli- 


gation to  pay  for  it,  has  no  recogni- 
tion or  support  in  the  laws  of  this 
state."  Seymour  v.  Cemetery  Asso- 
ciation, 144  N.  Y.  333,  341;  26  L.  R. 
A.  859;  39  X.  E.  365;  (citing  Whit- 
ney Arms  Co.  v.  Barlow,  63  N.  Y. 
62;  20  Am.  Rep.  504;  Duncomb  v. 
R.  R.  Co.,  84  X.  Y.  190;  Woodruff 
V.  R.  R.  Co.,  93  N.  Y.  609,  619). 
"  Where  an  ultra  vires  contract  is 
made  and  performed  on  one  side, 
the  other  party  cannot  be  permitted 
to  enjoy  the  benefits  received,  but 
will  be  required  in  a  proper  action 
to  account."  Twiss  v.  Association, 
87  la.  733,  737;  43  Am.  St.  Rep. 
418;  55  N.  W.  8;  quoted  in  Beach 
V.  Wakefield,  107  la.  567,  585;  76 
N.  W".  688;  78  N.  W.  197. 

4  People  V.  R.  R.  Co.,  178  IlL  594; 
607;  49  L.  R.  A.  650;  53  N.  E.  349; 
(citing  Heims  Brewing  Co.  v.  Flan- 

nery,  137  111.  309;  27  N.  E.  286; 
Kadish  v.  Association,  151  111.  531; 
42  Am.  St.  Rep.  256;  38  N.  E.  236; 
Eckman  v.  R.  R.  Co.,  169  HI.  312; 
38  L.  R.  A.  750;  48  N.  E.  496). 

5  Seymour  v.  Society,  54  Minn. 
147,  149;  55  N.  W.  907. 

6  Wright  V.  Hughes,  119  Ind.  324; 
12  Am.  St.  Rep.  412;  21  N.  E.  907. 

■^  International  Trust  Co.  v.  Mfg. 
Co.,  70  N.  H.  118;  46  Atl.  1054. 


PRIVATE   COKPORATIOXS.  1703 

and  retains  it,^  or  sells  it  to  another  person  and  retains  the 
proceeds  of  such  sale,^  it  cannot  invoke  the  doctrine  of  ultra 
vires  to  avoid  liability  on  the  contract  for  the  purchase  price. 
So  where  a  corporation  bought  certain  mining  claims  under  a 
contract  to  pay  the  owner  thereof  a  certain  per  cent  of  the 
sales  as  payment  for  such  claims  it  cannot  keep  the  claim  and 
refuse   to    make    such    payments/"     An    agreement   to    repay 
money  borrowed  by  the  corporation  cannot  be  avoided  as  being 
ultra  vires,  even  if  the  money  borrowed  was  to  be  used  for  an 
unauthorized  pur}X)se,"  if  not  known  to  the  lender/-  or  even, 
it  has  been  held,  if  such  intention  is  known  to  the  lender,^^  as 
long  as  the  contract  of  loan  does  not  require  such  use.     Even 
in  cases  of  this  sort  the  corporation  cannot  retain  the  benefits 
of  the  transaction  and  avoid  liability  thereon.     A  corporation 
cannot  contest  its  liability  on  mortgage  security  bonds,  though 
given  to  raise  money  with  which  to  aid  a  street  car  line.^* 
Where  a  church  sold  land  and  the  vendee  paid  the  church  there- 
for and  then  paid  off  pre-existing  liens  on   such  realty,   the 
church  cannot  recover  such  realty,  even  if  the  contract  was 
ultra  vires,  unless  it  restores  the  money  thus  paid.^^     A  cor- 
poration which  has  accepted  the  full  benefit  of  the  contract 
with  a  stockholder  under  which  he  became  a  member,  cannot 
repudiate  liability  to  him  under  such  contract  on  the  ground 
that  it  was  ultra  vires.^-^     In  such  a  case  the  corporation  "  can- 


8  Miners'  Ditch  Co.  v.  Zellerback,  is  Money  borrowed  by  a  loan  asso- 
37  Cal.  543;  99  Am.  Dec.  300.  ciation    to    pay    off    retiring    share- 

9  Rutland,  etc.,  Co.  v.  Proctor,  29  holders.     Marion   Trust   Co.    v.    In- 
Vt.  93.  vestment  Co.,  27  Ind.  App.  451;  87 

10  Wall  V.  Smelting  Co.,  20  Utah  Am.  St.  Rep.  257;  61  N.  E.  688. 
474;  59  Pac.  399.  i*  Illinois,   etc..   Bank  v.  Ry.   Co., 

11  Bradley  v.  Ballard,  55  111.  413;  117  Cal.  332;  49  Pac.  197. 

8    Am.    Rep.    656.      (A    corporation  is  Madison,  etc..  Church  v.  Church, 

formed  to  mine  in  Illinois  borrowed  73  N.  Y.  82. 

money  and  used  it  to  mine  in  Colo-  le  Vought    v.     Loan     Association, 

rado.)  172  N.  Y.  508 ;  92  Am.  St.  Rep.  761 ; 

12  As  where  money  was  borrowed  65  N.  E.  496.  This  case  was  fol- 
by  a  loan  association  to  pay  off  re-  lowed  in  Eastern,  etc.,  Association 
tiring  shareholders.  North  Hudson,  v.  Williamson,  189  U.  S.  122;  af- 
etc,  Association  v.  Bank,  79  Wis.  firming  Williamson  v.  Loan  Asso- 
31;   11  L.  R.  A.  845;  47  N.  W.  300.  ciation,  62  S.  C.  390;  38  S.  E.  616, 


1704 


PAGE    ON    CONTRACTS. 


not  be  excused  from  payment  upon  the  plea  that  the  contract 
was  beyond  its  power.""  Where  A  bought  stock  under  an 
agreement  with  the  corporation  that  he  should  be  given  employ- 
ment and  that  at  the  end  of  such  emj^loyment  the  corporation 
would  purchase  his  stock,  it  cannot  avoid  liability  on  such 
contract  after  A  has  fully  performed  his  part.^^  Where  one 
has  rendered  services  to  a  corporation  under  a  contract/''  ultra 
vires  is  no  defense.  Where  an  insurance  company  insured 
against  a  risk,  not  authorized  by  its  charter  and  received  the 
premium  therefor,  it  was  held  liable  on  the  policy.^"  It  is 
chiefly  with  reference  to  contracts  of  this  class  that  the  prin- 
ciple is  suggested  as  a  reason  for  the  decisions,  that  ultra  vires 
can  be  used  as  a  defense  only  when  "  consistent  with  the  obli- 
gations of  justice."^^  This  is  a  better  statement  of  ethics  than 
a  practical  rule  of  law.  It  has  been  repudiated  as  a  mere 
dictum  by  some  of  the  courts  that  have  enunciated  it."^ 


■which  involved  a  construction  of  the 
same  statute. 

17  Vought  V.  Loan  Association, 
172  N.  Y.  508;  518;  92  Am.  St.  Eep. 
761;  65  N.  E.  496;  quoted  in  East- 
ern, etc.,  Association  v.  Williamson, 
189  U.  S.  122. 

18  Chapman  v.  Rheostat  Co.,  62 
N.  J.  L.  497;  41  Atl.  690. 

19  Tyler  v.  Academy,  etc.,  14  Or. 
485;   13  Pac.  329. 

20  Denver,  etc.,  Co.  v,  McClelland, 
9  Colo.  11;  59  Am.  Rep.  134;  9  Pac. 
771.  Contra,  where  such  policy  was 
forbidden  by  statute.  In  re  As- 
signment Mutual,  etc.,  Ins.  Co.,  107 
la.  143;  70  Am.  St.  Rep.  149. 

21  Bath  Gaslight  Co.  v.  Claffy,  151 
N.  Y.  24,  37;  36  L.  R.  A.  664;  45  N. 
E.  390. 

To  the  same  effect  are  the  follow- 
ing eases:  Ohio,  etc.,  Ry.  Co.  V.  Mc- 
Carthy, 96  U.  S.  258;  tJnion  Water 
Co.  V.  Fluming  Co.,  22  Cal.  621; 
Burke,  etc.,  Co.  v.  Wells  Fargo  & 


Co.,  7  Ida.  42;  60  Pac.  87;  Chester 
Glass  Co.  V.  Dewey,  16  Mass.  94;  8 
Am.  Dec,  128;  Whitney  Arms  Co.  v. 
Barlow,  63  N.  Y.  62;  20  Am.  Rep. 
504 ;  Linkauf  v.  Lombard,  137  N.  Y. 
417;  33  Am.  St.  Rep.  743;  20  L.  R. 
A.  48;  33  N.  E.  472;  Kadish  v. 
Building  Asssoeiation,  151  111.  531; 
42  Am.  St.  Rep.  256;  38  N.  E.  236; 
Carson  City,  etc..  Bank  v.  Elevator 
Co.,  90  Mich.  550;  30  Am.  St.  Rep. 
454;  51  N.  W.  641;  Portland,  etc., 
Co.  V.  East  Portland,  18  Or.  21;  6 
L.  R.  A.  290;  22  Pac.  536;  Bear, 
etc.,  Co.  V.  Hanley,  15  Utah  506;  50 
Pac.  611;  Lewis  v.  American,  etc., 
Association,  98  Wis.  203;  39  L.  R. 
A.  559;  73  N.  W.  793. 

22  It  is  called  "  a  mere  passing 
remark  "  in  Central,  etc.,  Co.  v.  Car 
Co.,  139  U.  S.  24,  55.  So,  Buckeye, 
etc.,  Co.  V.  Harvey,  92  Tenn.  115; 
36  Am.  St.  Rep.  71;  18  L.  R.  A. 
252;  20  S.  W.  427. 


PRIVATE  CORPORATIONS. 


1705 


§1090.     Liability  independent  of  contract. 

Other  jurisdictions,  led  by  the  Supreme  Court  of  the  United 
States,  hold  that  no  liability  exists  on  the  contract,  since  it  is 
a  contract  exectuory  as  to  the  unauthorized  act ;  but  that  an 
action  in  quant mn  meruit  will  lie,  to  recover  a  reasonable  com- 
pensation for  the  benefits  received  by  the  corporation  under 
the  contract.^  It  is  well  settled  that  the  corporation  cannot 
retain  what  it  has  received  under  the  contract  without  incurring 
any  liability  therefor.^  So  if  a  corporation  sues  in  equity  to 
have  an  ultr^a  vires  mortgage  cancelled,  it  must  offer  to  restore 
to  the  mortgagee  the  amount  received  by  the  corporation  and 
remaining  unpaid.^  The  same  rule  applies  if  it  seeks  to  avoid 
its  contract.*  The  liability  is  said  to  exist  "  irrespective  of  the 
invalid  agreement."^     Where  a  land  company  and  a  street  rail- 


1 "  Whatever  doubts  may  have 
been  once  entertained  as  to  the 
power  of  corporations  to  set  up  the 
defense  of  ultra  vires  to  defeat  a  re- 
covery upon  an  executed  contract, 
the  rule  is  now  well  settled  at  least 
in  this  court,  that  where  the  ac- 
tion is  brought  upon  the  illegal  con- 
tract, it  is  a  good  defense  that  the 
corporation  was  prohibited  by  stat- 
ute from  entering  into  such  contract, 
although  in  an  action  upon  a  quan- 
tum meruit  it  may  be  compelled  to 
respond  for  the  benefit  actually  re- 
ceived." De  La  Vergne,  etc.,  Co.  v. 
Savings  Institution,  175  U.  S.  40, 
58.  Citing  Pearce  v.  E.  R.,  21  How. 
(U.  S.)  441.  So  as  to  leases  ultra 
vires  of  a  corporation.  Thomas  v. 
R.  R.  Co.,  101  U.  S.  71;  Pittsburgh, 
etc.,  Ry.  V.  Bridge  Co.,  131  U.  S. 
371;  McCormick  v.  Bank,  165  U.  S. 
538 ;  California  Bank  v.  Kennedy, 
167  U.  S.  362;  Central,  etc.,  Co.  v. 
Car  Co.,  171  U.  S.  138.  Also  citing 
Buckeye  Marble  Co.  v.  Harvey,  92 
Tenn.  115;  36  Am.  St.  Rep.  71;  18 
L.  R.  A.  252 ;  20  S.  \Y.  427.  See  on 
this  point,  Hitcock  v.  Galveston,  96 


U.  S.  341;  Dickerman  v.  Trust  Co., 
176  U.  S.  181;  Emmerling  v.  Bank, 
97  Fed.  739;  38  C.  C.  A.  399;  Whit- 
ney V.  Peay,  24  Ark,  22;  In  re  As- 
signment Mutual,  etc.,  Ins.  Co.,  107 
la.  143;  70  Am.  St.  Rep.  149;  77  X. 
W.  868  (prohibition  by  statute)  ; 
Brunswick  Gas  Light  Co.  v.  Gas, 
etc.,  Co.,  85  Me.  532;  35  Am.  St. 
Rep.  385;  27  Atl.  525;  Moore  v. 
Tanning  Co.,  60  Vt.  459;  15  Atl. 
114;  Northwestern,  etc.,  Co.  v. 
Shaw,  37  Wis.  655;  19  Am.  Rep. 
781. 

2  Great  Northwestern  Ry.  v.  Char- 
lebois  (1899),  A.  C.  114;  Louisiana, 
etc.,  Ry.  V.  Levee  District,  87  Fed. 
594;  31  C.  C.  A.  121. 

3  Southern,  etc.,  Association  v. 
Stable  Co.,  128  Ala.  624;  29  So. 
654. 

4  Louisiana,  etc.,  Ry.  v.  Board, 
etc.,  of  Levee  District,  87  Fed.  594; 
31  C.  C.  A.  121. 

5  Manchester,  etc.,  R.  R.  Co.  v.  R. 
R.  Co.,  66  N.  H.  100,  132;  49  Am. 
St.  Rep.  582;  9  L.  R.  A.  689;  20 
Atl.  383;  see  Davis  v.  R.  R.,  131 
Mass.   258;    41    Am.   St.   Rep.   221; 


1706  PAGE    02f    CONTRACTS. 

way  company  issued  bonds  together  and  divided  the  money  thus 
obtained,  each  company  was  held  liable  to  pay  the  proportion 
of  the  bonds  equal  to  the  proportion  of  the  money  received  bj 
it.^  This  view  has  been  carried  in  some  jurisdictions  to  the 
logical  conclusion  that  even  if  the  corporation  does  not  seek  to 
avoid  the  transaction,  the  party  who  has  performed  may  ignore 
the  contract  and  recover  a  reasonable  value  for  what  he  has 
parted  with.  Thus  a  corporation  in  consideration  of  a  loan 
of  twenty  thousand  dollars  agreed  to  repay  it  in  preferred  stock. 
When  the  contract  was  entered  into  it  was  ultra  vires,  as  the 
corporation  had  no  power  to  issue  preferred  stock.  Subse- 
quently the  legislature  gave  to  such  corporation  the  power  to 
issue  preferred  stock,  and  it  was  willing  to  deliver  the  proper 
amount  to  the  creditor.  It  was  held  that  such  contract  had  no 
consideration,  and  that  the  creditor  might  ignore  the  contract 
and  recover  the  amount  of  the  loan.'^  An  ultra  vires  contract 
for  the  purchase  of  certain  goods  for  speculation  had  been  made 
by  a  manufacturing  company.  The  vendor  delivered  part  of 
the  goods,  repudiated  the  contract  and  sued  for  the  value  of  the 
goods  delivered ;  and  recovery  was  allowed.*  In  some  cases  it 
is  held  that  the  corporation  is  not  liable  on  the  contract,  but  no 
opinion  is  given  as  to  its  liabilitj'  in  any  other  theory.^  Thus 
a  manufacturing  corporation  which  had  been  exceeding  its  au- 
thority in  operating  a  store  for  its  employees,  was  allowed  to 
use  ultra  vires  as  a  defense  in  an  action  for  goods  sold  and 
delivered."  Thus  it  has  been  held  that  a  corporation  to  manu- 
facture and  sell  cotton-seed  products,  including  fertilizers  made 

Morville  v.  Tract  Society,  123  Mass.  ton,  88  Tex.  562;   53  Am.  St.  Rep. 

129;    25    Am.    Rep.    40;    White    v.  778;  30  S.  W.  1055. 

Bank,   22   Pick.    (Mass.)    181;    Dill  7  Anthony     v.      Sewing     Machine 

V.   Wareham,   7   Met.    (Mass.)    438;  Co.,   16  R.  I.  571;   5  L.  R.  A.  575 

Greenville,    etc.,    Co.    v.    Warehouse  18  Atl.  176. 

Co.,  70  Miss.  669 ;   35  Am.  St.  Rep.  8  Day  v.  Buggy  Co.,  57  Mich.  146 

681;   National  Trust  Co.  v.  Miller,  58  Am.  Rep.  352;  23  N.  W.  628. 

33  N.  J.  Eq.  155;  Tennessee  Ice  Co.  »  Sherwood  v.  Alvis,  83  Ala.  115 

V.  Raine,   107  Tenn.  151;   64  S.  W.  3  Am.  St.  Rep.  695;  3  So.  307. 

29;  Miller  v.  Ins.  Co.,  92  Tenn.  167;  lo  Chewacla,    etc.,   Works   v.    Dis- 

20  L.  R.  A.  765;  21  S.  W.  39.  mukes,  87  Ala.  344;  5  L.  R.  A.  100; 

eNorthside  Rv.  Co.  v.  Worthing-  6  So.   122. 


PRIVATE   CORPORATIONS.  LiV  i 

therefrom,  is  not  liable  on  a  note  given  by  it  for  another  kind 
of  fertilizer  which  it  intends  to  resell  at  a  profit.^^ 

In  some  jurisdictions  the  liability  of  a  corporation  on  an 
ultra  vires  contract  which  the  other  party  has  fully  performed, 
is  said  to  be  in  the  nature  of  a  liability  in  tort/" 

§1091.     Partial  performance  by  one  party. 

If  one  party  to  an  ultra  vires  contract  has  performed  it  in 
part,  the  executory  part  of  such  contract  may  nevertheless  be 
avoided.^  An  ultra  vires  lease  made  by  one  railroad  to  an- 
other, on  which  rent  had  been  paid  for  several  years,  can  be 
repudiated  as  to  the  executory  part  thereof.^  An  ultra  vires 
lease  had  been  made,  and  installments  paid  for  years.  Suit 
was  brought  for  an  overdue  installment  of  rent,  the  defendant 
still  retaining  the  property.  No  recovery  was  allowed  on  the 
lease.^  If  the  corporation  has  partially  performed  the  contract 
and  it  remains  entirely  executory  on  the  other  side,  some 
authorities  hold  that  no  action  can  be  maintained  on  the  con- 
tract, but  only  to  recover  back  what  has  been  parted  with  under 
it.*  If  a  contract  is  partially  performed  by  the  adversary 
party,  the  corporation  is  liable  to  the  extent  at  least  of  benefits 
received.  Here  again  there  is  a  conflict  of  opinion ;  some  au- 
thorities holding  that  although  the  contract  may  be  repudiated 
by  the  corporation  as  to  the  part  not  performed,  the  corporation 

11  Richmond    Guano    Co.    v.     Oil  Co.,  118  U.  S.  290;  Thomas  v.  R.  R., 

Mill  &  Ginnery,  119  Fed.  709.  101    U.    S.    71;    McNulta   v.    Bank, 

12 «  If   the    agreement    was    ultra  164  111.  427 ;   56  Am.  St.  Rep.  203 ; 

vires    and    the    association    entered  45  N.  E.  954 ;  Mallory  v.  Oil  Works, 

into  it  knowing  it  could  not  perform  86  Tenn.  598 ;  8  S.  W,  396. 

its    part    thereof,    and    thereby    in-  2  Oregon,   etc.,   Ry.   v.   Oregonian, 

duced    plaintiff    to    part    with    its  etc.,  Ry.,   130  U.  S.   1. 

money  in  the  purchase  of  stock,  then  3  Central,  etc.,  Co.  v.  Car  Co.,  139 

it   was    a    tort,    and    the    defendant  U.  S.  24. 

would  be  liable  therefor."     William-  *  Northwestern,  etc.,  Co.  v.  Shaw, 

son   V.    Association,    54    S.    C.    582,  37    Wis.    655;    19    Am.    Rep.    781; 

596;   71  Am.  St.  Rep.  822;  32  S.  E.  (where    a    packet    company   bought 

765;    Miller    v.    Insurance    Co.,    92  grain  for  speculation;  and  the  cor- 

Tenn.   167;   20  L.  R.  A.  765;   21   S.  poration  was  not  allowed  to  recover 

W.  39.  damages    for    non-performance). 

1  Pennsylvania,  etc.,  Co.  v.  R.  R. 


1708  PAGE    ON    CONTRACTS. 

is  liable  on  the  contract  as  to  that  part  which  is  performed.* 
Thus  where  a  corporation  formed  a  partnership  with  a  stock- 
holder, and  he  performed  the  contract,  the  corporation  must 
account  to  him  for  the  proceeds  of  the  partneship  received  bj 
it.®  Other  authorities  hold  that  in  such  case  the  liability  is  on 
quantum  meruit  for  the  benefits  received,  and  not  on  the  con- 
tract.'' 

§1092.     Performance  not  conferring  benefit  on  corporation. 

Where  performance  does  not  pass  anything  of  value  to  the 
corporation,  performance  by  the  adversary  party  does  not  im- 
pose any  liability  on  the  corporation.  This  is  the  case  where 
the  corporation  has  issued  accommodation  paper,^  or  has  ultra 
vires  acted  as  surety.^  Thus  a  brewing  company  was  allowed 
to  plead  ultra  vires  to  an  appeal  bond  on  which  it  had  become 
surety  to  enable  the  appellee  to  continue  in  the  saloon  business 
and  to  buy  beer  of  the  company  f  and  a  railroad  could  thus 
defend   against   its   guaranty   of  the   expenses   of   a   festival.* 

5  Macon,  etc.,  Co.  v.  R.  R.  Co.,  63  ville,  etc.,  Planter's,  etc.,  Co.,  70 
Ga.  103.  Miss.  669;   35  Am.  St.  Rep.  68;   13 

6  Boyd  V.   Carbon-Black   Co.,    182      So.  879. 

Pa.  St.  206;  37  Atl.  937.  "While  i  Northside  Ry.  Co.  v.  Worthing- 
public  policy  demands  that  the  ton,  88  Tex.  562;  53  Am.  St.  Rep. 
courts  should  declare  such  contracts  778;  30  N.  W.  1055;  see  also  to 
by  corporations  unlawful,  and  that  the  same  effect  M.  V.  Monarch  Co. 
they  will  make  no  decree  which  pro-  v.  Bank,  105  Ky.  430;  88  Am.  St. 
longs  their  life  in  fact  for  a  single  Rep.  310;  49  S.  W.  317;  see  §  1071. 
day,  every  principle  of  equity  com-  2  See  §  1072;  see  to  the  same  ef- 
mands  that  the  corporation  receiv-  feet  First  National  Bank  v.  Win- 
ing a  benefit  from  such  contract  chester,  119  Ala.  168;  72  Am.  St. 
shall  account  for  what  it  has  re-  Rep.  904;  24  So.  351. 
ceived  from  him  who  has  fully  per-  3  Best  Brewing  Co.  v.  Klassen, 
formed."  Boyd  v,  Carbon-Black  Co.,  185  111.  37;  76  Am.  St.  Rep.  26;  50 
182  Pa.  St.  206,  211  •,  37  Atl.  937.  L.  R.  A.  765;  57  N.  E.  20. 

7  Pittsburgh,  etc.,  Co.  v.  Bridge  4  Davis  v.  R.  R.,  131  Mass.  258; 
Co.,  131  U.  S.  371;  McCormick  v.  41  Am.  Rep.  221.  Contra,  a  street 
Bank,  165  U.  S.  538;  California,  railroad  was  not  allowed  to  plead 
etc..  Bank  v.  Kennedy,  167  U.  S.  vltra  vires  to  a  subscription  to  a 
362;  Nashua,  etc.,  R.  R.  Co.  v,  fair,  in  order  to  increase  traffic. 
R.  R.  Co.,  164  Mass.  222;  49  Am.  State  Board  v.  R.  R.  Co.,  47  Ind. 
St.  Rep.  454;  41  N.  E.  268;  Green-  407;  17  Am.  Rep.  702. 


PRIVATE   CORPORATIONS.  1709 

"Where  a  building  association  bought  land  and  assumed  a  mort- 
gage ;  and  subsequently  repudiated  the  transaction  and  tendered 
a  deed  to  the  grantor,  it  was  held  that,  as  the  contract  to  assume 
the  debt  was  ultra  vires,  and  the  holder  of  the  debt  and  mort- 
gage had  parted  with  nothing  in  reliance  on  such  assuming  the 
debt,  he  could  not  enforce  the  debt  against  the  corporation.^ 
If  a  corporation  bj  an  ultra  vires  contract  buys  stock  in  an- 
other corporation,  it  cannot  be  compelled  to  pay  a  stock  liabil- 
ity.® This  doctrine  may  properly  be  extended  to  cases  where 
the  corporation  has  no  choice  in  receiving  or  retaining  benefits. 
Thus  where  work  was  done  under  a  contract,  with  an  unauthor- 
ized (and  possibly  ultra  vires)  change  made  by  the  authority 
of  the  superintendent  of  the  company,  the  contractor  could  not 
recover  extra  compensation  for  the  change.^ 

§1093.     Contracts  fully  performed. 

If  a  contract  has  been  fully  performed  on  both  sides,  neither 
party  can  take  advantage  of  the  fact  that  it  was  ultra  vires} 
The  right  of  attacking  transaction  ultra  vires,  but  fully  exe- 
cuted, belongs  to  the  state  alone.'     Thus,  the  right  of  a  cor-, 
poration  to  hold  land  can  be  questioned  only  by  the  state,  not 

5  National,  etc.,  Association  v.  1022;  Miller  v.  Turnpike  Co.,  109 
Bank,  181  111.  35;  72  Am.  St.  Rep.  Ky.  475;  59  S.  W.  512;  Hennessy 
245;   54  N.  E.  619.  v.  St.  Paul,  54  Minn.  219;  55  N.  W. 

6  Chemical  National  Bank  v.  Ha-  1123;  Manchester,  etc.,  R.  R.  v.  R. 
vermale,  120  Cal.  601;  65  Am.  St.  R.,  66  N.  H.  100;  49  Am.  St.  Rep. 
Rep.  206;  52  Pae.  1071;  White  v.  582;  9  L,  R.  A.  689;  20  Atl.  383; 
Bank,  66  S.  C.  491 ;  97  Am.  St.  Rep.  Camden,  etc.,  R.  R.  Co.  v.  R.  R., 
803;    45   S.   E.   94.  48  N.  J,  L.  530;  7  Atl.  523;  Holmes, 

7  Boynton  v.  Gas  Light  Co.,  124  etc.,  Co.  v.  Metal  Co.,  127  N.  Y.  252; 
Mass.  197.  24  Am.  St.  Rep.  448;  27  N.  E.  831; 

1  Brown  v.  Schleier,  194  U.  S.  18;  Parish  v.  Wheeler,  22  N.  Y.  494. 
Pennsylvania   R.   R.    Co.   v.   R.    R.,  2  Benton  v.  Elizabeth,  61  N.  J.  L. 

118    U.     S.    290;     Cincinnati,    etc.,  693;   40  Atl.  1132;   affirming  61  N. 

Co.  V.   McKeen,   64   Fed.   36;    12  C.  J.  L.  411;  39  Atl.  683,  906;  Barrow 

C.  A.  14;  Reorganized  Church,  etc.,  v.  Turnpike  Co.,  9  Humph,   (Tenn.) 

V.  Church,  etc.,   60  Fed.  937;   Long  304;    Heiskell   v.   Chickasaw  Lodge, 

V.  Ry.  Co.,  91  Ala.  519;  24  Am.  St.  87  Tenn.  668;   4  L.  R.   A.  699;    11 

Rep.  931;   8  So.  706;   Bedford  Belt  S.   W.   825;    Zinc  Carbonate  Co.  v. 

Ry.  Co.  V.  McDonald,  17  Ind.  App.  Bank,    103    Wis.    125;    74    Am.    St 

492;  60  Am.  St.  Rep.  172;  46  N.  E.  Rep.  845;   79  N.  W.  229;   see  §1086. 


1710  PAGE    ON    CONTRACTS. 

by  a  private  individual.^  An  illustration  of  several  of  tkese 
propositions  is  found  in  a  case,*  in  which  A,  who"  had  subscribed 
for  stock,  defended  a  suit  for  his  subscription  on  the  ground 
that  some  of  the  stock  was  subscribed  for  by  corporations ;  that 
such  subscriptions  were  ulh-a  vires;  and  that  accordingly  he 
could  not  be  held,  since  the  corporation  had  organized  without 
a  complete  list  of  subscribers.  The  court  held  that  as  long  as 
the  subscriptions  were  executory,  they  were  "  illegal  in  the 
sense  that  they  were  ultra  vires^  and  such  corporations  could 
make  that  defense  or  not  at  their  pleasure  "  f  yet  when  fully 
performed  they  were  absolutely  binding.  A  national  bank 
erected  an  oflBce  building  upon  realty  on  which  it  held  a  ninety- 
nine  year  lease  at  an  annual  rental,  under  a  contract  whereby 
the  bank  was  to  pay  all  taxes.  Subsequently  the  bank  became 
insolvent ;  rent  and  taxes  were  in  arrears,  and  the  income  from 
the  building  did  not  pay  fixed  charges.  Under  these  circum- 
stances the  bank  agreed  with  the  lessor  to  surrender  the  lease 
and  to  turn  over  the  building  to  him,  in  consideration  of  his 
releasing  the  bank  from  all  liability  under  the  lease.  There- 
after a  receiver  was  appointed  for  the  bank ;  and  he  sued  the 
lessor  in  equity  to  set  aside  the  lease  and  the  surrender  thereof. 
It  was  held  that  he  had  no  such  right.^ 

§1094.     Estoppel. 

The  fact  that  an  ultra  vires  contract,  which  is  so  often  said 
to  be  void,  does  in  many  jurisdictions  give  rise  to  liability  on 

3  Union    National    Bank    v.    Mat-  90  Me.  405 ;  38  L.  E.  A.  339 ;  37  Ail. 

thews,  98  U.  S.  621;  Tidwell  v.  Cat-  652;   In  re  Stiekney's  Will,  85  Md. 

tie  Co.   (Ariz.),  53  Pac.  192;  Water,  79;  60  Am.  St.  Rep.  308;   35  L.  R. 

etc.,  Co.  V.  Tenney,  24  Colo.  344;  51  A.  693;  36  All.  654;  Hanson  v.  Lit- 

Pac.   505;    Chicago,   etc.,  R.   R.   Co.  tie  Sisters,  etc.,  79  Md.  434;   32  L. 

V.    Keegan,    185    111.    70;    56   N.    E.  R.   A.   293;    32   Atl.   1052;    Heiskell 

1088;    Cooney  v.   Packing   Co.,    169  v.  Chickasaw  Lodge,  87  Tenn.  668;  4 

111.   370;   48   N".  E.  406;   Henderson  L.  R.  A.  699;  11  S.  W.  825. 

V.  Coal  Co.,  78  111.  App.  437 ;  Watts  4  McCoy  v.  Columbian  Exposition, 

V.  Gantt,  42  Neb.  869;  61  N.  W.  104;  186  111.  356;   78  Am.  St.  Rep.  288; 

Ray  V.  Foster    (Tex.  Civ.  App),  53  57  N.  E.  1043;  affirming  87  111.  App. 

S.  W.  54.     This  rule  is  applied  in  605. 

some   jurisdictions   to   devises   to   a  s  186  111.  360. 

corporation.  Farrington  v.  Putnam,  6  Brown  v.  Schleier,  194  U.  S.  18. 


PRIVATE   CORPORATIONS. 


1711 


the  contract,  has  caused  many  authorities  to  explain  this  ap- 
parent anomaly  by  invoking  the  doctrine  of  estoppel/  Thus 
whether  a  deposit  of  securities  with  state  officers  in  compliance 
with  the  statutes  thereof  prescribing  the  terms  on  which  foreign 
corporations  may  do  business  in  such  state  is  ultra  vires  of  such 
foreign  corporation  or  not,  it  cannot  take  advantage  of  its  lack 
of  power.^  So  where  a  corporation  bought  bank  stock  as  an 
investment  and  received  dividends  thereon  for  years,  with  the 
acquiescence  of  its  own  stockholders,  it  was  held  to  be  estopped 
to  deny  that  it  was  a  stockholder,  in  a  suit  to  enforce  a  stock 
liability.^  So  where  a  corporation  made  a  conveyance  to  one 
who  agreed  to  pay  the  debts  of  the  corporation,  it  was  held 
that  after  a  delay  of  five  years  and  after  third  persons  have 
acquired  an  interest  in  such  property,  the  corporation  cannot 
have  such  conveyance  set  aside.*  So  one  who  has  agreed  to 
sell  realty  to  a  corporation  is  said  to  be  estopped  to  avoid  the 
contract   after   the    corporation   has   taken   possession   of  such 


1  Eastern,  etc..  Association  v.  Wil- 
liamson, 189  U.  S.  122;  American 
National  Bank  v.  Paper  Co.,  77  Fed. 
85;  Wood  v.  Corry,  etc..  Water 
Works,  44  Fed.  146;  12  L.  R.  A. 
168;  Kennedy  v.  Savings  Bank,  101 
Cal.  495;  40  Am.  St.  Rep.  69;  35 
Pac.  1039;  People  v.  R.  R.,  178  111. 
594;  53  N.  E.  349;  Eckman  v.  R. 
R.,  169  111.  312;  48  N.  E.  496; 
Heims  Bre\yng  Co.  v.  Flannery,  137 
111.  309;  McCarthy  v.  Lavasche, 
27  N.  E.  286;  89  111.  270;  31  Am. 
Rep.  83;  State  Board  v.  Ry.,  47  Ind. 
407;  17  Am.  Rep.  702;  Wright  v. 
Hughes,  119  Ind.  324;  12  Am.  St. 
Rep.  412;  21  N.  E.  907;  White  v. 
Marquardt,  105  la.  145;  74  N.  W. 
930;  Sherman  Center  Town  Co.  v. 
Fletcher,  43  Kan.  282;  19  Am.  St. 
Rep.  134;  23  Pac.  569;  Nims  v. 
School,  160  Mass.  177;  39  Am.  St. 
Rep.  467;  22  L.  R.  A.  364;  35  N.  E. 
776;  (a  tort  growing  out  of  contract 
to  carry  as  a  ferryman)  ;  Carson, 
etc.,   Bank   v.    Carson,  etc.,   Co.,   90 


Mich.  550;  30  Am,  St.  Rep.  454;  51 
N.  W.  641 ;  Dewey  v.  Ry.,  91  Mich. 
351;  51  N.  W.  1063;  Manchester, 
etc.,  R.  R.  Co.  V.  R.  R.,  66  N.  H. 
100;  49  Am.  ^t.  Rep.  582;  9  L.  R. 
A.  689;  20  Atl.  383;  Bissell  v.  R. 
R.,  22  N.  Y.  258 ;  Whitney  Arms  Co. 
V.  Barlow,  63  N.  Y.  62 ;  20  Am.  Rep, 
504;  Kent  v.  Mining  Co.,  78  K  Y. 
159;  Linkauf  v.  Lombard,  137  N.  Y. 
417;  33  Am.  St.  Rep.  743;  20  L.  R. 
A.  48;  33  N.  E.  472;  Hannon  v.  Sie- 
gel-Cooper  Co.,  167  N,  Y,  244;  52 
L,  R,  A.  429 ;  50  N,  E,  597 ;  Vought 
V.  Loan  Association,  172  N.  Y,  508; 
92  Am,  St,  Rep.  761;  65  N.  E.  496; 
Tyler  v.  Academy,  14  Or.  485;  13 
Pac,  329, 

2  Lewis  V.  American,  etc.,  Loan 
Association,  98  Wis,  203;  39  L.  R. 
A.  559;  73  N.  W,  793, 

3  Hunt  V.  Malting  Co,,  90  Minn, 
282;  96  N,  W.  85, 

4  Bear  Valley,  etc.,  Co.  v.  Trust 
Co.,  117  Fed.  941. 


1712  PAGE    ON    CONTEACTS. 

realty  and  made  valuable  improvements  thereon.'^  However, 
it  was  held  that  no  estoppel  existed  where  a  stockholder  who 
had  not  assented  to  an  ultra  vires  sale  by  the  corporation  of 
corporate  property,  received  some  of  the  bonds  issued  in  pay- 
ment for  such  property  as  long  as  he  did  not  assert  any  rights 
thereunder.^  Conversely,  no  estoppel  exists  if  nothing  of  value 
is  received  by  virtue  of  the  transaction  in  question/  An  ex- 
amination of  these  cases  will  show,  however,  that  no  technical 
estoppel  is  meant ;  and  they  may  be  explained  by  saying  that 
such  contracts  were  originally  voidable,  and  that  those  who 
have  elected  by  receiving  and  retaining  benefits  thereunder,  ta 
treat  them  as  valid,  are  bound  by  such  election. 

Estoppel  in  pais  exists  only  where  one  party  by  false  repre' 
sentations  of  fact  has  induced  the  other  to  act  so  that  he  would 
be  prejudiced  were  the  first  party  allowed  to  deny  the  truth 
of  the  facts  as  represented  by  him.  If  the  power  is  one  which 
might  under  proper  circumstances  be  exercised  by  the  corpora- 
tion, there  may  be  a  true  estoppel,^  though  the  contract  is  much 
oftener,  in  such  case,  entered  into  in  ignorance  of  the  law. 
Where  the  power  is  one  which  the  corporation  cannot  exercise 
under  any  circumstances,  there  can  never  be  a  technical  estoppel 
if  all  are  bound  to  take  notice  of  the  charter.^  The  doctrine  of 
estoppel  is  accordingly  repudiated  by  some  courts.^"     For  the 

5  Coleridge  Creamery  Co.  v.  Jen-  cause  there  was  a  failure  to  comply 
kins,  —  Neb.  — ;  92  N.  W.  123.  with  some  regulation,  or  the  power 

6  Morris  v.  Land  Co.,  125  Ala.  was  improperly  exercisedi"  Nation- 
263;   28  So.  513.  al,  etc.,  Association  v.  Bank,  181  111. 

7  Nebraska  Shirt  Co.  v.  Horton  35,  46 ;  72  Am.  St.  Rep.  245 ;  54  N. 
(Neb.),  93  N.  W.  225.  "No  fruits  E.  619;  Davis  v.  R.  R.,  131  Mass. 
of  the  transaction  were  received  by  258;  41  Am.  Rep.  221. 

the    company    and    its    mere    acqui-  9  See  §  1066. 

escence  in  the  unauthorized  acts  of  lo  An  ultra  vires  contract  "  cannot 

its  officers  in  a  matter  outside  of  its  be  enforced  or  rendered  enforceable 

corporate  powers  cannot  give  rise  to  by  the  aplication  of  the  doctrine  of 

an  estoppel."     Wheeler  v.  Bank,  188  estoppel."     Union  Pacific  Ry.  v.  Ry., 

111.  34,  38;  80  Am.  St.  Rep.  161;  58  103  U.  S.  564,  581;  quoted  in  Cali- 

N.  E.  598.  fornia,  etc.,   Bank  v.   Kennedy,    167 

8  Estoppel  applies  only  where  the  U.  S.  362,  371;  Best  Brewing  Co. 
"making  of  the  contract  is  within  y.  Klassen,  185  111.  37;  76  Am.  St. 
the  scope  of  the  franchise  and  the  Rep.  26;  50  L.  R.  A.  765;  57  N.  E. 
contract  is  sought  to  be  avoided  be-  20;    National,    etc.,    Association    v. 


PRIVATE  CORPORATIONS. 


1713 


most  part,  however,  these  same  courts  say  that  such  contracts 
are  void. 

If  the  contract  is  invalid  as  against  policy  or  as  forbidden  by 
statute,  estoppel  has  no  anplication/^ 

§1095.     Ratification. 

In  the  strict  sense  of  the  term,  a  contract  which  is  ultra  vires 
is  not  susceptible  of  ratification.^  If  it  is  in  excess  of  the 
power  of  the  corporation,  there  is,  obviously,  no  power  capable 
of  ratifying  it,  not  even  all  the  stockholders.^  "  Being  ultra 
vires,  the  consent  of  its  stockholders  cannot  legalize  or  vitalize 
the  transaction."^  What  is  meant  by  using  the  term  "  ratifica- 
tion "  in  this  connection  is  that  by  reason  of  performance  on 
one  or  both  sides,  and  acquiescence  by  parties  affected  thereby. 


Bank,  181  111.  35;  72  Am.  St.  Rep. 
245;  54  N.  E.  619;  Franklin  Na- 
tional Bank  v.  Whitehead,  149  Ind. 
660;  63  Am.  St.  Rep.  302;  39  L.  R. 
A.  725;  49  N.  E.  592. 

11  Franklin  National  Bank  v. 
Whitehead,  149  Ind.  560;  63  Am. 
St.  Rep.  302;  39  L.  R.  A.  725;  49 
N.  E.  592;  In  re  Assignment  Mu- 
tual, etc.,  Ins.  Co.,  107  la.  143;  70 
Am.  St.  Rep.  149;  77  N.  W.  868; 
Kent  V.  Mining  Co.,  78  N.  Y.  159; 
Miller  v.  Ins.  Co.,  92  Tenn.  167;  20 
L.  R.  A.  765;  21  S.  W.  39.  "His 
position  is  not  such  as  appeals  very 
strongly  to  a  court  of  equity.  He 
paid  his  money  knowing  that  the 
company  had  no  right  to  accept  it, 
and  ought  not  to  be  allowed  to  base 
an  estoppel  thereon.  Again,  the 
company  was  expressly  prohibited 
from  issuing  such  a  policy  as  the  one 
in  suit."  In  re  Assignment  ^Mutual, 
etc.,  Ins.  Co.,  107  la.  143,  149;  70 
Am.  St.  Rep.  149;   77  N.  W.  868. 

1  California  Bank  v.  Kennedy,  167 

U.  S.  362;  Central,  etc.,  Co.  v.  Car 

Co.,   139  U.  S.  24;   Pittsburgh,  etc., 

Co.  V.  Bridge  Co.,    131  U.  S.   371; 

108 


Chambers  v.  Falkner,  65  Ala.  448; 
San  Diego,  etc.,  R.  R.  Co.  v.  Pacific, 
etc.,  Co.,  112  Cal.  53;  33  L.  R.  A, 
788;  44  Pac.  333;  National,  etc.. 
Association  v.  Bank,  181  111.  35; 
72  Am.  St.  Rep.  245;  54  N.  E. 
619;  Davis  v.  R.  R.,  131  Mass.  258; 
41  Am.  Rep.  221;  Thompson  v. 
West,  59  Neb.  677;  49  L.  R.  A. 
337;  82  N.  W.  13;  Miller  v.  Ins. 
Co.,  92  Tenn.  167;  20  L.  R.  A.  765; 
21  S.  W.  39.  Such  a  contract  is 
"  ultra  vires,  void,  and  incapable  of 
ratification."  W'heeler  v.  Bank,  188 
111.  34,  38;  80  Am.  St.  Rep.  161; 
58  N.  E.  598. 

2  Webster  v.  Machine  Co.,  54  Conn. 
394;  8  Atl.  482;  Washington,  etc., 
Co.  V.  Lumber  Co.,  19  Wash.  165; 
52  Pac.   1067. 

3  McCutcheon  v.  Capsule  Co..  71 
Fed.  787,  794;  31  L.  R.  A.  415.  They 
may  acquiesce  so  as  to  prevent  them- 
selves from  attacking  its  validity 
thereafter,  but  they  cannot  ratify 
so  as  to  bind  third  persons,  such  as 
creditors  who  may  be  prejudiced  by 
such  transaction. 


l714  PAGE    ON    CONTRACTS. 

no  one  is  in  a  position  to  take  advantage  of  the  fact  that  the 
contract  was  ultra  vires  in  its  inception.  If  the  transaction  is 
merely  irregular,  ratification  is  possible.*  This  is  not,  how- 
ever, a  true  case  of  ultra  vires. 

§1096.     Laches. 

Where  the  ultra  vires  contract  is  one  which  a  dissenting  stock- 
holder or  the  corjx)ration  might  at  the  outset  have  avoided, 
delay  in  proceeding  to  avoid  it  will  bar  whatever  right  origi- 
nally existed.^  The  stockholders,  or  those  representing  them^ 
must  be  vigilant  and  diligent  to  be  entitled  to  be  relieved  in 
equity.^  Thus  where  an  ultra  vires  transfer  had  been  acqui- 
esced for  seventeen  years,^  no  stockholder  could  complain 

§1097.     "  Modern  doctrine  "  of  ultra  vires. 

The  proposition  has  been  advanced  in  a  number  of  recent 
cases,  that  only  the  state  can  take  advantage  of  the  fact  that 
a  contract  is  ultra  vires,  by  a  direct  attack  in  quo  warranto  to 
oust  the  corporation  from  exercising  such  franchises ;  and  that 
private  persons  cannot  attack  the  validity  of  the  corporation's 
contracts  on  the  ground  of  ultra  vires.^     The  reason  underly- 

4  Kessler  v.  Ensley  Co.,   123  Fed.  in  modern   life,   while  its   eflfective- 

746.  ness    for    all   essential    purposes    of 

1  St.  Louis,  etc.,  R.  R.  Co.  v.  R.  restraint  and  punishment  is  fully 
R.  Co.,  145  U.  S.  393;  Boston,  etc.,  preserved,  furnishes  no  cause  for 
R.  R.  Co.  V.  R.  R.,  13  R.  I.  260.  regret,   but  rather   cause   for  grati- 

2  Boston,  etc.,  R.  R.  Co.  v.  R.  R.,  fication  at  the  evidence  of  how  cer- 
13  R.  I.  260;  Boyce  v.  Coal  Co.,  37  tainly  principles  by  naxural  growth 
W.  Va.  73;  16  S.  E.  501.  and  development  adapt  the  law  and 

3  St.  Louis,  etc.,  R.  R.  Co.  v.  R.  R.  its  administration  to  the  ever-chang- 
Co.,  145  U.  S.  393.  ing  needs  of  advancing  civilization, 

1 "  That  such  doctrine  cannot  be  so  as  best  to  promote  justice  and 
resorted  to  as  a  weapon  for  attack  the  common  welfare."  John  V. 
and  defense  in  the  hands  of  mere  Farwell  Co.  v.  Wolf,  96  Wis.  10, 
private  persons  and  used  as  a  ready  16 :  65  Am.  iSt.  Rep.  22 ;  37  L.  R.  A. 
means  of  embarrassing  business  op-  138;  70  N.  W.  289;  71  N.  W.  109. 
erations  by  and  with  corporate  bod-  "  When  a  contract  has  been  so  far 
ies,  which  directly  or  indirectly  executed  that  to  allow  the  corpora- 
touch  and  administer  to  human  de-  tion  to  repudiate  it  would  work  in- 
sires  at  every  turn  of  the  individual  justii>ri  to   the  other  party  thereto, 


PRIVATE  COEPORATIONS. 


1715 


ing  this  rule  is  that  in  its  inception  and  true  place  in  law,  ultra 
vires  was  a  doctrine  for  restraining  the  action  of  a  corporation, 
not  intended  for  the  benefit  of  either  party  to  the  transaction, 
but  api>licable  only  to  public  corporations  or  to  questions  be- 
tween private  corporations  and  the  state.^  An  analysis  of  the 
cases  in  which  this  doctrine  has  been  advanced,  will  show  that 
it  has  not  in  fact  the  radical  and  sweeping  effect  that  it  at  first 
seems  to  have.^  It  is  applied  chiefly  to  cases  where  one  not  a 
party  to  the  uUm  vires  transaction  seeks  to  avoid  it;^  or  to 
cases  where  the  contract  has  been  performed  fully  on  one  or 
both  sides,  and  is  therefore  treated  as  valid  and  binding,  what- 
ever it  may  have  been  at  its  inception.^ 


who  has  in  good  faith  relied  thereon, 
the  doctrine  of  estoppel  applies  and 
prevents  such  repudiation  regardless 
of  whether  the  corporation  had  a 
right  to  make  it  or  not,  unless  its 
act  in  that  regard  was  in  violation 
of  some  written  law  of  the  State  or 
sound  public  policy;  (that)  in  such 
circumstances,  if  the  corporation 
exceeds  its  power  it  commits  a  pun- 
ishable offense  against  the  sover- 
eignty of  the  people,  but  cannot  it- 
self invoke  the  doctrine  of  ultra 
vires  to  avoid  its  act,  at  the  same 
time  inflicting  a  grievous  wrong  up- 
on the  one  who  has  in  good  faith 
relied  upon  the  assumption  that  it 
possessed  in  fact  the  power  which 
it  pretended  to  have  authority  to 
exercise."  Wuerfler  v.  Trustees 
Grand  Grove,  116  Wis.  19;  96  Am. 
St.  Rep.  940;  92  N.  W.  433. 

2 "  The  doctrine  of  ultra  vires  is 
a  most  powerful  weapon  to  keep 
private  corporations  within  their  le- 
gitimate spheres  and  to  punish  them 
for  violations  of  their  corporate 
charters,  and  it  probably  is  not  in- 
voked too  often;  but  to  place  that 
power  in  the  hands  of  the  corpora- 
tion itself,  or  a  private  individual, 
to  be  used  by  it  or  him  as  a  means 


of  obtaining  or  retaining  something 
of  value  which  belongs  to  another, 
would  turn  an  instrument  intended 
to  effect  justice  between  the  state 
and  corporations  into  one  of  fraud 
as  between  the  latter  and  innocent 
parties."  Zinc  Carbonate  Co.  v. 
Bank,  103  Wis.  125,  131;  74  Am. 
St.  Rep.  845;  79  N.  W.  229.  Ex- 
pressing somewhat  similar  views  are 
Union  National  Bank  v.  Matthews, 
98  U.  S.  621;  Wood  v.  Water  Works 
Co.,  44  Fed.  146;  12  L.  R.  A.  168; 
Prescott  National  Bank  v.  Butler, 
157  Mass.  548;  32  N.  E.  909;  State 
V.  Thresher,  etc.,  Co.,  40  Minn.  213; 
3  L.  R.  A.  510;  41  N.  W.  1020;  Bar- 
row v.  Turnpike  Co.,  9  Humph. 
(Tenn.)    304. 

3  Wuerfler  v.  Trustees  Grand 
Grove,  116  Wis.  19;  96  Am.  St. 
Rep.  940;  92  N.  W.  433. 

4  John  V.  Farwell  Co.  v.  Wolf, 
96  Wis.  10;  65  Am.  St.  Rep.  22;  37 
L.  R.  A.  138;  70  N.  W.  289;  71 
N.  W.  109. 

5  Henderson  v.  Coal  Co.,  78  111. 
App.  437;  Bank  of  Missouri  v. 
Bank,  10  Mo.  123;  Zinc  Carbonate 
Co.  v.  Bank,  103  Wis.  125;  74  Am. 
St.  Rep.  845;  79  N.  W.  229. 


11716 


PAGE    ON    CONTRACTS. 


CHAPTER  L. 

IRREGULAR    CORPORATIONS. 

§1098.     De  facto  private  corporations. 

A  de  facto  corporation  is  one  whose  members  are  in  fact 
exercising  and  enjoying  the  franchise  of  being  a  corjX)ration, 
but  whose  members  may  be  ousted  of  their  right  to  exercise 
corporate  power,  in  an  action  in  quo  wurranto,  instituted  by 
the  state,  by  reason  of  omissions  or  defects  in  the  incorporation.^ 
Thus  an  omission  to  record  the  final  certificate,^  or  recording 
the  original  articles  of  incorporation  instead  of  a  verified  copy 
thereof,^  or  a  defective  acknowledgment,*  still  leaves  the  organ- 
ization a  de  facto  corporation.  Many  authorities  hold  that 
"  where  there  cannot  lawfully  be  a  corporation  de  jure,  there 


1 "  A  corporation  de  facto  is,  in 
plain  English,  a  corporation  in 
fact."  Lamkin  v.  Mfg.  Co.,  72 
Conn.  57;  44  L.  E.  A.  786;  43  Atl. 
593,  1042.  "  A  corporation  de  facto 
exists  when,  from  irregularity  or 
defect  in  the  organization  or  con- 
stitution, or  from  some  omission  to 
comply  with  the  conditions  prece- 
dent, a  corporation  de  jure  is  not 
created,  but  there  has  been  a  color- 
able compliance  with  the  require- 
ments of  some  law  under  which  an 
association  might  lawfully  be  in- 
corporated; .  .  .  when  there  is 
an  organization  with  color  of  law, 
and  the  exercise  of  corporate  fran- 
chises and  functions."  Snider's 
Sons'  Co.  V.  Troy,  91  Ala.  224,  228; 
24  Am.  St.  Rep.  887;  11  L.  JR.  A. 
515;  8  So.  658.  To  the  same  effect 
see  Duke  v.  Taylor,  37  Fla.  64;   53 


Am.  St.  Rep.  232;  31  L.  R.  A.  484; 
19  So.  172;  Doty  v.  Patterson,  155 
Ind.  60;  56  N.  E.  668;  Crowder  v. 
Sullivan,  128  Ind.  486;  13  L.  R.  A. 
647;  28  N.  E.  94;  Williams  v.  Ry., 
130  Ind.  71;  30  Am.  St.  Rep.  201; 
15  L.  R.  A.  64;  29  N.  E.  408;  Ten- 
nessee, etc.,  Co.  V.  Massey  (Tenn. 
Ch.  App.),  56  S.  W.  35;  American 
Salt  Co.  V.  Heidenheimer,  80  Tex. 
344;  26  Am.  St.  Rep.  743;  15  S. 
W.  1038;  Marsh  v.  Mathias,  19 
Utah  350;  56  Pac.  1074;  Franke  v. 
Mann,  106  Wis.  118;  48  L.  R.  A. 
856;  81  N.  W.  1014. 

2  The  Joliet  v.  Frances,  85  111. 
App.  243;  Edwards  v.  Dryer  Co., 
83    111.    App.   643. 

3  Slocum  V.  Head,  105  Wis.  431 ; 
81   N.  W.  673. 

4  Franke  v.  Mann,  106  Wis.  118; 
48  L.  R.  A.  856;   81  N.  W.  1014. 


IRKEGULAE  COEPOEATIONS, 


1717 


cannot  be  one  de  fado."^  Other  authorities  hold  that  a  de 
facto  corporation  may  exist  even  when  a  de  jure  corporation 
would  be  impossible,*'  A  colorable  compliance  with  the  statute 
on  the  subject  of  incorporation  is  sufficient/  and  it  has  been 
held  that  not  even  a  colorable  compliance  with  the  incorporation 
laws  is  necessary.^ 

A  corporation,  whose  charter  limits  a  certain  length  of 
time  for  its  existence  is  not  a  de  facto  corporation  after  the 
time  thus  limited  has  elapsed,  but  has  no  legal  existence  of 
any  kind.^  If  the  corporate  existence  is  continued  by  statute 
for  certain  purposes,  it  is  a  valid  corporation  for  those  pur- 


5  McTighe  v.  Construction  Co.,  94 
Ga.  306,  315;  47  Am.  St.  Rep.  153; 
32  L.  E.  A.  208;  21  S.  E.  701;  cited 
also  as  Georgia  R.  E.  Co.  v.  Mercan- 
tile, etc.,  Co..  To  this  effect  are 
Davis  V.  Stevens,  104  Fed.  235;  Peo- 
ple v.  Toll  Road  Co.,  100  Cal.  87; 
34  Pac.  522;  Jones  v.  Hardware 
Co.,  21  Colo.  263;  52  Am.  St.  Rep. 
220;  29  L.  R.  A.  143;  40  Pac.  457; 
American,  etc.,  Co.  v.  R.  R.,  157  111. 
641;  42  X.  E.  153;  Cozzens  v.  Brick 
Co.,  166  111.  213;  46  X.  E.  788;  In- 
diana Bond  Co.  V.  Ogle,  22  Ind.  App. 
593 ;  72  Am.  St.  Rep.  326 ;  54  X.  E. 
407;  Heaston  v.  Ry.  Co.,  16  Ind. 
275;  79  Am.  Dec.  430;  Snyder  v, 
Studebaker,  19  Ind.  462;  81  Am. 
Dec.  415;  Pape  v.  Bank,  20  Kan. 
440;  27  Am.  Rep.  183;  Eaton  v. 
Walker,  76  Mich.  579;  6  L.  R.  A. 
102;  43  N.  W.  638;  Detroit,  etc., 
Bund  V.  Verein,  44  Mich.  313;  38 
Am.  Rep.  270;  6  N.  W.  675;  St. 
Louis,  etc..  Association  v.  Hennessy, 
11  Mo.  App.  555;  Johnson  v.  Oker- 
strom,  70  Minn.  303 ;  sub  nomine 
Johnson  v.  Schulin,  73  X.  W.  147; 
Vanneman  v.  Young,  52  X.  J.  L. 
403;  20  Atl.  53;  Gibb's  Estate,  157 
Pa.  St.  59;  22  L.  R.  A.  276;  27 
Atl.    383;    McLeary   v.   Dawson,    87 


Tex.  524;  29  S.  W.  1044;  Evenson 
V.  Ellingson,  67  Wis.  634;  31  X.  W. 
342. 

6Goff  V.  Flesher,  33  O.  S.  107; 
(where  the  purpose  of  the  corpora- 
tion was  one  not  authorized  by 
law) . 

7  Bibb  V.  Hall,  101  Ala.  79;  14  So. 
98;  Central,  etc.,  Co.  v.  Insurance 
Co.,  70  Ala.  120;  Jones  v.  Hard- 
ware Co.,  21  Colo.  263;  52  Am.  St. 
Rep.  220;  29  L.  R.  A.  143;  40  Pac. 
457;  Johnson  v.  Okerstrom,  70 
Minn.  303 ;  sub  nomine  Johnson  v. 
Schulin,  73  X.  W.  147;  (distin- 
guishing  Johnson  v.  Corser,  34 
Minn.  355;  25  X.  W.  799;  and  dis- 
approving  Bergeron  v.  Hobbs,  96 
Wis.  641;  65  Am.  St.  Rep.  85;  71  X. 
W.  1056):  Pott  V.  Schmucker,  84 
Md.  535;  57  Am.  St.  Rep.  415;  35  L. 
R.  A.  392;  36  Atl.  592. 

8  Finnegan  v.  Xoerenberg,  52 
Minn.  239;  38  Am.  St.  Rep.  552;  18 
L.  R.  A.  778;  53  X.  W.  1150. 

9  Wilson  V.  Tesson,  12  Ind.  285 ; 
Grand  Rapids  Bridge  Co.  v.  Prange, 
35  Mich.  400;  24  Am.  Rep.  585; 
Bradley  v.  Reppell,  133  Mo.  545;  54 
Am.  St.  Rep.  685;  32  S.  W.  645;  34 
S.  W.  841;  Sturges  v.  Vanderbilt, 
73  X.  Y.  384. 


1718 


PAGE    ON    CONTRACTS. 


poses,  after  the  limitation  of  its  existence  has  expired.^^  The 
status  of  a  de  facto  corporation  is  not  limited  to  those  dealing 
with  it  in  such  capacity,  but  exists  as  to  the  world  at  large,^^ 
except  in  cases  where  the  state  is  suing  in  quo  warranto  to  oust 
the  de  facto  corporation  of  its  franchises.  In  an  action  between 
a  de  facto  corporation  and  the  state  other  than  quo  warranto, 
the  de  facto  corporation  is  to  be  treated  as  a  corporation.^^ 

§1099.    Estoppel  to  deny  corporate  existence. 

Persons  who  deal  with  a  corporation,  or  with  an  organization 
purporting  to  be  a  corporation,  as  if  it  were  a  corporation,  are 
estopped  to  deny  that  it  is  a  corporation,^  such  as  stockholders,^ 
or  a  judgment  creditor.^  A  subscriber  to  a  corporation  cannot 
deny  its  existence.*     So  the  corporation  is  estopped  to  deny  its 


10  Miller  v.  Coal  Co.,  31  W.  Va. 
836;  13  Am.  St.  Rep.  903;  8  S.  E. 
600. 

11  People  V.  Water  Co.,  97  Cal. 
276;  33  Am.  St.  Rep.  172;  32  Pae. 
236;  Doty  v.  Patterson,  155  Ind.  60; 
56  N.  E.  668;  Improvement  Co.  v. 
Small,  150  Ind.  427,  431;  47  N.  E. 
11;  50  N.  E.  476;  Taylor  v.  Ry.,  91 
Me.  193;  64  Am.  St.  Rep.  216;  39 
Atl.  560;  Society  Perun  v.  Cleve- 
land, 43  O.  S.  481;  3  N.  E.  357. 

i2Coxe  V.  State,  144  N.  Y.  396; 
39  N.  E.  400;  (where  the  receiver 
of  such  corporation  sues  the  state.) 

1  Andes  v.  Ely,  158  U.  S.  312; 
Close  V.  Cemetery,  107  U.  S.  466; 
Owensboro  Wagon  Co.  v.  Bliss,  132 
Ala.  253;  90  Am.  St.  Rep.  907;  31 
So.  81 ;  Schloss  v.  Montgomery 
Trade  Co.,  87  Ala.  411;  6  So.  360; 
Cahall  v.  Building  Association,  61 
Ala.  232;  Raphael  Weill,  etc.,  Co. 
A-.  Crittenden,  139  Cal.  488;  73  Pac. 
238 ;  Fresno,  etc.,  v.  Warner,  72  Cal. 
379;  14  Pac.  37;  Jones  v.  Hardware 
Co.,  21  Colo.  263;  52  Am.  St.  Rep. 
220;  40  Pac.  457;  Winget  v.  Asso- 
ciation, 128  111.  67;  21  N.  E.  12; 
Cravens  v.   Mills  Co.,    120   Ind.   6; 


16  Am.  St.  Rep.  298;  21  N.  E.  981; 
Hasselman  v.  Mtge.  Co.,  97  Ind. 
365;  Butchers',  etc.,  Bank  v.  Mc- 
Donald, 130  Mass.  264;  Stafflet  v. 
Strome,  101  Mich.  197;  59  N.  W. 
411;  Crete,  etc..  Association  v.  Patz, 
1  Xeb.  ^ep.  Unofficial  768;  95  N. 
W.  793;  (following  Livingston, 
etc..  Association  v.  Drummond,  49 
Neb.  200;  68  N.  W.  375)  ;  Otoe,  etc.. 
Association  v.  Doman,  1  Neb.  Rep. 
Unofficial  179;  95  N.  W.  327;  Ne- 
braska National  Bank  v.  Ferguson, 
49  Neb.  109;  59  Am.  St.  Rep.  522; 
68  N.  W.  370;  Larned  v.  Beal,  65  N. 
H.  184;  23  Atl.  149;  Washington, 
etc..  Association  v.  Stanley,  38  Or. 
319;  58  L.  R.  A.  816;  63  Pac.  489; 
Hooven  Mercantile  Co.  v.  Mining 
Co.,  193  Pa.  St.  28;  44  Atl.  277; 
Hamilton  v.  R.  R.,  144  Pa.  St.  34; 
23  Atl.  53 ;  suh  nomine  Hamilton  v. 
Jackson,  13  L.  R.  A.  779. 

2  Fish   V.    Smith,    73    Conn.    377; 
47  Atl.  711. 

3  Shoun  V.  Armstrong   ( Tenn.  Ch. 
App.),  59  S.  W.  790. 

*  ]\Iullen  V.  Driving  Park,  64  Ind. 
202. 


IRREGULAE  CORPORATIONS. 


1719 


corporate  existence.^  So  persons  who  contract  with  a  corpora- 
tion after  the  time  limited  for  its  existence  has  expired,  are 
estopped  to  deny  that  it  is  a  corporation.''  The  doctrine  of 
estoppel  is  properly  distinguished  from  the  doctrine  of  cor- 
porations de  facto.  The  former  applies  only  to  those  dealing 
with  the  corporation ;  the  latter  to  the  world  at  large.  In  con- 
tracts of  de  facto  corporations,  the  two  doctrines  necessarily 
exist  together.  Further,  the  doctrine  of  estoppel  may  apply 
to  organizations  which  are  not  even  de  facto  corporations. 

§1100.     Contracts  of  de  facto  corporation. —  Corporate  liability. 

A  de  facto  corporation  is  as  liable  on  its  contracts  as  a  cor- 
poration de  jure.  It  cannot  deny  its  own  corporate  existence 
in  order  to  evade  liability.^  Its  mortgage  of  its  property  is 
valid."  On  the  other  hand  those  who  have  dealt  with  such  an 
organization  on  the  theory  that  it  is  a  corporation,  cannot  deny 
its  corporate  existence  in  an  action  based  upon  such  dealings, 
and  treat  such  corporation  as  a  partnership.^     This  rule  rests 


5  Crystal,  etc.,  Co.  v.  Roseboom, 
91  111.  App.  551;  Carroll  v.  Bank, 
19  Wash.  639;  54  Pac.  32;  Williams 
V.  Lumber  Co.,  72  Wis.  487;  40  N. 
W.    154. 

6  Citizens'  Bank  v.  Jones,  117 
Wis.  446;  94  N.  W.  329. 

1  Lamkin  v.  Mfg.  Co.,  72  Conn. 
57;  44  L.  Jl.  A.  786;  43  Atl.  593, 
1042;  Cravens  v.  Mills  Co.,  120  Ind. 
6;  16  Am.  St.  Rep.  298;  21  N.  E. 
981;  Doty  v.  Patterson,  155  Ind.  60; 
56  N.  E.  668;  Larned  v.  Beal,  65 
N.  H.  184;  23  Atl.  149. 

2  McTighe  v.  Construction  Co.,  94 
Ga.  306;  47  Am.  St.  Rep.  153;  32 
L.  R.  A.  208;  21  S.  E.  701;  also 
cited  as  Georgia,  etc.,  R.  R.  v.  Mer- 
cantile, etc.,  Co. 

3  Whitney  v.  Wyman,  101  U.  S. 
392;  Gartside  Coal  Co.  v.  Maxwell, 
22  Fed.  197;  Owensboro  Wagon  Co. 
V.  Bliss.  132  Ala.  253;  90  Am.  St. 
Rep.  907;  31  So.  81;  Louis  Snider's 


Sons'  Co.  V.  Troy,  91  Ala.  224;  24 
Am.  St.  Rep.  887;  11  L.  R.  A.  515; 
8  So.  658 ;  Humphreys  v.  Mooney, 
5  Colo.  282 ;  Stafford  National  Bank 
V.  Palmer,  47  Conn.  443 ;  Planters  & 
M.  Bank  v.  Padgett,  69  Ga.  159; 
Arnold  v.  Conklin,  96  111.  App.  373 ; 
Ward  V.  Brigham,  127  Mass.  24; 
Salem  First  National  Bank  v.  Almy, 
117  Mass.  476;  Fay  v.  Noble,  7 
Gush.  (Mass.)  188;  Merchants', 
etc.,  Bank  v.  Stone,  38  Mich. 
779;  Finnegan  v.  Noerenberg, 
52;  Minn.  239;  38  Am.  St. 
Rep.  522;  IS  L.  R.  A.  778; 
53  N.  W.  1150;  Stout  v.  Zulick, 
48  N.  J.  L.  599;  7  Atl.  362;  Jessup 
V.  Carnegie,  80  N.  Y.  441;  36  Am. 
Rep.  643;  Central  City  Savings 
Bank  v.  Walker,  66  N.  Y.  424;  Sec- 
ond National  Bank  v.  Hall.  35  O.  S. 
158;  Rowland  v.  Furniture  Co.,  38 
O.  S.  269;  Rutherford  v.  Hill,  22 
Or.  218;  29  Am.  St.  Rep.  596;  17  L. 
R.   A.  549;   29   Pac.   546. 


1720  PAGE    ON    CONTEACTS. 

in  part  upon  the  theory  of  the  natnre  of  the  de  facto  corpora- 
tion ;  and  in  part  upon  the  rule  that  persons  who  deal  with  an 
organization  as  if  it  were  a  corporation,  are  estopped  to  deny 
its  corporate  existence.^ 

§1101.     Partnership  liability. 

There  is  a  lack  of  harmony  in  the  judicial  utterances  upon 
this  question,  however.  In  many  cases  a  defective  corporation, 
which  has  contracted  as  a  corporation,  has  been  treated  as  a 
partnership  when  it  comes  to  enforcing  liability.^  The  diver- 
gence in  result  often  turns  on  a  different  wording  of  the  incor- 
poration statutes.  There  is,  further,  a  real  difference  in 
opinion  as  to  what  constitutes  a  de  facto  corporation.  Further, 
in  many  of  these  cases  there  was  no  attempt  to  comply  with 
the  incorporation  statutes.^  Thus,  if  the  articles  of  incorpora- 
tion are  filed  for  record  hut  no  stock  is  subscribed  nor  is  any 
attempt  made  to  organize,  the  organization 'is  a  partnership, 
where  the  statute  requires  such  subscription  as  essential  to  cor- 
porate existence.^  A  change  in  the  corporate  name  without 
complying  with  the  statute  makes  the  new  organization  a  part- 
iiership,^  and  an  unincorporated  bank  owned  by  one  person  is 
not  a  de  facto  corporation.^     So  a  joint  stock  partnership  organ- 


4See§1099.  X.   Y.   23;    Jessup   v.    Carnegie,    12 

iWecbselberg    v.    Bank,    64    Fed.  Jones  &  S.    (N.  Y.)    260;   Ridenour 

SO;  12  C.  C.  A.  56;  26  L.  R.  A.  470;  v.  Mayo,  40  O.  S.  9. 

Garnett  V.  Richardson,  35  Ark.  144;  2  Liebold   v.    Green,    69    111.   App. 

Jones  V.  Hardware  Co.,  21  Colo.  263;  527;     Sebastian     v.     Academy     Co. 

52  Am.  St.  Rep.   220:   29  L.  R.  A.  (Ky.),  56  S.  W.  810. 

143;  40  Pac.  457;  Bigelow  v.  Greg-  s  Wechselberg   v.    Bank,    64    Fed. 

ory,   73   111.   197;    Coleman  v.   Cole-  90;    12   C.   C.  A.    56;    26   L.  R.   A. 

man,   78  Ind.   344;   Kaiser  v.  Law-  470;     Jones    v.    Hardware    Co.,    21 

rence  Sav.  Bank,  56  la.  104;  41  Am.  Colo.  263;  52  Am.  St.  Rep.  220;  29 

Rep.  85;   8  N.  W.  772;  Whipple  v.  L.  R.  A.  143;  40  Pac.  457;  Bergeron 

Parker,   29    Mich.   369;    Johnson  v.  v.  Hobbs,  96  Wis.  641;   65  Am.  St. 

Corser,  34  Minn.  355;  25  X.  W.  799;  Rep.  85;   71  X.  W.  1056. 

Smith  V.  Warden,  86  Mo.  382 ;  Fer-  •*  Cincinnati      Cooperage     Co.      v. 

ris  V.  Thaw,  V2  Mo.  446 ;  Richardson  Bate,  96  Ky.  356 ;   49  Am.  St.  Rep. 

V.  Pitts,  71  Mo.  128;  Abbott  v.  Be-  300;   26  S.  W.  538. 

fining  Co.,  4  Keh.  416;  Hill  v.  Beach,  s  Longfellow  v.  Barnard,  58  Xeb. 

12  N.  J.  Eq    31;  Fuller  v.  Rowe,  57  612;  76  Am.  St.  Rep.  117;  79  X.  W. 


IRREGULAR  CORPORATIONS.  1721 

ized  as  a  corporation  is  not  a  corporation  de  facto.^  "  Tramp  " 
corporations,  or  corporations  formed  in  one  state  for  the  pur- 
pose of  doing  business  in  another,  are  held  liable  as  partner- 
ships in  some  jurisdictions.'^  If  the  members  of  an  irregular 
corporation  or  a  de  facto  corporation  hold  themselves  out  to  the 
world  as  partners,  they  are  held  liable  as  such.® 

§1102.     De  facto  public  corporations. 

Contracts  of  a  de  facto  public  corporation  are  as  valid  as 
those  of  a  corporation  de  jwe/  though  the  corporation  is  dis- 
solved by  a  decree  of  court  as  including  more  territory  than  it 
should.^  So  where  a  municipal  corporation,  organized  under 
special  act,  tried  to  reorganize  under  general  law,  and  issued 
bonds,  and  the  new  officers  were  removed,  the  bonds  were  valid.* 
This  rule  applies  only  to  de  facto  corporations,  however,  and 
not  to  aggregations  of  individuals  who  may  assume  to  act  as  a 
public  corporation.  Accordingly,  bonds  issued  by  an  unincor- 
porated body,  claiming  to  act  as  a  town  or  city,  are  invalid.* 

255;   affirmed  on  rehearing  59  Neb.  24  Neb.  242;    8  Am.  St,  Rep.  202; 

455;  81  N.  W.  307;    (though  it  has  38    N.    W.    737;    Coast    v.    Spring 

officers  like  a  corporation).  Lake,  56  N.  J.  Eq.  615;  51  L.  R.  A. 

6  Allen  V.  Long,  80  Tex.  261 ;   26  657 ;    36    Atl.    21 ;    Coler   v.    School 
Am.  St.  Rep.   735;    16   S.  W.  43.  Township,  3  N.  D.  249;  28  L.  R.  A, 

7  Taylor     v.     Branham,     35     Fla.  649;   55  N.  W.  587. 

297;  48  Am.  St.  Rep.  249;  39  L.  R.  2  Uvalde   v.    Spier,    91    Fed.    594; 

A.  362;   17  So.  552;   Hill  v.  Beach,  33  C.  C.  A.  501. 

12  N.  J.  Eq.  31.  3  Lampasas    v.    Talcott,    94    Fed. 

8  Simmons     v.     Ingram,     78     Mo.  547;  36  C.  C.  A.  318. 

App.  603;  Slocum  V.  Head,  105  Wis.  4  Guthrie  v.   Lumber   Co.,   9    Okl. 

431;  50  L.  R.  A.  324;  81  N.  W.  673.  464;  60  Pac.  247;  Ruohs  v.  Athens, 

iShapleigh  v.  San  Angelo,  167  U.  91  Tenn.  20;  30  Am.  St.  Rep.  858; 

S.  646;  Miller  v.  Irrigation  District.  18  S.  W.  400. 
99    Fed.    143;    Arapahoe    v.    Albee, 


PART  V. 

CONSTRUCTION  AND  INTERPRETATION. 


GENERAL  PRINCIPLES  OF  CONSTRUCTION.  1725 


CHAPTER  LI. 

GENERAL  PRINCIPLES  OF  CONSTRUCTION. 

§1103.     Nature  of  construction. 

If  a  question  of  construction  becomes  material,  this  necessarily 
implies  that  the  contract  is  in  every  respect  valid  and  enforce- 
able, at  least  under  one  of  the  constructions  contended  for. 
Questions  as  to  the  validity  and  enforceability  of  the  contract 
cannot  therefore  be  involved  as  a  part  of  a  question  of  con- 
struction. They  may,  of  course,  be  presented  in  the  same  case ; 
and  a  question  of  construction,  when  once  determined,  may  also 
determine  the  validity  of  the  contract  itself.  Accordingly, 
many  questions  of  construction  have  already  been  anticipated 
in  connection  wtih  the  formation  of  the  contract.  Still  ques- 
tions of  construction  are  easy  to  separate  from  questions  of 
formation,  until  we  reach  the  question  of  what  terms  of  the 
negotiations  constitute  the  terms  of  the  contract.  The  line  of 
demarkation  between  this  subject  and  construction  is  an  arbi- 
trary one.^  Construction  is  in  reality  a  part  of  the  contract. 
The  division  is  solely  for  necessary  convenience  in  discussion. 
When  we  attempt  to  distinguish  questions  of  construction  from 
those  of  the  operation  of  the  contract,  or  from  those  arising  out 
of  discharge,  the  difficulty  of  making  any  logical  separation  of 
topics  is  even  greater.  Operation  and  discharge  are  both  de^ 
pendent  on  the  construction  of  the  contract,  if  there  is  any 
dispute  as  to  its  meaning.  Accordingly  many  questions  of  con- 
struction are  necessarily  left  for  discussion  in  connection  with, 
discharge. 

§1104.     Intention  deduced  primarily  from  words  employed. 

The  primary  object  of  construction  in  contract  law  is  to  dis- 
cover the  intention  of  the  parties.^     This  intention  in  express 

1  See  §  598  et  seq.  Pac.   105,  236;  Linehan,  etc.,  Co.  v. 

1  Porter  v.  Allen,  —  Ida.  — •   m      Ry.,    107    La.    (545-    31    So.    1026. 


1726 


PAGE    ON"    CONTRACTS. 


contracts  is,  in  the  first  instance,  embodied  in  the  words  which 
the  parties  have  used  and  is  to  be  deduced  therefrom.^  This 
rule  applies  to  oral  contracts,^  as  well  as  to  contracts  in  writing, 
and  is  the  rule  recognized  by  courts  of  equity.*  It  follows, 
therefor,  that  construction  cannot  be  expressed  in  a  series  of 
rigid  rules  from  which  in  each  case  the  legal  effect  of  the  par- 
ticular contract  can  be  determined  infallibly.  The  principles 
which  follow  are  prima  facie  rules  for  determining  the  mutual 
intention  of  the  contracting  parties,  liable  in  any  particular 
case  to  be  inapplicable  because  of  some  phrase  in  that  contract 
showing  a  contrar}^  intention.  The  value  of  precedents  in  con- 
struction depends  largely  on  the  kind  of  contract  involved. 
Certain  kinds,  such  as  bills  of  lading,  insurance  policies,  and 
negotiable  instruments  are  drawn  in  set  forms,  and  precedents 


"  The  construction  of  a  contract  is 
nothing  more  than  the  gathering 
of  the  intention  of  the  parties  to 
it  from  the  words  they  have  used." 
Di  Sora  v.  Phillips,  10  H.  L.  Cas, 
624,  638;  quoted  in  Gibbons  v.  Grin- 
sel,  79  Wis.  365,  369;  48  N.  W. 
255. 

2  Rockefeller  v.  Merritt,  76  Fed. 
Rep.  909;  35  L.  R,  A.  633;  22  C.  C. 
A.  608;  Davis  v.  JfobeVt,  89  Ala. 
402;  18  Am.  St.  Rep.  126;  8  So. 
114;  Schroeder  v.  Ins.  Co.;  132  Cal. 
18;  84  Am.  St.  Rep.  17;  63  Pac. 
1074;  McDermith  v.  Voorhees,  16 
Colo.  402;  25  Am.  St.  Rep.  286;  27 
Pac.  250;  Atchison,  etc.,  R.  R.  v. 
R.  R.,  162  111.  632;  35  L.  R.  A. 
167;  44  N.  E.  823;  Cravens  v.  Cot- 
ton Mills,  120  Ind.  6;  16  Am.  St. 
Rep.  298;  21  N.  E.  981;  Heiple  v. 
Reinhart,  100  la.  525;  69  N.  W. 
871;  superseding  65  K  W.  331; 
Louisville,  etc.,  "Rj.  v.  Ry.,  100 
Ky.  690;  39  S.  W.  42;  Yorston  v. 
Brown,  178  Mass.  103;  59  N.  E. 
654;  Hoose  v.  Ins.  Co.,  84  Mich, 
309;  11  L.  R.  A.  340;  47  N.  W. 
587;   Mathews  v.  i^'he.lps,  61   Mich. 


327 ;  1  Am.  St.  Rep.  581 ;  28  N.  W. 
108;  Lovelace  v.  Protective  Asso- 
ciation, 126  Mo.  104;  47  Am.  St, 
Rep.  638;  30  L.  R.  A.  209;  28  S. 
W.  877;  Mastin  v.  Stoller,  107  Mo. 
-317;  17  S.  W.  1011;  McCormick 
Harvesting  Machine  Co.  v.  Brown, 
(Neb.),  98  N.  W.  697;  Jackson  v. 
Phillips,  57  Neb.  189;  77  N.  W. 
683 ;  Chism  v.  Schipper,  51  N.  J.  L. 
1 ;  14  Am.  St.  Rep.  668 ;  2  L.  R.  A. 
544;  16  Atl.  316;  Berry  Harvester 
Co.  V.  Machine  Co.,  152  N.  Y.  540; 
46  N.  E.  952;  Schoonmaker  v.  Hoyt, 
148  N.  Y.  425;  42  N.  E.  1059; 
Smith  v.  Kerr,  108  N.  Y.  31 ;  2  Am. 
St.  Rep.  362;  15  N.  E.  70;  Travel- 
ers' Ins.  Co.  V.  Myers,  62  0.  S.  529; 
49  L.  H.  A.  760;  57  N.  E.  458; 
McFarland  v.  R.  R.,  etc..  Associa- 
tion, 5  Wyom.  126 ;  63  Am.  St.  Rep. 
29;  27  L.  R.  A.  48;  38  Pac.  347, 
677. 

3  Ins.  Co.  V.  Crane,  134  Mass.  56; 
45  Am.  Rep.  282. 

4  Atchison,  etc.,  R.  R.  v.  R.  R., 
162  111.  632;  35  L.  R.  A.  167;  44  N. 
E.  823. 


GENERAL  PRINCIPLES  OF  CONSTRUCTION.  1727 

ar  to  construction  of  a  given  form  are  of  value  in  contracts  of 
similar  form,  their  value  rapidly  lessening  as  the  form  to  be  con- 
sidered departs  from  that  considered  in  the  precedent.  Other 
contracts  are  rarely  drawn  in  set  forms,  and  in  their  construc- 
tion precedents  are  of  value  chiefly  as  illustrating  the  general 
principles  by  which  the  contract  in  question  must  be  construed. 

§1105.    Ordinary  meaning  of  word  prima  facie  correct. 

The  ordinary  meaning  of  a  word  is  prima  facie  that  em- 
ployed,^ and  will  be  used  in  construction  unless  the  context,* 
or  admissible  evidence  shows  that  another  meaning  was  in- 
tended, even  if  it  may  not  be  the  accurate  meaning,^  or  even 
if  the  ordinary  meaning  is  so  colloquial  as  not  to  appear  in  the 
dictionary.* 

§1106.     Context  and  subject-matter  control  meaning  of  word. 

The  context  and  subject-matter  may  affect  the  meaning  to 
be  given  to  the  words  of  a  contract,^  especially  if  in  connection 
with  the  subject-matter  the  ordinary  meaning  of  the  term  would 
give  an  absurd  result.^  The  subject-matter  of  a  contract  to 
lay  pipe  for  gas  may  be  invoked  to  aid  in  determining  the 
meaning  of  "  light "  pipe.^  So  under  a  contract  for  the  sale 
of  a  coal  business  in  a  certain  township,  a  covenant  not  to  en- 


1  Fitzgerald  v.  Bank,  114  Fed.  i  Hull,  etc,  Co.  v.  Coke  Co.,  113 
474;  52  C.  C.  A.  276;  Francis  Bros.  Fed.  256;  51  C.  C.  A.  213;  St.  Lan- 
V.  Boiler  Co.,  112  Fed.  899;  Mis-  dry  State  Bank  v.  Meyers,  52  La. 
souri,  etc.,  Co.  v.  Bry,  88  Mo.  App.  Ann.  1769;  28  So.  136;  Lehigh,  etc., 
135;  Moore  v.  Ins.  Co.,  62  N.  H.  Coal  Co.  v.  Wright,  177  Pa.  St.  387; 
240;  13  Am.  St.  Rep.  556;  Metho-  35  Atl.  919;  Ullman  v.  By.,  112  Wis. 
dist,  etc.,  Society  v.  Water  Co.,  20  150;  88  Am.  St.  Rep.  949;  56  L.  R. 
Ohio  C.  C.  578;   10  Ohio  C.  D.  648.  A.  246;   88  N.  W.  41. 

2  Brush,  etc.,  Co.  v.  Montgomery,  2  Pendleton  v.  Saunders,  19  Or. 
114  Ala.   433;   21   So.   960.  9;    24   Pac.   506;   Kentzler  v.   Acci- 

3 Kohl  V.  Frederick,  115  la.  517;  dent  Association,   88   Wis.   589;   43 

88  N.  W.  1055.  Am.  St.  Rep.  934;   60  N.  W.  1002. 

4Ullman  v.  Ry.,  112  Wis.  150;  88  s  Columbus    Construction    Co.    v. 

Am.  St.  Rep.  949;  56  L.  R.  A.  246;  Crane  Co.,  98  Fed.  946;  40  C.  C.  A. 

88  N.  W.  41;    (construction  of  "  ac-  35. 
cident"). 


1728  PAGE    ON    CONTEACTS. 

gage  in  such  business  for  five  years,  will  be  construed  to  mean 
to  engage  in  such  business  in  such  township.* 

§1107.     Technical  meaning. 

Words  of  technical  meaning  will  be  given  that  meaning/ 
unless  the  context  shows  that  the  ordinary  meaning  was  in- 
tended.^ Thus  "  horse-power "  in  a  contract  for  the  sale  of 
water  power  has  been  held  to  mean  the  efiicient,  and  not  the 
theoretical  horse-power.^  It  is  accordingly  proper  to  introduce 
evidence  to  show  that  certain  words  in  a  written  contract  have 
a  technical  meaning,  and  what  that  meaning  is.*  Thus  evi- 
dence is  admissible  to  show  the  meaning  of  "  watch  makers' 
material/'^  "  dry  goods,"*'  "  artesian  well,"'  to  "  reduce  "  fire 
insurance,^  "  order "  in  a  contract  of  agency  for  the  sale  of 
books,"  "  merchantable  timber,""  or  in  the  sale  of  horses,  the 
meaning  of  "  good  condition,""  or  "  safe  property,"^"  or  in  con- 
tracts for  the  management  of  railroads,  the  meaning  of  "  neces- 
sary signals  and  switchmen, "^^  or  "  other  similar  appliances,"" 
or  "  transportation,"  "  switching,"  and  "  transfer."^^ 

4Melick   V.    Foster,    64    N.    J.   L.  9  Xewhall  v.  Appleton,  114  N.  Y. 

394;    45   Atl.   911.  140;  3  L.  R.  A.  859;  21  N.  E.  105. 

1  Seymour  v.  Armstrong,  62  Kan.  (The  agent  was  to  receive  fifteen 
720;  64  Pae.  612;  affirming  10  Kan.  dollars  for  each  "order"  taken.  It 
App.  10;  61  Pac.  675.  was  held  proper  to  show  that  "  or- 

2  Atkinson  v.  Sinnott,  67  Miss.  der  "  meant  at  least  five  volumes  of 
602;    7   So.    289.  the    encyclopaedia    taken    and    paid 

3 Lloyd  V.  Kehl,  132  Cal.  107;  64  for.) 

Pac.    125.  loDorris     v.     King      (Tenn.     Ch. 

4Grasmier  v.   Wolf    (la.),   90  N.  App),  54  S.  W.  683. 

W.    813;     Cambers    v.    Lowry,    21  "  Elwood  v.  McDill,  105  la.  437; 

Mont.  478;  54  Pac.  816.  75  N.  W.  340. 

sMaril  v.  Ins.   Co.,  95  Ga.  604;  12  Thompson   v.   Pruden,   18   Ohio 

51  Am.  St.  Rep.  102;   30  L.  R.  A.  C.  C.  886. 

835;    23    S.    E.   463.  i3  Louisville,  etc.,  Ry.  v.  Ry.,  174 

6  Wood  V.  Allen,  111   la.  97;   82  111.  448;  51  N.  E.  824. 

N.  W.  451.  "Chicago,   etc.,   Ry.   v.   Ry.,    11$ 

THattiesburg     Plumbing     Co.     v.  Wis.  161;   89  N.  W.   180;    (whether 

Carmichael,    80    Miss.    66;     31    So.  in  view  of  the  context,   it  included 

536;    (whether  this  implied  that  the  a  system  of  interlocking  switches), 

water  must  rise  to  the  top)  is  Dixon    v.    Ry.,    110    Ga.     173; 

sHalsey  v.   Adams.   63   N.   J.   L.  35  S.  E.  369. 
330;    43    Atl.    708;     (equivalent   to 
"cancel"). 


GENEKAL  PRINCIPLES  OF  CONSTRUCTION.  1729 

§1108.     Meaning  of  word  controlled  by  usage. 

Usages/  such  as  those  of  a  trade,^  may  be  resorted  to  to  show 
the  special  meanings  of  words.  Thus  evidence  of  local  usage 
as  to  the  meaning  of  "  cord  "  in  a  sale  of  cedar  posts,  or  of 
a  trade  usage  as  to  "  subject  to  strikes  "  in  a  contract  for  the 
sale  of  coal/  is  admissible,  or  as  to  "  on  approval "  in  the 
diamond  trade.*  If  the  meaning  of  a  written  contract  is  clear, 
a  trade  usage  cannot  change  the  meaning  of  the  words,  or  add 
incidents  so  as  to  contradict  the  meaning.^  Thus  a  contract 
with  a  broker  for  the  sale  of  certain  articles,  "  seller  paying 
brokerage  at  ten  cents  per  ton,"  cannot  be  contradicted  to  cut 
down  the  broker's  recovery  by  showing  a  usage  to  pay  com- 
missions only  on  the  amount  delivered.^  l^o  usage  can  be  in- 
voked to  change  rules  of  law.  Thus  a  usage  among  brokers 
that  stock  certificates  are  negotiable  is  invalid.^ 

§1109.    Cipher. 

If  a  contract  consists  in  part  or  all  of  cipher,  extrinsic  evi- 
dence is  admissible  to  show  the  meaning  of  the  terms  written 
in  cipher  contracts  by  telegraph.^  Thus  the  meaning  of  "  Buy 
three  May,"  may  be  so  explained.^  Without  such  evidence  a 
contract  in  cipher  could  have  no  validity. 


1  Metropolitan  Exhibition  Co.  v.  s  Deacon  v.  Mattison,  11  N.  D. 
Ewing,  42  Fed.  198;  7  L.  R.  A.  381.  190;   91   N.  W.  35. 

2  Seymour  v.  Armstrong,  62  Kan.  6  Fairly  v.  Wappoo  Mills,  44  S. 
720;  64  Pae.  612;  affirming  10  Kan.  C.  227;  29  L.  R.  A.  215;  22  S.  E. 
App.    10;    61    Pac.    675;    Smith    v.  108. 

Clews,   114  N.  Y.   190;    11  Am.  St.  7  East   Birmingham   Land   Co.   v. 

Rep.   627;    4   L.   R.   A.   392;    21   N.  Dennis,  85  Ala.  565;  7  Am.  St.  Rep. 

E.  160.  73;  2  L.  R.  A.  836;  5  So.  317. 

3  Hesser,  etc.,  Co.  v.  Fuel  Co.,  114  i  Western  Union  Telegraph  Co. 
Wis.  654;  90  N.  W.  1094;  (that  is,  v.  Collins,  45  Kan.  88;  10  L.  R.  A. 
whether  local  or  general  strikes  were  515;    25  Pac.   187. 

intended).  2  Garland    v.    Telegraph    Co.,    118 

4  Smith  V.  Clews,  114  N.  Y.  190;  Mich.  369;  74  Am.  St.  Rep.  394;  4» 
11    Am.   St.   Rep.   627;    4   L.   R.   A.  L.  R.  A.  280;  76  N.  W.  762. 

392;   21   N.  E.   160. 

109 


1730  PAGE    ON    CONTKACTS. 

§1110.    Abbreviations. 

If  abbreviations  are  used  in  a  written  contract,  extrinsic  evi- 
dence is  admissible  to  show  that  thej  have  a  meaning  in  the 
trade  or  business  to  which  the  subject  of  the  contract  relates 
which  is  generally  recognized  and  understood  among  those 
familiar  with  such  trade  or  business.^  Thus  extrinsic  evidence 
is  admissible  to  show  the  meaning  of  "  S/87  wheat,"^  "  C.  L. 
E.  P.  oats,"^  "  stripped  and  sample  warranted  #  208,"*  "  O. 
K,"'  "  K  D.  and  released,'"'  "  Care  E.  E.  agt.  Callahan."'  The 
meaning  of  the  abbreviation  must  be  understood  by  both 
parties,  however,  if  the  court  is  to  adopt  such  meaning  as  that 
intended  by  the  parties.  Thus,  "  L  &  O  Ex.  $20  E.  E.  val." 
cannot  be  shown  to  mean  "  Leaks  and  outs  excepted  $20  rail- 
road valuation,"  unless  such  meaning  was  known  to  the  shipper 
as  well  as  to  the  railroad.*  Even  if  the  contract  is  one  which 
by  the  statute  of  frauds  must  be  proved  by  writing,  extrinsic 
evidence  is  admissible  to  show  the  meaning  of  abbreviations.^ 


iMcChesney  v.  Chicago,  173  111. 
75;  50  N.  E.  191;  Western  Union 
Telegraph  Co.  v.  Collins,  45  Kan. 
88;  10  L.  R.  A.  515;  25  Pac.  187; 
Maurin  v.  Lyon,  69  Minn.  257;  65 
Am.  St.  Rep.  568;  72  N.  W.  72; 
Springfield  First  National  Bank  v. 
Fricks,  75  Mo.  178;  42  Am.  Rep. 
397. 

2  Berry  v.  Kowalsky,  95  Cal.  134 ; 

29  Am.  St.  Rep.  101;  27  Pac.  286; 

30  Pac.  202. 

3  Wilson  V.  Coleman,  81  Ga.  297; 
6  S.  E.  693;  ("Car  Loads  Rust 
Proof  Oats"). 

4  Conestoga  Cigar  Co.  v.  Finke, 
144  Pa.  St.  159;  13  L.  R.  A.  438; 
22  Atl.  868;    (in  a  sale  of  tobacco). 

5  Penn  Tobacco  Co.  v.  Leeman,  109 
Ga.  428;  34  S.  E.  679;  (to  show  it 
amounts  to  a  guaranty). 

eMouton  v.  Ry.,  128  Ala.  537;  29 
So.  602. 


7  Savannah,  etc.,  R.  R.  v.  Collins, 
77  Ga.  376;  4  Am.  St.  Rep.  87; 
3  S.  E.  416.  (To  show  that  the  rail- 
road was  to  deliver  the  goods  to  the 
agent  of  another  company  at  Colla- 
han.) 

sRosenfeld  v.  Ry.,  103  Ind.  121; 
53  Am.  Rep.  500;  2  N.  E.  344. 

9  Contract  for  the  sale  of  realty: 
Melone  v.  Ruffino,  129  CaL  514; 
79  Am.  St.  Rep.  127;  62  Pac.  93. 
Contract  for  the  sale  of  personal- 
ty: New  England,  etc.,  Co.  v.  Wor- 
sted Co.,  165  Mass.  328;  52  Am.  St. 
Rep.  516;  43  N.  E.  112.  ("F.  C. 
Wool.")  Maurin  v.  Lyon,  69  Minn. 
257 ;  65  Am.  St.  Rep.  568 ;  72  N.  W. 
72.  (In  this  case  the  written  mem- 
orandum was  as  follows :  "  St. 
Cloud,  7-6-96.  sold  Maurin  Bros., 
Cold  Springs.  5000,  1-0  Jul.  Del.  99 
C.  Duluth  "  and  signed.) 


GENERAL  PRINCIPLES  OF  CONSTRUCTION.  1731 

§1111.    Intention  of  parties  direct  as  affecting  meaning  of  term. 

If  the  parties  have  used  words  which  have  au  ordinary  mean- 
ing free  from  ambiguity,  and  no  technical  meaning  is  shown, 
extrinsic  evidence  is  inadmissible  to  show  that  the  parties  used 
such  terms  in  a  sense  different  from  their  ordinary  meaning, 
as  the  only  effect  of  such  evidence  would  be  to  contradict  the 
legal  effect  of  the  language  which  the  parties  themselves  have 
used.^  Thus  evidence  is  not  admissible  to  show  the  meaning  of 
"  to  be  advertised  till  sold,"'  "  delivered  East  St.  Louis,"^ 
"  wholesale  prices,"*  or  to  mine  ore  at  a  certain  price  as  long 
"  as  we  can  make  it  pay."^  Under  a  contract  for  drilling  for  gas 
or  oil  a  provision  to  pay  for  "  gas  "  cannot  be  shown  to  mean 
only  gas  from  a  gas  well  and  not  gas  from  a  well  producing  oil 
chiefly.^  So  under  a  contract  concerning  "  bales  "  of  cotton,  it 
was  held  that  the  parties  could  show  what  meaning  "  bales  " 
had  by  usage ;  but  that  they  could  not  show  an  oral  contract 
between  the  parties  fixing  a  weight  for  a  "  bale."^  So  under  a 
contract  which  refers  to  the  *"  amount "  of  grading  it  cannot  be 
shown  that  "  amount "  means  cost  and  not  quantity.^  If,  on 
the  other  hand,  the  term  used  is  one  which  has  two  or  more 
meanings,  evidence  of  the  intention  of  the  parties  direct  is 
admissible  to  show  in  which  sense  it  was  used."  So  if  a 
written  receipt  refers  to  a  "  due  bill  "  evidence  is  admissible 
to  show  that  by  such  expression  the  parties  intended  a  certain 

1  Adams  v.  Turner,  73  Conn.  38 ;  6  Burton  v.  Oil  Co.,  204  Pa.   St. 
46  Atl.  247;  Chase  v.  Ainsworth,  —      349;  54  Atl.  266. 

Mich.  — ;  97  N.  W.  404.  7  Stewart  v.  Cook,  118  Ga.  541 ;  45 

2  Wikle  V.  Johnson   Laboratories,      S.  E.  398. 

132  Ala.  268;  31  So.  715.  s  Ryan  v.  Dubuque,   112  la.   284; 

3  Lippert  v.  Milling  Co.,  108  Wis.      83  N.  W.  1073. 

512;  84  N.  W.  831.  0  Bank  of  New  Zealand  v.   Simp- 

4Fawkner  v.   Wall  Paper  Co.,  88  son    (1900).    App.   Cas.    182;    Kelly 

la.    169;   45   Am.   St.  Hep.  230;    55  v.  Fejervary,  111  la.  693;  83  N.  W. 

N.  W.  200.  791;    Streeter    v.    Seigman     (N.    J. 

5  Davie   v.   Mining   Co..   93   Mich.  Eq.),    48   Atl.    907;    Phetteplace   v. 

491;    24    L.   R.   A.    357;    53   N.   W.  Ins.   Co.,  23   R.   I.   26;   49  Atl.   33; 

625.      (Oral  evidence  is  inadmissible  Andrews    v.     Robertson,     111     Wis. 

to  show  that  this  means   "as   long  334;  87  Am.  St.  Rep.  870;  54  L,  R. 

as  we  can  make  company  wages.")  A.  673;  87  N.  W.  190. 


1732  PAGE    ON    CONTEACTS. 

promissory  note/^  So  the  meaning  which  the  parties  give  to 
"  outstanding  accounts "  may  be  shown.^^  So  if  the  term 
"  perch  "  is  shown  to  have  two  meanings  when  used  as  a  measure 
of  stone,  the  direct  intention  of  the  parties  may  be  considered  in 
ascertaining  which  meaning  of  the  term  was  intended.^^  So  un- 
der a  contract  providing  for  "  wholesale  factory  prices  "  it  was 
held  proper  to  show  that  the  parties  intended  a  scale  differing 
from  actual  wholesale  prices/^  It  will  be  seen  that  some  of 
the  cases  cited  under  the  second  branch  of  the  rule  are  really 
contrary  to  those  cited  under  the  first  branch.  The  cases 
under  the  second  branch  are  some  of  them  cases  where,  in  spite 
of  the  general  rule,^*  the  courts  have  really  given  reformation 
in  an  action  at  law  under  cover  of  construction. 

§1112.     Contract  construed  as  a  whole. 

Since  the  object  of  construction  is  to  ascertain  the  intention 
of  the  parties,  the  contract  must  be  considered  as  an  entirety. 
The  problem  is  not  what  the  separate  parts  of  the  contract 
mean,  but  what  the  contract  means  when  considered  as  a  whole.^ 

10  Andre\A'i'v.  Robertson,  111  Wis.  the  term  "perch"  meant  sixteen 
334;  87  Am.  St.  Rep.  870;  54  L.  R.  and  a  half  feet;  in  railroad  masonry 
A.  673;  87  N.  W.  190.  it   meant    twenty-five    feet;    and   in 

11  McCutsky  V.  Klosterman,  20  bridge  masonry,  which  was  the  sub- 
Or.  108;  10  L.  R.  A.  785;  25  Pac.  ject  of  the  contract,  the  term  was 
366.      (To   show   that   it  meant   ac-  ambiguous.) 

counts    outstanding    after    charging  is  Barrett  v.  Allen,  10  Ohio  426. 

the  bad  accounts  to  profit  and  loss.)  i*  See  §  1131. 

12  Quarry  Co.  v.  Clements,  38  O.  i  O'Brien  v.  Miller,  168  U.  S.  287; 
S.  587;  43  Am.  Rep.  442.  (In  this  Brush,  etc.,  Co.  v.  Montgomery,  114 
case  evidence  was  admitted  to  show  Ala.  433;  21  So.  960;  Siegel,  etc., 
that  the  parties  had  agreed  that  Co.  v.  Colby,  176  111.  210;  52  N.  E. 
stone  shouFd  be  furnished  at  eighteen  917;  afiirming,  61  111.  App.  315;  St. 
cents  per  cubic  foot,  and  that  the  Landry  State  Bank  v.  Meyer,  52  La. 
scrivener  who  drew  the  contract  of  Ann.  1769;  28  So.  136;  Tete  v.  Lan- 
his  own  motion,  stated  this  rate  by  aux,  45  La.  Ann.  1343;  14  So.  241; 
the  perch  and  assumed  that  twenty-  Jackson  v.  Phillips,  57  Neb.  189; 
five  cubic  feet  made  a  perch.  Ac-  77  N.  W.  683;  Ballou  v.  Sherwood, 
cordingly  he  stated  the  rate  at  four  32  Neb.  666;  49  K  W,  790;  50  N. 
dollars  and  fifty  cents  a  perch.  The  W.  1131;  Monmouth  Park  Associa- 
evidence  showed  that  in  cellar  walls  tion  v.  Iron  Works,  55  N.  J.  L. 
and  foundations  by  the  local  usage  132;  39  Am.  St.  Rep.  626;  19  L.  R 


GE^TERAL  PRINCIPLES  OF  CONSTRUCTION.  1733 

A  contract  must  be  thus  construed  even  if  the  separate  parts  are 
clear  and  free  from  ambiguity.^  Thus  the  name  given  by  the 
jDarties  to  the  contract  is  not  conclusive,  and  if,  considering  it 
as  a  whole,  it  is  evidently  an  instrument  of  a  sort  different 
from  that  which  the  parties  have  called  it,  it  must  be  treated  as 
what  it  is  and  not  what  it  is  called.^  Thus  an  instrument  called 
a  "  special  selling  factor  appointment "  may  be  construed  as 
a  contract  of  sale,*  or  an  instrument  called  a  lease  may  be 
construed  as  a  conditional  sale,  the  title  being  reserved  for 
security.^  So  money  paid  by  an  insurer  to  an  insured  equal 
in  amount  to  the  loss  under  the  policy  may  be  construed  as 
payment,  though  it  was  called  a  "  loan  "  by  the  contract  under 
which  it  was  paid,  which  provided  that  so  much  thereof  as 
might  be  recovered  from  the  carrier,  whose  liability  for  the 
loss  was  then  under  investigation  should  be  repaid  by  the  in- 
sured to  the  insurer.^  So  the  fact  that  the  language  used  in  the 
instrument  under  consideration  is  in  part  appropriate  and  pecul- 
iar to  a  certain  kind  of  instrument  is  not  of  itself  conclusive 
that  the  instrument  is  of  that  kind/ 

A.  456;  26  Atl.  140;  Chism  v.  Schip-  Dederick  v.  Wolfe,  68  Miss.  500;  24 

per,  51  N.  J.  L.  1 ;   14  Am,  St.  Rep.  Am.  St.  Rep.   283;   9   So.  350;   Ar- 

668;    2  L.  R.  A.  544;    16  Atl.   316;  buckle  v.  Kirkpatrick,  98  Tenn.  221; 

Sattler  v.  Hallock,   160  X.  Y.  291;  60  Am.   St.   Rep.   854;   36  L.  R.  A. 

73  Am.   St.  Rep.  686;   46   L.  R.  A.  285;  39  S.  W.  3;  Cowan  v.  Mfg.  Co., 

679;    54   N.   E.    667;    German   Fire  92  Tenn.  376;  21  S.  W.  663;  Singer 

Ins.  Co.  V.  Roost,  55  O.  S.  581;   60  Mfg.  Co.  v.  Cole,  4  Lea  (Tenn.)  439; 

Am.  St.  Rep.  711;  36  L.  R.  A.  236;  40  Am.  Rep.  20. 

45  N.  E.  1097 ;  Arbuckle  v.  Kirkpat-  4  Arbuckle      v.      Kirkpatrick,      98 

rick,  98  Tenn.  221;  60  Am.  St.  Rep.  Tenn.  221;  60  Am.  St.  Rep.  854;  36 

854;   36  L.  J^.  A.  285;   39  S.  W.  3;  L.  R.  A.  285;  39  S.  W.  3. 

McKay  v.  Barnett,  21  Utah  239;  50  5  Fidelity,   etc.,    Co.   v.  R.   R.,   86 

L.  R.  A.  371;  60  Pac.  1100;  Kentz-  Va.  1;  19  Am.  St.  Rep.  858;  9  S.  E. 

ler  V.  Accident  Association,  88  Wis.  759. 

689;  43  Am.  St.  Rep.  934;  60  K  W.  6  Lancaster  Mills  v.  Cotton  Press 

1002.  Co.,   89   Tenn.   1;    24   Am.   St.   Rep. 

2  O'Brien  v.  Miller,  168  U.  S.  287.  586;  14  S.  W.  317. 

sHerryford   v.    Davis,    102    U.    S.  7  Burlington    University    v.    Bar- 

235,     244;     Hervey    v.     Locomotive  rett,   22   la.  60;    92   Am.  Dec.   376; 

Works,  93  U.  S.  664;  Stockton  Sav-  Lauck  v.  Logan,  45  W.  Va.  251;  31 

ings  Society  v.  Purvis,  112  Cal,  236;  S.  E.  986. 
53  Am.  St.  Rep.  210;   44  Pac.  561; 


1734 


PAGE    ON    CONTRACTS. 


§1113.     General  paramount  intent  controls  special  intent. 

The  contract  being  construed  as  a  whole,  it  follows  that  one 
part  of  it  may  affect  the  construction  of  a  different  part.^  An 
illustration  of  this  is  found  where  the  contract  as  a  whole  shows 
a  given  intention,  but  certain  words  or  phrases  if  taken  literally 
will  defeat  such  intention.  In  such  case  the  particular  words 
or  phrases  will,  if  possible,  be  construed  in  such  a  way  as  to  be 
consistent  with  the  general  intention.^ 

§1114.    Every  part  of  contract  given  effect  if  practicable. 

The  parties  have  inserted  each  provision  in  the  contract,  and 
accordingly,  if  possible,  a  contract  should  be  so  construed  as 
to  give  effect  to  each  provision  inserted  therein.^  Thus  a  clause 
in  a  building  contract  providing  that  no  lien  should  be  taken 
thereunder  is  not  repugnant  to  a  subsequent  provision  requiring 
the  contractor  to  show  by  sufficient  evidence  that  the  premises 


1  Pensacola  Gas  Co.  v.  Lotze,  23 
ria.  368;  2  So.  609;  Lindley  v. 
Groff,  37  Minn.  338;  34  N.  W.  26 
Ballou  V.  Sherwood,  32  Neb.  666 
49  N.  W.  790;  50  N.  W.  1131 
Chism  V.  Schipper,  51  N.  J.  L.  1 
14  Am.  St.  Rep.  668;  2  L.  R.  A.  544 
16  Atl.  316. 

2Erickson  v.  United  States,  107 
Fed.  204;  Speed  v.  Ry.,  86  Fed.  235; 
30  C.  C.  A.  1 ;  Rockefeller  v.  Merritt, 
76  Fed.  909;  35  L.  R.  A.  633;  22 
C.  C.  A.  608;  Stockton  Savings  So- 
ciety V.  Purvis,  112  Cal.  236;  53 
Am.  St.  Rep.  210;  44  Pac.  561; 
Whalen  v.  Stephens,  193  111.  121: 
61  N.  E.  921;  affirming,  92  111.  App. 
235;  Seaver  v.  Thompson,  189  111. 
158;  59  N.  E.  553;  Kennedy  v.  Ken- 
nedy, 150  Ind.  636;  50  N.  E.  756; 
City  of  Garden  City  v.  Heller,  61 
Kan.  767;  60  Pae.  1060;  Spragiie 
Electric  Co.  v.  Hennepin  County,  83 
Minn.  262 ;  86  N.  W.  332 ;  Chism  v. 
Schipper,  51  N.  J.  L.  1;  14  Am.  St. 


Rep.  668;  2  L.  R.  A.  544;  16  Atl. 
316;  Arbuekle  v.  Kirkpatrick,  98 
Tenn.  221;  60  Am.  St.  Rep.  854;  36 
L.  R.  A.  285;  39  S.  W.  3;  Collins  v. 
Lavelle,  44  Vt.  230. 

1  First  National  Bank  v.  Ry.,  36 
Fla.  183;  18  So.  345;  Snoqualmi 
Realty  Co.  v.  Moynihan,  —  Mo.  — ; 
78  S.  W.  1014;  Ricketts  v.  Buck- 
staff,  64  Neb.  851;  90  N.  W.  915; 
McGavock  v.  Bank,  64  Neb.  440; 
90  N.  W.  230 ;  Lawton  v.  Fonner,  59 
Neb.  214;  80  N.  W.  808;  Chrisman 
V.  Ins.  Co.,  16  Or.  283;  18  Pac.  466; 
German  Fire  Ins.  Co.  v.  Roost,  55 
O.  S.  581;  60  Am.  St.  Rep.  711;  36 
L.  R.  A.  236;  45  N.  E.  1097;  Com- 
monwealth, etc.,  Co.  V.  Ellis,  192 
Pa.  St.  321;  73  Am.  St.  Rep.  816; 
43  Atl.  1034;  Philadelphia  v.  River 
Front  R.  Co.,  133  Pa.  St.  134;  19 
Atl.  356;  Smith  v.  Smith,  33  S.  C. 
210;  11  S.  E.  761;  McKay  v.  Bar- 
nett,  21  Utah  239;  50  L.  R.  A.  371; 
60  Pac.  1100. 


GENERAL  PEINCIPLES  OF  CONSTRUCTION.  1735 

are  free  of  liens.^  Whether  in  this  sense  a  printed  heading 
is  a  part  of  the  contract  written  thereunder  is  a  question  on 
which  there  seems  to  be  some  conflict.  It  has  been  held  that 
a  printed  heading  on  an  order  blank  may  be  looked  to  to  show 
that  the  order  was  taken  as  a  publisher  and  not  as  an  engraver  f 
while  a  notice  on  a  letter  head  that  all  orders  were  subject  to 
delays  arising  from  strikes  was  held  not  a  part  of  a  contract 
written  thereunder/  and  terms  printed  at  the  head  of  a  bill 
cannot  be  considered  as  a  waiver  of  express  provisions  of  the 
written  contract  for  the  sale  of  such  goods,  which  contract  is 
contained  in  a  letter  mailed  on  the  same  day  as  that  on  which 
the  goods  are  shipped.^  The  rule  that  every  part  of  the  con- 
tract must  be  given  effect,  applies  to  a  contract  that  is  partly 
written  and  partly  oral.® 

§1115.     Incorporation  of  writing  by  reference. 

Since  a  contract  must  be  construed  as  a  whole,  effect  must 
be  given  to  writings  incorporated  in  the  contract  by  reference.^ 
Thus  the  agent  of  an  insurance  company  agreed  to  issue  a 
standard  policy.  Such  policy  was  not  issued.  In  an  action  by 
the  insured  after  loss  for  damages  caused  by  breach  of  such 
contract  it  was  held  that  the  standard  form  of  policy  was  a  part 
of  such  contract,  and  hence  the  insured  was  bound  to  show  that 
the  same  proof  of  loss  had  been  made  as  if  the  policy  had  is- 
sued." However,  a  contract  to  give  a  mortgage  "  in  your  usual 
form  "  does  not  give  the  right  to  insert  "  unusual  terms  and 
conditions  "  different  from  those  used  before.^     It  is  not  neces- 


2  Commonwealth,  etc.,  Co.  V.  Ellis,  (Ala.),    12    So.    768;    Chicago,    etc., 

192   Pa.   St.   321;    73   Am.   St.   Eep.  Bank  v.  Trust  Co.,  190  111.  404;  83 

816;  43  Atl.  1034.  Am.   St.    Rep.    138;    60   N.   E.   586; 

sYorston    v.    Brown,     178    Mass.  affirming.  92  111.  App.  366;  Hicks  v. 

103;  59  N.  E.  654.  Assurance  Co.,  162  N.  Y.  284;  48  L. 

4  Summers    v.    Hibbard,    153    111.  R.  A.  424;  56  N.  E.  743. 

102;  46  Am.  St.  Rep.  872;  38  N.  E.  2  Hicks  v.  Assurance  Co.,   162  N. 

899.  Y.  284;  48  L.  R.  A.  424;   56  N.  E. 

sMillhiser  v.  Erdmann.  103  N.  C.  743. 

27;  9  S.  E.  582;  see  §  600.  3  Peabody  v.  Dewey.  153  111.  657; 

6  Wood  V.  Perkins,  57  Fed.  258.  27  L.  R.  A.  322;  .39  N.  E.  977  (such 

1  Piedmont,  etc.,  Co.  v.  Motor  Co,  as  a  provision  for  payment  in  gold ) . 


1736  PAGE    ON    CONTEACTS. 

sary  that  the  writing  thus  incorj^wrated  should  be  signed.* 
Thus  a  reference  to  specifications  may  incorporate  them.^  So 
in  a  contract  to  paint  certain  houses  "  according  to  the  annexed 
specifications  "  a  letter  showing  the  kind  of  paint,  the  quality, 
and  the  manner  of  its  apiDlication  may  be  "  specifications."* 
However,  a  reference  to  plans  incorporates  them  only  as  plans, 
and  does  not  incorporate  a  provision  inserted  by  the  city  en- 
gineer forbidding  assignment  of  the  contract  and  providing 
for  deduction  for  delay.'^  So  a  reference  to  an  unsigned  bill 
of  sale,^  or  to  a  blank  unsigned  warranty  on  the  back  of  the 
contract,^  or  a  provision  that  the  contract  is  to  be  performed 
according  to  the  city  ordinances,^"  in  each  case  incorporates  such 
Unsigned  instrument  into  the  contract.  So  an  ambiguous  ref- 
erence in  a  later  contract  to  an  earlier  one  may  be  explained  by 
the  contents  of  such  earlier  one.^^  In  accordance  with  the  doc- 
trine of  offer  and  acceptance^^  such  writing  can  be  considered 
a  part  of  the  contract  only  if  communicated  to  the  adversary 
party." 

§1116.     Different  writings  construed  together. 

To  have  two  or  more  writings  construed  together  it  is  not 
necessary  that  one  of  them  should  refer  to  the  other  in  express 
terms.  If  two  or  more  writings  are  executed  at  the  same  time, 
between  the  same  j)arties  ,  and  concerning  the  same  subject- 
matter,  they  may  be  construed  together  as  a  part  of  the  same 


4  White    V.    McLaren,    151    Mass.  a  Grieb  V-   Cole,  60  Mich.  397;    1 
553;    24  N.  E.  911;   Coe  v.  Tough,  Am.  St.  Rep.  533;  27  N.  W.  579. 
116  N.  Y.  273;   22  N.  E.  550.  lo  Philadelphia  v.  Jewell,  135  Pa. 

5  Lake  View  v.  MacRitchie,  134  St.  329;  19  .Atl.  947;  20  Atl.  281. 
111.  203;  25  N.  E.  663;  White  v.  (Hence  it  incorporates  an  ordinance 
McLaren,  151  Mass.  553;  24  N.  E.  requiring  the  work  to  be  finished  ia 
911;    Watson  v.   O'lSTeill,    14   Mont.  two  years.) 

197;  35  Pac.  1064.  n  Mjones  v.  Bank,  45  Minn.  335; 

6  McGeragle  v.  Broemel,  53  N.  J.  47  N.  W,  1072. 

L.  59;  20  Atl.  857.  12  See  §  30  et  seq. 

7  Young  V.  Borzone,  26  Wash.  4,  i3  Tichnor  v.  Hart,  63  Mipn.  407; 
23;  66  Pac.  135,  421.  54  N.  W.  369. 

8  Coe  V.  Tough,    116   N.  Y.   273; 
22  jSr.  E.  550. 


GENEKAL  PEINCIPLES  OF  CONSTRUCTION. 


1737 


ccntract/  at  least  in  the  absence  of  evidence  to  the  contrary.* 
Thus  a  note  and  the  contract  under  which  it  was  made,^  espe- 
cially if  the  note  refers  to  the  contract/  a  deed,  mortgage  and 
note,^  a  building  and  loan  association  note,  mortgage  and  con- 
tract/ a  deed  and  a  chattel  mortgage/  a  contract  and  a  chattel 
mortgage/  a  land  contract  and  a  bond/  a  deed  and  a  lease/** 
a  lease  and  a  contract/^  a  will,  deed,  and  contract,^^  and  a  deed 
and  an  acknowledgment  of  trust  by  the  grantee^ '^  may  in  each 


iJoy  V.  St.  Louis,  138  U.  S.  1; 
Prichard  v.  Miller,  86  Ala.  500;  5 
So.  784;  Meyer  v.  Weber,  133  Cal. 
681;  65  Pac.  1110;  Flinn  v.  Mowry, 
131  Cal.  481;  63  Pac.  724;  modified, 
63  Pac.  1006;  Weston  v.  Estey,  22 
Colo.  334;  45  Pac.  367;  Howard  v. 
Ry.,  24  Fla.  560;  5  So.  356;  Chicago, 
etc.,  Bank  v.  Trust  Co.,  190  111.  404; 
83  Am.  St.  Rep.  138;  60  N.  E.  586; 
affirming,  92  111.  App.  366;  Hunter 
V.  Clarke,  184  111.  158;  75  Am.  St. 
Rep.  160;  56  N.  E.  297;  affirming, 
83  111.  App.  100;  Wichita  University 
V.  Schweiter,  50  Kan.  672;  32  Pac. 
352;  Phelps-Bigelow  Windmill  Co. 
V.  Piercy,  41  Kan.  763;  21  Pac.  793; 
Shuttleworth  v.  Development  Co. 
(Ky.),  60  S.  W.  534;  Smith  v. 
Theobald,  86  Ky.  141 ;  5  S.  W.  394 ; 
Washburn,  etc.,  Mfg.  Co.  v.  Salis- 
bury, 152  Mass.  346;  25  N.  E.  724; 
Makepeace  v.  College,  10  Pick. 
(Mass.)  298;  McNamara  v.  Gargett, 
68  Mich.  454;  13  Am.  St.  Rep.  355; 
36  N.  W.  218;  Sutton  v.  Beckwith, 
68  Mich.  303;  13  Am.  St.  Rep.  344; 
36  N.  W.  79;  Eberts  v.  Selover,  44 
Mich.  519;  38  Am.  Rep.  278;  7  N. 
W.  225;  Jennings  v.  Todd,  118  Mo. 
296;  40  Am.  St.  Rep,  373;  24  S.  W. 
148;  Gwin  v.  Waggoner,  98  Mo. 
315;  11  S.  W.  227;  Palmer  v.  Pal- 
mer, 150  N.  Y.  139;  55  Am.  St.  Rep. 
653;  44  N.  E.  966;  Mott  v.  Richt- 
meyer,  57  N.  Y.  49;  Hills  v.  Miller, 
3  Paige  (N.  Y.)  2.54;  24  Am.  Deo. 
218;    Bradtfeldt    v.    Cooke,    27    Or. 


194;  50  Am.  St.  Rep.  701;  40  Pac. 
1 ;  Dallas  National  Bank  v.  Davis, 
78  Tex.  362;  14  S.  W.  706;  Rhoades 
V.  R.  .R.,  49  W.  Va.  494;  87  Am.  St, 
Rep.  826;  55  L.  R.  A.  170;  39  S.  E. 
209;  Hannig  v.  Mueller,  82  Wis. 
235 ;  52  N.  W.  98. 

2  Weber  v.  Rothchild,  15  Or.  385 ; 
3  Am.  St.  Rep.  162;   15  Pac.  650. 

3  Beach's  Appeal,  58  Conn.  464;  20 
Atl.  475;  Seieroe  v.  Bank,  50  Neb. 
612;  70  N.  W.  220. 

4  Solomon  Solar  Salt  Co.  v.  Bar- 
ber, 58  Kan.  419;  49  Pac.  524, 

5  Bradtfeldt  v.  Cooke,  27  Or.  194; 
50  Am.  St.  Rep.   701;   40  Pac.   1. 

6  Interstate,  etc..  Association  v. 
Knapp,  20  Wash,  225;  55  Pac,  48; 
rehearing  denied,  20  Wash,  230;  55 
Pac,  931, 

7  Stapleton  v,  Brannon,  102  Wis. 
26;  78  N,  W,  181. 

sEdling  V.  Bradford,  30  Neb. 
593;  46  N.  W,  836, 

9  Coughran  v.  Bigelow,  9  Utah 
260;  34  Pac,  51. 

lost.  Paul,  etc.,  Ry.  v.  Depot  Co., 
44  Minn.  325;  46  N.  W.  566. 

11  Clark  V.  Needham,  125  Mich, 
84;  84  Am,  St.  Rep.  559;  51  L.  R. 
A,  785;  83  N.  W.  1027.  (To  show 
that  the  lease  was  intended  to  create 
a  monopoly.     See  §  434.) 

12  Copeland  v,  Sumers,  138  Ind, 
219;  35  N.  E.  514;  rehearing  de- 
nied, 138  Ind,  226;  37  N,  E.  971. 

13  Chute  V,  Washburn.  44  Minn. 
312;   46  N.  W.  555, 


1738  PAGE    ON    CONTRACTS. 

case  be  construed  together.  So  a  term  inserted  in  one  letter 
need  not  be  repeated  in  subsequent  letters  on  the  same  subject, 
not  inconsistent  with  such  term  in  order  to  preserve  its  force.^* 
While  a  note  may  be  construed  in  connection  with  a  contempora- 
neous contract,  such  construction  cannot  be  invoked  to  modify 
its  legal  effect  if  it  is  in  the  hands  of  a  bona  fide  holder  for 
value.^^  If  the  two  contracts  are  not  executed  at  the  same 
time  but  refer  to  the  same  subject-matter  and  on  their  face 
show  that  they  were"  executed  each  as  a  means  of  carrying  out 
the  same  intent  as  the  other,  they  may  be  construed  together.^* 
Thus  a  note  and  the  contract,  executed  a  few  days  before  the 
note,  in  consideration  of  which  it  was  executed,^^  a  transfer  of 
stock  and  the  contract  under  which  it  was  transferred,^^  and 
a  trust  deed  and  a  deed  thereunder^®  are  to  be  construed  to- 
gether. Even  if  two  writings  are  executed  on  different  dates 
and  between  different  parties,  they  may  from  their  subject- 
matter  be  so  connected  that  even  without  express  reference 
the  later  contract  is  to  be  so  construed  as  to  be  read  in  connec- 
tion with  the  earlier.'**  Thus  the  contract  of  a  sub-contractor 
with  the  chief  contractor  must  be  construed  with  that  between 
the  chief  contractor  and  the  owner,^^  a  contract  of  sale  and  an 
authority  to  sell  must  be  construed  together,"-  and  a  prospectus 
and  a  land  contract  must  be  construed  together."^  If  two  con- 
'rncts  between  the  same  parties  dealing  with  the  same  subject- 

:i- Georgia,  etc.,  Co.  v.  Smith,  83  isMt.  Morris  v.  Thomas,  158  N. 

Ga.  626;   10  S.  E.  235.  Y.  450;  53  N.  E.  214. 

15  Jennings  V.  Todd,  118  Mo.  296;  i9  Leach  v.   Rains,   149   Ind.    152; 

40  Am.  St.  .Rep.  373;  24  S.  W.  148.  48  N.  E.  858. 

leDrennen  v.  Satterfield,  119  Ala.  20  Drennen  v.  Satterfield,  119  Ala. 

84;   24  So.  723;   Melone  v.  Ruffino,  84;   24  So.  723;   Melone  v.  Ruffino, 

129  Cal.  514;  79  Am.  St.  Rep.  127;  129  Cal.  514;    79  Am.   St.   127;   62 

62  Pac.  93;  Chicago,  etc.,  Bank  v.  Pae.  93;  Delogny  v.  Mercer,  43  La. 
Trust  Co.,  190  TIL  404;  83  Am.  St.  Ann.  205;  8  So.  903;  Shaw  v. 
Rep.  138;  60  X.  E.  586;  affirming.  Church,  44  Minn.  22;  46  X.  W.  146, 
92  111.  App.  366;  Delogny  v.  Mer-  21  Shaw  v.  Church,  44  Minn.  22? 
cer,   43   La.   Ann.   205;    8    So.    903;  46  N.  W.  146. 

Talbott  V.  Heinze,   25  Mont.  4;    63  22  Melone  v.  Ruffino,  129  Cal.  514; 

Pac.  624;  Mt.  Morris  v.  Thomas,  158  79  Am.  St.  Rep.  127;  62  Pac.  93. 

N.  Y.  450;  53  N.  E.  214.  23  Delogny  v.  Mercer.  43  La.  Ann. 

17  Talbott  V.  Heinze,  25  Mont.  4 ;  205 ;  8  So.  903. 

63  Pac.  624. 


GENEEAI,  PKINCIPLES  OF  CONSTRUCTION.  1739 

matter  are  executed  on  different  dates  and  cannot  be  construed 
together,  the  latter  of  course  abrogates  the  earlier.^*  On  the 
other  hand,  if  the  two  instruments  are  not  connected  in  inten- 
tion, especially  where  they  are  executed  on  different  dates,  as 
two  deeds  executed  a  week  apart,^^  or  if  they  deal  with  differ- 
ent subject-matters,  even  if  executed  on  the  same  date,  as  inde- 
pendent contracts  for  the  sale  of  different  lots,^^  they  cannot 
be  construed  together. 

§1117.    Law  part  of  contract. 

The  law  in  force  when  a  contract  is  made  is  a  part  of  sucli 
contract  as  fully  as  if  its  provisions  had  been  incorporated  into 
such  contract.^  Thus  a  contract  between  heirs  with  reference 
to  property  descending  to  them  is  governed  by  the  law  of  de- 
scent as  then  interpreted  by  the  court,  and  a  subsequent  change 
of  judicial  decision  will  not  change  the  legal  effect  of  such 
contract.^  An  unconstitutional  statute  does  not  become  a  part 
of  a  contract  made  after  such  statute  is  passed  and  before  it  is 
declared  unconstitutional,  where  the  contract  does  not  expressly 
incorporate  the  provisions  of  such  statute.^  Even  if  the  pro- 
visions of  the  unconstitutional  statute  are  carried  into  the  con- 
tract in  compliance  with  the  peremptory  requirements  of  such 
statute,  they  do  not  thereby  in  legal  effect  become  a  part  of 
such  contract.*     "  It  is  not  in  the  power  of  the  legislature  to 


24  Heine      Safety-Boiler      Co.      v.  367;    Haskett   v.    Maxey,    134    Ind. 
Francis  Brothers,  10.5  Fed.  413.  182;  19  L.  R.  A.  379;  33  N.  E.  358; 

25  Nye  V.  Lovitt,  92  Va.  710;   24  Graves  County  Water  Co.  v.  Ligon, 
S.  E.  345.                                                     .  112  Ky.  775;  66  S.  W.  725;  Phinney 

26  Clark    V.     Neumann,     56    Neb.  v.  Phinney,  81  Me.  450;   10  Am.  St. 
374;  76  N.  W.  892.  Rep.  266;  4  L.  Jl.  A.  348;    17  Atl. 

1  Bank  v.  Eaton,  95  Fed.  355 ;  Ede  405 ;    Manistee    Iron   Works   Co.   v. 

V.  Knight,  93  Cal.  159;  28  Pac.  860;  Lumber  Co.,  92  Wis.  21;  65  N.  W. 

Kendall  v.  Fader,   199  111.  294;   65  863. 

N.   E.   318;    affirming,    99   III.   App.  2  Haskett  v.  Maxey,  134  Ind.  182: 

104;   Andrews,  etc.,  Co.  v.  Atwood,  19  L.  R.  A.  379;  33  N.  E.  358. 

167  111.  249;  47  N.  E.  387;  affirm-  s  Palmer  v.  Tingle,  55  O.  S.  423; 

ing,    67   111.    App.    303;    Barrett    v.  45  N.  E.  313. 

Boddie,    158    111.    479;    49    Am.    St.  *  People   v.   Coler,    166   N.   Y.    1: 

Rep.  172;   42  N.  E.  143;   43  N.   E.  82  Am.  St.  Rep.  605;  59  N.  E.  716; 


1740  PAGE    ON    CONTRACTS. 

protect  an  invalid  law  from  judicial  scrutiny  by  providing 
that  it  must  receive  the  assent  of  the  parties  to  every  contract 
to  which  it  relates."^ 

§1118.     Covenant  implied  from  writing  equivalent  to  written 
promise. 

Since  a  contract  is  to  be  construed  as  a  whole,  terms  which 
can  be  inferred  from  a  consideration  of  the  entire  instrument 
are  as  much  a  part  of  the  contract  as  if  expressly  set  forth 
therein.^  Thus  a  provision  requiring  notice  may  be  equivalent 
to  a  covenant  to  give  notice.^  So  the  "  assumption  "  of  debts 
includes  a  promise  to  pay  them,^  and  a  provision  that  ''  bills  bear 
interest  after  maturity  "  includes  a  contract  to  pay  interest.* 
This  principle  is  often  invoked  where  questions  of  mutuality 
are  concerned.  If  the  consideration  relied  upon  for  one  execu- 
tory promise  is  another,  such  other  must  itself  be  binding  to 
constitute  a  legal  obligation  and  a  valuable  consideration.  Al- 
though the  promise  relied  upon  as  a  consideration  may  not  be 
expressly  stated  in  any  clause  of  the  contract,  still  if  it  appears 
from  the  entire  contract  that  such  promise  is  intended,  it  will 
be  as  binding  and  as  much  a  valuable  consideration  as  though 
it  were  expressly  stated.^  Thus  a  promise  to  pay  for  realty 
agreed  to  be  conveyed,^  or  to  permit  the  use  of  certain  realty 
in  consideration  of  the  lease  of  other  realty^  may  be  implied 

Cleveland  v.  Construction  Co.,  67  0.  2  Wells  v.  Alexandre,    130   N.   Y. 

S.  197;  93  Am.  St.  Rep.  670;  59  L.  642;  15  L.  H.  A.  218;  29  N.  E.  142. 

R.  A.   775;    65   N.   E.   885.  3  Lenz  v.  Ry.,  Ill  Wis.  198;  86  N. 

5  People  V.  Coler,  166  N.  Y.  1,  9;  W.  607. 

82  Am.  St.  Rep.  605;  59  N.  E.  716;  4  Braun  v.  Hess,  187  111.  283;   79 

quoted  in  Cleveland  v.  Construction  Am.  St.  Rep.  221;  58  N.  E.  371. 

Co.,  67  O.  S.  197;  9.3  Am.  St.  670;  s  Lawler  v.  Murphy,  58  Conn.  294; 

59  L.  R.  A.  775;  65  N.  E.  885.  8  L.  R.  A.  113;  20  Atl.  457;  Haines 

iLawler    v.    Murphy,    58    Conn.  v.   Dearborn,    199   Pa.   St.  474;    49 

294;   8  L.  R.  A.   113;   20  Atl.  457;  Atl.  319. 

Grimley  v.  Davidson,   133   HI.   116;  e  Haines  v.  Dearborn,  199  Pa.  St. 

24  N.  E.  439;   Nicoll  v.  Sands,  131  474;  49  Atl.  319. 

N.  Y.   19;   29  N.  E.  818;   Jugla  v.  7  stubblefield    v.    Imbler,    33    Or. 

Trouttet,    120  N.   Y.   21;    23   N.   E.  446;  54  Pac.  198. 
1066;  New  England,  etc.,  Co.  v,  R. 
R.  Co.,  91  N.  Y.  153. 


GENEKAL  I'KINCIPLES  OF  CONSTRUCTION. 


1741 


from  the  entire  contract.  So  a  clause  "  machines  to  be  re- 
turned by  B  to  A  at  the  termination  of  the  contract  on  her 
repayment  of  their  original  cost "  binds  A  to  accept  such 
machines  and  to  repay  their  original  cost.* 

§1119.     Written  and  printed  provisions. 

If  the  contract  is  written  in  part  and  printed  in  part,  as 
where  it  has  been  filled  in  upon  a  printed  form,  the  parties 
usually  pay  much  more  attention  to  the  written  parts  than  to 
the  printed  parts.  Accordingly  if  the  written  provisions  can- 
not be  reconciled  with  the  printed  the  written  provisions  con- 
trol.^ The  written  parts  are  "  the  immediate  language  and 
terms  selected  by  the  parties  themselves  for  the  expression  of 
their  meaning,""  and  accordingly  must  control  in  case  of  con- 
flict. Thus  where  in  a  land  contract  the  written  and  printed 
portions  are  at  variance  as  to  the  character  of  deed  to  be  given 
the  written  controls.^ 

The  same  principle  applies  where  a  contract  has  been  filled 
in  in  writing  upon  the  blanks  in  a  type-written  form.^  The 
written  part  will,  however,  prevail  only  in  so  far  as  the  inten- 


8  Norfolk,  etc.,  Co.  v.  Arnold,  64 
N.  J.  254;  45  Atl.  608;  reversing, 
44  Atl.  192. 

lAlsager  v.  Dock  Co.,  14  M.  & 
VV.  794;  Robertson  v.  French,  4 
East  130;  Hagan  v.  Ins.  Co.,  186 
U.  S.  423;  Thornton  v.  E.  R.,  84 
Ala.  109;  5  Am.  St.  Rep.  337;  4  So 
197;  Chicago  v.  Weir,  165  111.  582 
46  N.  E.  725 ;  affirming,  67  111.  App 
247;  Summers  v.  Hibbard,  153  111 
102;  46  Am.  St.  Rep.  872;  38  N.  E 
899;  Holmes  v.  Parker,  125  111.  478 
17  N.  E.  759;  affirming,  25  HI.  App 
225;  People  v.  Dulaney,  96  111.  503 
Adams  Express  Co.  v.  Pinckney,  29 
111.  392;  Mansfield  Machine  Works 
V.  Lowell,  62  Mich.  546;  29  N.  W. 
105;  Murray  v.  Pillsbury.  59  Minn. 
85;  60  N.  W.  844;  Frost's,  etc.,  Co. 
V.  Ins.  Co.,  37  Minn.  300;  5  Am.  St, 


Rep.  846;  34  N.  W.  35;  Davis  v. 
Creamery  Co.,  48  Neb.  471;  67  N. 
W.  436;  Union  Pacific  Ry.  v.  Grad- 
dy,  25  Neb.  849;  41  N.  W.  809; 
Eager  v.  Mathewson,  —  Nev.  — ; 
74  Pac.  404;  Commonwealth,  etc., 
Co.  V.  Ellis,  192  Pa.  St.  321;  73 
Am.  St.  Jlep.  816;  43  Atl.  1034; 
Dick  V.  Ireland,  130  Pa.  St.  299;  18 
Atl.  735;  Duffield  v.  Hue,  129  Pa. 
St.  94;  18  Atl.  566;  Gilbert  v. 
Stockman,  76  Wis.  62;  20  Am.  St. 
Rep.  23 ;  44  N.  W.  845. 

2  Summers  v.  Hibbard,  153  111. 
102,  109;  46  Am.  St.  Rep.  872;  38 
N.  E.  899. 

3  Gilbert  v.  Stockman,  76  Wis.  62 ; 
20  Am.  St.  Rep.  23 ;  44  N.  W.  845. 

4  Sprague  Electric  Co.  v.  Henne- 
pin County,  83  Minn.  262;  86  N.  W. 
332. 


1742  PAGE    ON    CONTBACTS. 

tion  of  the  parties  to  modify  tlie  printed  portion  by  the  writ- 
ten can  fairly  be  inferred,^  and  the  two  provisions  will  be  con- 
strued  together   if   possible.*' 

§1120.     Contract  to  be  upheld  by  construction  if  possible. 

As  between  two  constructions,  each  reasonable,  one  of  which 
will  make  the  contract  enforceable,  and  the  other  of  which 
will  make  it  unenforceable,  that  construction  which  makes  the 
contract  enforceable  will  be  preferred.^  Thus  if  a  contract  is 
fairly  open  to  two  constructions,  one  of  which  will  accomplish 
the  intention  of  the  parties  and  the  other  of  which  will  defeat 
such  intention^  or  will  make  the  contract  meaningless,^  the 
former  construction  is  to  be  preferred.  So  if  one  construc- 
tion will  make  a  contract  legal  and  another  will  make  it  illegal 
the  former  is  to  be  preferred.*  So  a  construction  which  will 
accord  with  public  policy  is  to  be  preferred  to  one  contrary 
thereto.^  If  the  interest  of  the  public  is  affected  by  a  contract, 
it  should  be  construed  so  as  to  protect  such  interest.** 

§1121.     Contract  construed  to  be  fair  and  reasonable. 

As  between  two  constructions,  each  probable,  one  of  which 
makes  the  contract  fair  and  reasonable  and  the  other  of  which 

5  Frost,   etc.,    Co.   v.    Ins.    Co.,    37  272;   Atlanta   Guano  Co.  v.   Phipps 

Minn.  300;   5  Am.  St.  Rep.  846;   34  (Tenn.  Ch.  App.),  41  S.  W.  1087. 
N.  W.  35.  3  Shreffler  v.  Nadelhoffer,  133  111. 

eHardie,  etc.,  Co.  v.  Oil  Mill,  —  536;  23  Am.  St.  Rep.  626;  25  N.  E. 

Miss.  — ;  36  So.  262.  630. 

1  Shreffler  v.  NadelhoflFer,  133  111.  *  South  Carolina,  etc.,  Hy.  v.  Ry., 
536;  23  Am.  St.  Rep.  626;  25  N.  E.  93  Fed.  543;  35  C.  C.  A.  423;  Wyatt 
630;  New  Memphis  Gaslight  Co.  v.  Irrigation  Co.,  18  Colo.  298;  36 
Cases,  105  Tenn.  268;  80  Am.  St.  Am.  St.  Rep.  280;  33  Pac.  144;  Al- 
Rep.  880;  60  S.  W.  206;  Morley  v.  free  v.  Gates,  82  la.  19;  47  N.  W. 
Power,  10  Lea   (Tenn.)   219.  993;  Pitney  v.  Bolton,  45  N.  J.  Eq. 

2  Cravens  V.  Cotton  Mills,  120  Ind.  639;  18  Atl.  211;  North  Pacific 
6;  16  Am.  St.  Rep.  298;  21  N.  E.  Lumber  Co.  v.  Spore,  —  Or.  — ; 
981 ;    Powers  v.   Clarke,    127   N.   Y.  75  Pac.  890. 

417;   28   N.  E.  402;   New  Memphis  5  Rackemann  v.  Improvement  Co., 

Gaslight  Co.  Cases,   105  Tenn.  268;  167  Mass.  1;   57  Am.  St.  Rep.  427; 

80  Am.  St.  Rep.  880;  60  S.  W.  206;  44  N.  E.  990. 

Frierson  v.  Blanton,  1  Baxt.  (Tenn.)  e  Joy  v.  St.  Louis,  138  U.  S.  1. 


GENERAL  PRINCIPLES  OF  CONSTRUCTION.  1743 

inakes  it  unfair  and  unreasonable,  the  former  should  always 
be  preferred/  Thus  a  contract  by  a  principal  to  furnish  his 
agent  samples  and  advertising  matter  means  a  reasonable 
amount,  and  not  whatever  the  agent  may  demand."  So  a  con- 
tract to  furnish  machinery  to  be  set  up  in  "  good  working  or- 
der "  means  not  at  the  very  moment  of  completing  the  work, 
but  after  giving  the  vendee  a  reasonable  opportunity  for  testing 
it.^  A  contract  by  A  to  construct  a  heater  to  B's  satisfaction 
means,  if  B  dies  before  the  heater  is  finished,  to  the  satisfaction 
of  B's  executor  and  devisee,  and  not  to  B's  satisfaction.*  Where 
A  agreed  to  pay  B  for  certain  advertising  by  deducting  the 
amount  of  such  bill  from  the  price  of  any  launch  that  B  might 
buy  of  A,  it  was  held  that  such  launch  was  to  be  sold  on 
"  exactly  the  same  terms  as  it  offered  other  customers,"^  So 
under  a  contract  for  the  sale  of  sugar  "  for  shipment  within 
thirty  days  by  sail  or  steam  at  seller's  option,"  "  shipment  '^ 
means  placing  the  sugar  within  such  time  on  board  of  a  vessel 
which  is  honestly  endeavoring  to  secure  a  full  cargo,  and  which 
is  bound  for  the  proper  port,  and  does  not  mean  that  such  vessel 
must  clear  within  such  time.*'  So  contracts  in  restraint  of  trade 
will  be  construed  to  impose  reasonable  limitations  as  to  time^ 


Ungersoll    v.    Coram,     127     Fed.  12  Am.  St.  Rep.  888;  17  Atl.  665. 
418;    McElroy    v.    Swope,    47    Fed.  3  Edison,   etc.,   Co.   v.   Navigation 
380;    Wyatt    v.    Irrigation    Co.,    18  Co.,  8  Wash.  370;  40  Am.  St.  Rep. 
Colo.  298;   36  Am.  St.  Rep.  280;  33  910;  24  L.  R.  A.  315;  36  Pac.  260. 
Pac.   144 ;   Bartlett  v.  Wheeler,   195  *  Adams  Radiator  Co.  v.  Sehnader, 
111.   445;    63   N.   E.    169;    affirming,  155   Pa.   St.   394;    35   Am.   St.   Rep. 
96  111.  App.  342;  Dederick  v.  Wolfe,  893;  26  Atl.  745. 
68  Miss.  500;  24  Am.  St.  Rep.  283;  s  Hand   v.   Power   Co.,    167   N.  Y. 
9    So.    350;    Lovelace   v.   Travelers',  142;  60  N.  E.  425. 
etc.,   Association,    126   Mo.    104;    47  6  Ledon  v.  Havermeyer,  121  N.  Y. 
Am.  St.  Rep.  638;  30  L.  R.  A.  209;  179;  8  L.  R.  A.  245;  24  N.  E.  297. 
28  S.  W.  877;   Gillett  v.  Bank,  160  7  Saddlery  Hardware  Mfg.   Co.  v. 
N.  Y.  549;  55  N.  E.  292;  Wright  v.  Hillsborough   Mills,   68   N.   H.   216; 
Reusens,  133  N.  Y.  298,  305;  31  N.  73  Am.  St.  Rep.  569;   44   Atl.   300. 
E.  215;  Travelers' Ins.  Co.  V.  Myers,  (Here   a    contract    by    a    vendor    of 
62  O.  S.  529;   49  L.  R.  A.  760;   57  goods  not  to  sell  like  goods  to  any- 
N.  E.  458;  Kentzler  v.  Accident  As-  one   else   in   that   locality   was   con- 
sociation, 88  Wis.  589;   43  Am.  St.  strued  to  mean  until  vendee  had  a 
Rep.  934;  60  N.  W.  1002.  reasonable     opportunity     to     resell 

2  Jensen  v.  Perry,  126  Pa.  St.  495;  such  goods.) 


1744  PAGE    ON    CONTRACTS. 

or  place,*  if  it  does  not  appear  to  be  the  intention  of  the 
parties  to  impose  an  unreasonable  limitation.  So  a  contract 
not  to  sell  certain  realty  for  less  than  a  certain  price  will  be 
construed  to  restrict  it  for  a  reasonable  time  only.* 

§1122.    The  rule  contra  proferentem. 

If  terms  of  a  contract  appear  on  their  face  to  be  inserted 
for  the  benefit  of  one  of  the  parties,  he  will  be  considered  as 
having  inserted  such  terms  and  as  having  chosen  the  language 
thereof.  Any  ambiguity  in  such  language  is  therefore  to  be 
construed  more  strongly  against  the  party  making  use  of  such 
language.^  This  rule  is  summarized  in  the  maxim  "  Fortius 
contra  proferentem.^^  Thus  a  contract  of  sale  has  been  con- 
strued more  strictly  against  the  vendor;^  a  contract  to  repair 
more  strictly  against  the  builder  who  drew  it  f  restrictions  on  a 
carrier's  Common  Law  liability  more  strictly  against  the  car- 
rier f  conditions  in  an  insurance  policy  more  strictly  against 
the  insurer.^  This  rule,  if  rightly  applied,  has  especial  force 
with  reference  to  such  contracts  as  are  not  favored  by  the  law. 

sDethlefs  v.  Tamsen,  7  Daly   (N.  149  N.  Y.  307,  313;  43  N.  E.  856? 

Y.)  354.  Paul  v.  Ins.  Co.,  112  N.  Y.  472;  8 

9  Rackemann  v.  Improvement  Co.,  Am.  St.  Rep.  758;  3  L.  R.  A.  443; 

167  Mass.  1;  57  Am.  St.  Rep.  427;  20  N.  E.  347;  Kendrick  v.  Ins.  Co., 

44  X.  E.  990.  124  N.  C.  315;  70  Am.  St.  Rep.  592; 

1  Davis-,  etc.,  Co.  v.  Jones,  66  Fed.  32   S.  E.  728 ;   \Yebster  v.  Ins.  Co., 

124;   Supreme  Council,  etc.,  v.  Cas-  53  O.  S.  558;  53  Am.  St.  Rep.  658; 

ualty  Co.,  63  Fed.  48;   11   C.  C.  A.  30  L.  R.  A.  719;  42  N.  E.  546;  D. 

96;    Simpson   v.   United    States,    31  M.  Osborne  &  Co.  v.  Stringham,  4  S. 

Ct.    CI.    217;    Chambers    v.    United  D.  593;  57  N.  W.  776. 
States,  24  Ct.  CI.  387;  Wyatt  v.  Ir-  2  Delogny  v.  Mercer,  43  La.  Ann, 

rigation  Co.,  18  Colo.  298;   36  Am.  205;  8  So.  903. 

St.  Rep.  280;   33  Pac.   144;   Hill  v.  -  Laidlaw  v.  Marye,  133  Cal.  170; 

Mfg.  Co.,  79  Ga.  105;  3  S.  E.  445;  65  Pac.  391. 

Mueller  v.  University,  195  111.  236;  4  Texas,  etc.,  Ry.  v.  Reiss,  183  U. 

88  Am.  St.  Rep.  194;  63  X.  E.  110;  S.    621;    Hinkle   v.   Ry.,    126   X.   C. 

affirming,  95  111.  App.  258;   Rogers  932;  78  Am.  St.  Rep.  685;  36  S.  E. 

V.  Ins.  Co.,  121  Ind.  570;  23  X.  E.  348;  Amory  Mfg.  Co,  v.  Ry.,  89  Tex. 

498;    Bowser   v.   Patrick    (Ky.),   65  419;  59  Am.  St.  Rep.  65;  37  S.  W. 

S.  W.  824;   St.  Landry  State  Bank  856. 

V.  Meyers,  52  La.  Ann.  1769;  28  So.  s  London  Assurance   Co.  v.    Com- 

136;  Gillettv.  Bank.  160  X.  Y.  549;  panhia  de  Moagens.   167  U.  S.  149; 

55  X.  E.  292;  Rickerson  v.  Ins.  Co.,  First  Xational  Bank  v.  Ins.  Co.,  9c 


GENERAL  PRINCIPLES  OF  CONSTRUCTION.  1745 

Thus  covenants  for  forfeitures/  such  as  covenants  inserted  in 
insurance  policies/  are  construed  strictly  against  the  party  for 
whose  benefit  they  are  exacted.  Thus  under  an  insurance  pol- 
icy containing  a  provision  that  the  policy  should  be  incontest- 
able after  three  years,  and  another  provision  avoiding  the  policy 
"  if  the  insured  die  in  consequence  of  his  own  criminal  action," 
the  latter  clause  was  held  not  to  apply  after  the  expiration  of 
three  years.^  To  have  this  rule  apply,  the  contract  must,  on 
its  face,  show  which  party  makes  use  of  the  langTiage.  Oral 
evidence  is  inadmissible  to  show  which  party  stipulated  for  cer- 
tain  terms.^  The  rule  contra  proferentem  is  not  one  of  the 
favored  rules  of  construction.  Indeed,  it  is  said  that  it  is  to 
be  resorted  to  only  when  the  other  rules  fail.^" 

» 
§1123.     Surrounding  circumstances. 

The  parties  to  a  contract  choose  words  to  express  their  inten- 
tion in  view  of  all  the  surrounding  circumstances.  It  is  prac- 
tically impossible  to  state  these  facts  in  the  contract,  and  is 
rarely  if  ever  attempted.  The  court  which  construes  the  con- 
tract must  therefore  either  disregard  all  the  material  facts 
which  led  the  parties  to  express  their  intention  as  they  did,  or 
else  admit  extrinsic  evidence  of  the  surrounding  facts  and  cir- 
cumstances. In  this  dilemma  the  courts  have  chosen  the  latter 
alternative.  It  is  a  recognized  rule  of  construction  that  the 
court  will  place  itself  in  the  position  of  the  parties  who  made 

U.  S.  673;   Forest  City  Ins.  Co.  v.  Deming,  123  Ind.  384;  24  N.  E.  86, 

Hardesty,    182   111.   39;    74   Am.   St.  375;    Connecticut   Fire    Ins.    Co.   v. 

Rep.    161;    55   N.   E.    139;    Paul  v.  Jeary,    60   Neb.    338;    51    L.    R.   A. 

Ins.  Co.,  112  N.  Y.  472;  8  Am.  St.  698;  83  N.  W.  78;  Webster  v.  Ins. 

Rep.  758;  3  L.  R.  A.  443;  20  N.  E.  Co.,  53  O.  S.  558;   53  Am.  St.  Rep. 

347;   ^A^bster  v.  Ins.  Co.,  53  O.   S.  658;  30  L.  R.  A.  719;  42  N.  E.  546; 

558;  53  Am.  St.  Rep.  658;  30  L.  R.  MeXamara  v.  Ins.  Co.,  1  S.  D.  342; 

A.  719;  42  N.  K  546.  47  N.  W.  288. 

6  Jacobs  V.  Spalding,  71  Wis.  177;  «  Sun  Life  Ins.  Co.  v.  Taylor,  108 

36  N.  W.  608.  Ky.  408 ;   94  Am.  St.  Rep.  383 ;   56 

T  Thornton    v.   Ins.    Co.,    116    Ga.  S.  W.  668. 

121;   94  Am.  St.  Rep.  99;  42  S.  E.  9  Hull,  etc.,  Co.  v.  Coke  Co.,  113 

287;   Forest  City  Ins.  Co.  v.  Har-  Fed.  256;  51  C.  C.  A.  213. 

desty,  182  HI.  39;  74  Am.  St.  Rep.  lo Patterson  v.  Gage,  11  Colo.  50; 

161;  55  N.  E.  139;  ^tna  Ins.  Co.  v.  16  Pae.  560. 
110 


1746 


PAGE    ON    CONTRACTS. 


the  contract  as  nearly  as  can  be  done,  by  admitting  evidence  of 
the  surrounding  facts  and  circumstances/  the  nature  of  the 
Bubject-matter,^  the  relation  of  the  parties  to  the  contract/ 
and  the  objects  sought  to  be  accomplished  by  the  contract.* 


1  Chicago,  etc.,  Ey.  v,  Ey.,  143  U. 
S.  596;  Eeid  v.  Insurance  Co.,  95  U. 
S.  23;  Nash  v.  Towne,  5  Wall.  (U. 
S.)  689;  Hull,  etc.,  Co.  v.  Coke  Co., 
113  Fed.  256;  51  C.  C.  A.  213;  Fox 
V.  Tyler,  109  Fed.  258;  48  C.  C.  A. 
356;  Kauffman  v.  Eaeder,  108  Fed. 
171;  54  L.  E.  A.  247;  47  C.  C.  A. 
278;  Campbell  v.  Moran  Bros.  Co., 
97  Fed.  477;  38  C.  C.  A.  293;  Speed 
V.  Ey.,  86  Fed.  235;  30  C.  C.  A.  1; 
Mississippi  Elver  Logging  Co.  v. 
Eobson,  69  Fed.  773;  16  C.  C.  A. 
400;  Crass  v.  Scruggs,  115  Ala.  258; 
22  So.  81;  Eemy  v.  Olds  (Cal.), 
21  L.  E.  A.  645;  34  Pac.  216; 
Union  Pacific  Ey.  v.  Anderson,  11 
Colo.  293;  18  Pac.  24;  Illges  v.  Dex- 
ter, 77  Ga.  36;  Burke,  etc.,  Co.  v. 
Wells,  etc.,  Co.,  7  Ida.  42;  60  Pac. 
87;  Givens  v.  Keeney,  7  Ida.  335; 
63  Pac.  110;  Illinois  Terra  Cotta 
Lumber  Co.  v.  Owen,  167  111.  360; 
47  N.  E.  722 ;  reversing,  64  III.  App. 
632;  Street  v.  Storage  Co.,  157  111. 
605;  41  K  E.  1108;  Torrence  v. 
Shedd,  156  111.  194;  41  N.  E.  95; 
42  N.  E.  171;  Dougherty  v.  Eogers, 
119  Ind.  254;  3  L.  E.  A.  847;  20  N. 
E.  779;  New  York,  etc.,  Ey.  v.  Ey., 
116  Ind.  60;  18  N.  E.  182;  Ketcham 
V.  Coal  Co.,  88  Ind.  515;  Crane  v. 
Williamson,  111  Ky.  271;  63  S.  W. 
610,  975;  Watson  v.  Succession  of 
Barber,  105  La.  456;  29  So.  949; 
Eackemann  v.  Improvement  Co.,  167 
Mass.  1 ;  57  Am.  St.  Eep.  427 ;  44  N. 
E.  990;  Hoose  v.  Ins.  Co.,  84  Mich. 
309;  11  L.  E.  A.  340;  47  N.  W.  587; 
Mathews  v.  Phelps,  61  Mich.  327; 
1  Am.  St.  Eep.  581;  28  N.  W.  108; 
Nordyke  &  Marmon  Co.  v.  Kehlor, 
155  Mo.  643;  78  Am.  St.  Eep.  600; 


56  S.  W.  287 ;  Eice  v.  McCague,  61 
Neb.  861;  86  N.  W.  486;  Saddlery 
Hardware  Mfg.  Co.  v.  Hillsborough 
Mills,  68  N.  H.  216 ;  73  Am.  St.  Eep. 
569 ;  44  Atl.  300 ;  Cohen  v.  Envelope 
Co.,  166  N.  Y.  292;  59  N.  E.  906; 
Gillet  V.  Bank,  160  N.  Y.  549 ;  55  N. 
E.  292;  Sattler  v.  Hallock,  160  N. 
Y,  291;  73  Am.  St.  Eep.  686;  46  L. 
E.  A.  679;  54  N.  E.  667;  Berry 
Harvester  Co.  v.  Machine  Co.,  152 
N.  Y.  540;  46  N.  E.  952;  Smith  v. 
Kerr,  108  N.  Y.  31;  2  Am.  St.  Eep. 
362;  15  N.  E.  70;  Eeynolds  v.  Ins. 
Co.,  47  N.  Y.  597;  Mosier  v.  Parry, 

60  0.  S.  388;  54  N.  E.  364;  Shel- 
don's Estate,  —  Wis.  — ;  97  N.  W. 
524. 

sPensacola  Gas  Co.  v.  Lotze,  23 
Fla.  368;  2  So.  609;  Mathews  v. 
Phelps,  61  Mich.  327;  1  Am.  St.  Eep. 
581;  28  N.  W.  108;  Crocker  v.  Hill, 

61  N.  H.  345 ;   60  Am.  Eep.  322. 

3  Hall  V.  Bank,  133  111.  234;  24 
N.  E.  546;  Holmes  v.  Parker,  125 
111.  478;  17  N.  E.  759;  affirming, 
25  111.  App.  225;  Holmes  v.  Bemis, 
124  111.  453;  17  N.  E.  42;  affirming, 
25  111.  App.  232;  H.  G.  Olds  Wagon 
Works  V.  Combs,  124  Ind.  62;  24  N. 
E.  589;  Darrah  v.  Gow,  77  Mich. 
16;  43  N.  W.  851;  Morgan  v.  Ey., 

57  Mich.  430;  25  N.  W.  161;  26  N. 
W.  865;  Farr  v.  Nichols,  132  N.  Y. 
327;  30  N.  E.  834;  Blood  v.  Ele- 
vator Co.,  1  S.  D.  71 ;  45  N.  W.  200; 
Heatherly  v.  Bank,  31  W.  Va.  70; 
5  S.  E.  754. 

4  Kauffman  v.  Eaeder,  108  Fed. 
171;  54  L.  E.  A.  247;  47  C.  C.  A. 
278;  Eockefeller  v.  Merritt,  76  Fed. 
909;  35  L.  E.  A.  633;  22  C.  C.  A. 
608;  Davis  v.  Eobert,  89  Ala.  402; 


GENEEAL  PRINCIPLES  OF  CONSTRUCTION.  1747 

Thus  in  contracts  of  guaranty,'  contracts  between  pro- 
motors  of  a  corporation,*  and  contracts  of  bailment^  the  sur- 
rounding facts,  the  relations  of  the  parties  and  the  object 
of  the  contract  may  all  be  looked  to.  Even  though  the  contract 
is  in  writing  extrinsic  evidence  of  the  surrounding  facts  and 
circumstances  is  admissible  to  aid  the  court  to  determine  the 
intention  of  the  parties.^  Thus  extrinsic  evidence  of  the  sur- 
rounding facts  is  admissible  to  show  want  of  consideration,* 
whether  a  contract  is  severable  or  not^"  or  the  mode  of  perform- 
ance.^^ Where  one  tenant  in  common  agreed  to  sell  realty  to 
another,  it  was  permitted  to  show  that  they  were  partners  and 
that  the  balance  due  one  of  them  from  the  firm  was  to  be 
applied  on  the  price  of  the  land.^'  Thus  in  a  contract  to  re- 
lease dower  in  consideration  of  one  fourth  of  the  proceeds  of 
the  property  extrinsic  evidence  is  admissible  to  show  that  the 
proceeds  are  the  rents,  and  that  an  expensive  building  was 
erected  upon  the  property  after  this  contract  was  made."  So 
where  a  note  was  given  for  $240,  payable  in  case  certain  taxes 
were  not  rebated,  "  or  such  part  of  the  above  sum  as  may  not 
be  rebated,"   extrinsic  evidence  was  admissible  to  show  that 

18   Am.   St.   Eep.    126;    8   So.    114;  8  Western  Union  Telegraph  Co.  v. 

Construction     Information     Co.     v.  Telephone  Co.,  105  Fed.  684;  Bank 

Cass,    74    Conn.   213;    50   Atl.    563;  v.  Brigham,  61   Kan.   727;    60  Pac. 

Cravens  V.  Cotton  Mills,  120  Ind.  6;  754;    reversing,    58   Pac.    1117;    Al- 

16  Am.  St.  Rep.  298;  21  N.  E.  981;  vord  v.  Cook,  174  Mass.  120;  54  N. 

Eackemann     v.     Improvement     Co.,  E.   499;    White  v.   Rice,    112   Mich. 

167  Mass.  1;  57  Am.  St.  Rep.  427;  403;    70  N.  W.    1024;    Douthett  v. 

44  N.  E.  990;  Nordyke  &  Marmon  Gas  Co.,  202  Pa.  St.  416;    51  Atl. 

Co.  v.  Keillor,  155  Mo.  643;  78  Am.  981;  Uhl  v.  Ry.,  51  W.  Va.  106;  41 

St.  Rep.  600;  56  S.  W.  287;  Mosier  S.  E.  340. 

V.   Parry,   60  O.   S.   388 ;    54   N.   E.  9  Spies  v.  Rosenstock,  87  Md.  14 ; 

364 ;  Lancaster  Mills  v.  Cotton-press  39  Atl.  268. 

Co.,   89   Tenn.    1;    24  Am.   St.  Rep.  lo  Morrison  v.   Baechtold,   93  Md. 

586;  14  S.  W.  317.  319;  48  Atl.  926. 

5  Cambria  Iron  Co.  v.  Keynes,  56  nYorston   v.    Brown,    178    Mass. 
O.  S.  501 ;  47  N.  E.  548.  103 ;  59  N.  E.  654. 

6  Mosier  v.  Pany,  60  O.  S.  388;  isRedfield  v.  Gleason,  61  Vt.  220; 
54  N.  E.  364.  15  Am.  St.  Rep.  889;  17  Atl.  1075. 

7  Lancaster  Mills  v.   Cotton-press  i3  Irwin  v.  Powell,   188  111.   107; 
Co.,   89   Tenn.   1 ;   24   Am.   St.  Rep.  58  N.  E.  941. 

586;  14  S.  W.  317. 


17^1:8  PAGE    ON    CONTRACTS. 

the  taxes  amounted  to  $842,  and  that  the  note  was  not  to  be 
paid  if  $240  or  more  of  such  taxes  were  rebated.^*  So  where  a 
village  made  a  contract  to  take  the  water  it  might  "  need  or 
desire  for  any  and  all  purposes,"  extrinsic  evidence  is  admissi- 
ble to  show  that  when  the  contract  was  made  the  village  had  a 
partial  supply  of  water/^  If  the  meaning  of  a  written  contract 
is  clear,  evidence  of  the  surrounding  facts  is  inadmissible  to 
contradict  its  terms.^®  Thus  where  in  return  for  money  put 
into  his  business  by  his  wife  a  husband  gives  her  a  note,  prom- 
ising to  pay  her  son  $800  after  her  death,  evidence  of  his  means 
and  the  amount  expended  by  him  for  her  in  her  last  illness 
is  inadmissible  to  show  that  he  is  not  liable  on  the  note/^ 

§1124.     Grammatical  accuracy  and  punctuation. 

Grammatical  accuracy  is  preferred  and  presumed.  How- 
ever, a  construction  fair,  reasonable  and  consistent,  but  involv- 
ing grammatical  inaccuracy,  will  not  yield  to  a  construction 
more  accurately  grammatical,  but  less  fair  and  reasonable.^ 
On  the  same  principle  punctuation  may  be  ignored  in  order 
to  adopt  the  more  reasonable  of  two  constructions.^  Thus  of 
the  words  "  lien  operation  and  effect,"  lien  is  not  supposed  to 
be  an  adjective  because  no  comma  follows.^  Still  if  two  con- 
structions are  equally  probable,*  or  other  means  of  ascertaining 
which  meaning  was  intended  are  lacking^  punctuation  may  bep 
resorted  to. 

14  Carr  v.  Jones,  29  Wash.  78 :  i  Ketchum  v.  Spurlock,  34  W.  Yd. 
69  Pac.  646.  597;  12  S.  E.  832. 

15  Gregory  v.  Village  of  Lake  Lin-  2  Holmes  v.  Ins.  Co.,  98  Fed.  240 } 
den,  136  Mich.  368;  90  N.  W.  29.  47  L.  R.  A.  308;   39  C.  C.  A.  45; 

16  Moody  V.  Ry.,  124  Ala.  195;  Ketchum  v.  Spurlock,  34  W,  Va. 
26  So.  952;  Moore  v.  Teriy,  66  Ark.  597;   12  S.  E.  832. 

393;  50  S.  W.  998;  Camden  v.  Me-  3  Abbott's  Estate,  198  Pa.  St,  493; 

Coy,  48  W.  Va.  377;  37  S.  E.  637;  48  Atl.  435. 

Johnson  v.  Pugh,  110  Wis.  167;  85  4  Joy  v.  St.  Louis.  138  U.  S.  1. 

X.  W.  641.  sEwing   v.   Burnet,    11    Pet.    (U. 

IT  Baxter  v.  Camp,  71  Conn.  245;  S.)    41;    Armory  Mfg.   Co.   v.   Ry., 

71  Am.  St.  Rep.  169;   42  L.  R.  A.  89  Tex.  419;   59  Am.  St.  Rep.  65,- 

614;    41    Atl.    803.     (Though    in   a  37  S.  W.  856. 
suit  by  her  administrator  it  might 
be  available  as  a  set  off.) 


GENERAL  PKINCIPLES  OF  CONSTRUCTION.  1749 

§il25.     Omissions,  errors  and  surplusage. 

Words  -which  are  omitted  by  inadvertance  from  a  written, 
contract  may  be  supplied  by  construction  at  law,  without  resort 
to  reformation  if  the  context  shows  what  words  are  omitted/ 
Thus  the  omiasion  of  a  dollar  sign  may  be  supplied  from  a  con- 
text which  shows  that  money  was  contracted  for,  as  the  number 
given  will  be  assumed  to  refer  to  dollars  as  units  of  value.^ 
So  in  a  promise  to  pay  "  twenty-five  after  date  "  the  surround- 
ing facts  may  be  looked  to  to  show  that  "  days  "  was  the  omitted 
word.^  So  figures  showing  numbers  may  be  used  to  supply 
the  numbers  omitted  from  the  words  in  the  body  of  the  instru- 
ment.* So  in  a  provision,  "  In  case  the  said  party  of  the  first 
part  shall  to  fully  and  entirely,"^  the  word  "  fail  "  may  be  sup- 
plied from  a  corresponding  provision  containing  the  phrase, 
*'  to  be  in  default."  Errors  apparent  on  the  face  of  the  instru- 
ment may  be  corrected  at  law  by  construction  without  resort 
to  equity.^  Thus  the  context  may  show  that  "  or "  means 
*'  and."^  If  words  or  phrases  in  a  contract  are  without  mean- 
ing, they  may  be  rejected  as  surplusage  without  defeating  the 
contract.  Thus  abbreviations^  or  the  sigTi  "  etc."^  may  be  ig- 
nored in  construction  if  without  meaning. 

§1126.     Practical  construction  by  parties. 

If  a  contract  is  ambiguous  in  meaning,  the  practical  con- 
struction put  upon  it  by  the  parties  thereto  is  of  great  weight, 

1  Richelieu  Hotel  Co.  v.  Encamp-  5  Monmouth  Park  Association  v. 
ment  Co.,  140  112.  248;  33  Am.  St.  Iron  Works,  55  N.  J.  L.  132;  39 
Rep.  234;  29  X.  E.  1044;  Gran  v.  Am.  St.  Rep.  626;  19  L.  R.  A.  456; 
Spangenberg.  53  Minn.  42 ;  54  N.  W.  26  Atl.  140. 

933;  Monmouth  Park  Association  V.  6  Siegel,    etc..    Co.    v.    Colby,    176 

Iron   Works,   55   N.   J.   L.    132;    39  111.  210;  52  N".  E.  917;  affirming.  61 

Am.  St.  Rep.  626,  19  L.  R.  A.  456;  111.  App.  315. 

26  Atl.  140;  Sisson  v.  Donnelly,  36  ^  Bettman  v.  Harness,  42  W.  Va. 

N.  J.  L.  432.  433 :  36  L.  R.  A.  566. 

2  Richelieu  Hotel  Co.  v.  Encamp-  8  Berry  v.  Kowalsky.  95  Cal.  134; 
ment  Co..   140  111    248:   33  Am.  St.  29  Am.  St.  Rep.  101;  30  Pac.  202. 
Rep.  234 ;  29  N.  E.  1044.  9  Harrison  v.  IMcCormick.  89  Cal. 

sBoykin  v.  Bank,  72  Ala.  262;  47  327:  23  Am,  St.  Rep.  469;  26  Pac. 
Am.  Rep.  408.  830. 

4  Gran  v.  Spangmberg.  53  Minn. 
42;  54  N.  W.  933. 


1750 


PAGE    OIST    CONTRACTS. 


even  though  tlie  contract  is  in  writing/  and,  ordinarily,  is  con- 
trolling." Thus  the  practical  construction  by  the  parties  may 
determine  whether  an  ambiguous  instrument  is  a  partnership 


1  Chicago  V.  Sheldon,  9  Wall.  (U. 
S.)  50,  54;  Fitzgerald  v.  Bank,  114 
Fed.  474;  52  C.  C.  A.  276;  Inter- 
state Land  Co.  v.  Land  Grant  Co., 
41  Fed.  275;  Pacific,  etc.,  Co.  v. 
Leete,  94  Fed.  968;  36  C.  C.  A.  587; 
Manhattan  Life  Ins.  Co.  v.  Wright, 
126  Fed.  82;  Hohbins  v.  Kimball, 
55  Ark.  414;  29  Am.  St.  Rep.  45; 
18  S.  W.  457;  Hill  v.  McKay,  94 
Cal.  5;  29  Pac.  406;  Wyatt  v.  Irri- 
gation Co.,  18  Colo.  298;  36  Am.  St. 
Rep.  280;  33  Pac.  144;  Board  of 
Commissioners  v.  Gibson,  158  Ind. 
471;  63  N.  E.  982;  Smith  v.  Miami 
County,  6  Ind.  App.  153;  33  N.  E. 
243;  Pratt  v.  Prouty,  104  la.  419; 
65  Am.  St.  Rep.  472;  73  N.  W. 
1035;  City  of  Baxter  Springs  v. 
Power  Co.,  64  Kan.  591 ;  68  Pac.  63 ; 
MeVickar  v.  Denison,  81  Mich.  348; 
45  N.  W.  659;  Switzer  v.  Mfg.  Co., 
59  Mich.  488;  26  N.  W.  762;  Laten- 
ser  V.  Misner,  56  Neb.  340 ;  76  N.  W. 
897 ;  Rathbun  v.  McConnell,  27  Neb. 
239;  42  N.  W.  1042;  Sattler  v. 
Hallock,  160  N.  Y.  291 ;  73  Am.  St. 
Rep.  686;  46  L.  R.  A.  679;  54  N.  E. 
667;  Williamson  v.  Loan  Associa- 
tion, 54  S.  C.  582;  71  Am.  St.  Rep. 
822;  32  S.  E.  765;  Murray  v.  Mfg. 
Co.,  37  S.  C.  468;  16  S.  E.  143; 
Blood  V.  Elevator  Co.,  1  S.  D.  71; 
45  N.  W.  200;  Clark  v.  Lambert,  — 
W.  Va.  — ;  47  S.  E.  312;  Heatherly 
V.  Bank,  31  W.  Va.  70;  5  S.  E.  754; 
•Wussow  V.  Hase,  108  Wis.  382;  84 
N.  W.  433;  Janesville  Cotton  Mills 
V.  Ford,  82  Wis.  416;  17  L.  R.  A. 
564;  52  N.  W.  764. 

2Topliff  v.'Topliff,  122  U.  S.  121; 
Philadelphia,  etc.,  Ry.  v.  Trimble, 
10  Wall.  (U.  S.)  367:  State  Trust 
Co.  V.  Duluth,    104   Fed.   632;    Ly- 


man V.  Ry.,  101   Fed.   636;  House- 
keeper Publishing  Co.   v.   Swift,   97 
Fed.  290;   38  C.  C.  A.  187;  Russell 
V.  Young,  94  Fed.  45;   36  C.  C.  A. 
71;    Robbins   v.    Kimball,    55    Ark. 
414;  29  Am.  St.  Rep.  45;   18  S.  W. 
457;    Wyatt   v.    Irrigation    Co.,    18 
Colo.  298;  36  Am.  St.  Rep.  280;  33 
Pac.  144;  Buckeye,  etc.,  Co.  v.  Carl 
son,  —  Colo.  App.  — ;  66  Pac.  168 
Shouse  V.  Doane,  39  Fla.  95;  21  So, 
807 ;  Webster  v.  Clark,  34  Fla.  637 
43  Am.   St.  Rep.  217;    27  L.  R.  A 
126;    16    So.    601;    Mueller    v.   Uni 
versity,    195   111.    236;    88   Am.    St. 
Hep.   194;  63  N.  E.   110;   affirming, 
95   111.   App.   258;   Work   v.   Welsh, 
160  111.  468;   43  N.  E.  719;   Street 
V.  Storage  Co.,  157  111.  605;  41  N. 
E.  1108;  Hall  v.  Bank,  133  III.  234; 

24  N.  E.  546;  Cambria  Iron  Co.  v. 
Trust  Co.,  154  Ind.  291;  sub  nomine 
Union  Trust  Co.  v.  Ry.,  48  L.  R.  A. 
41;  55  N.  E.  745;  56  N.  E.  665; 
Vincennes  v.  Gas  Light  Co.,  132  Ind. 
114;  16  L.  R.  A.  485;  31  N.  E.  573; 
Ingle  V.  Norrington,   126  Ind.   174; 

25  N.  E.  900;  Pate  v.  French,  122 
Ind.  10;  23  N.  E.  673;  Smith  v. 
Miami  Co.,  6  Ind.  App.  153;  33  N. 
E.  243;  Pratt  v.  Prouty,  104  la. 
419;  65  Am.  St.  Rep.  472;  73  N.  W. 
1035;  Enterprise  Carriage  Mfg.  Co. 
V.  Cruzan,  63  Kan.  411;  65  Pac. 
647;  Citizens',  etc.,  Co.  v.  Doll,  35 
Md.  89;  6  Am.  Rep.  360;  Fogg  v. 
Ins.  Co.,  10  Cush.  (Mass.)  337; 
Burtis  V.  Munising  Co.,  126  Mich. 
685;  86  N.  W.  124;  Luverne  First 
National  Bank  v.  Jagger,  41  Minn. 
308;  43  N.  W.  70;  Ellis  v.  Harrison, 
104  Mo.  270;  16  S.  W.  198;  Wil- 
liamson V.  Ry.,  85  Mo.  App.  103; 
Lawton  v.  Fonner,  59  Neb.  214;   80 


GENERAL  PRINCIPLES  OF  CONSTRUCTION. 


1751 


contract  or  not  f  whether  the  vendee  of  stock  has  an  equal  inter- 
est therein  with  the  other  parties  ;*  what  constitutes  a  "  first 
class  place  of  amusement;"^  what  is  "  any  extension  of  time;"* 
whether  the  instrument  in  question  abrogates  a  pre-existing 
contract  or  not  f  and  whether  the  instrument  in  question  is  a 
binding  contract  or  not.®  So  in  some  states,  where  it  is  doubt- 
ful whether  a  signature  was  intended  to  bind  the  agent  or  the 
principal,  the  subsequent  conduct  of  the  parties  may  be  relied 
upon  to  show  that  it  was  intended  to  bind  the  principal  and 
not  the  agent.^  So  a  city  ordinance,  if  a  contract,  may  be 
construed  in  the  light  of  the  practical  construction  placed 
thereon  by  the  parties.^"  The  practical  interpretation  of  the 
parties  is  to  be  regarded,  however,  only  when  the  contract  is 
ambiguous.  If  clear  and  free  from  ambiguity,  the  intention 
shown  upon  its  face  if  written  must  be  followed,  though 'con- 
trary to  the  practical  interpretation  by  the  parties,^^  and  even 


N.  W.  808;  Hale  v.  Sheehan,  52 
Neb.  184;  71  N.  W.  1019;  Davis  v. 
Creamery  Co.,  48  Neb.  471;  67  N. 
W.  436;  Paxton  v.  Smith,  41  Neb. 
56;  59  N.  W.  690;  D'wyer  v.  Bonitz 
(N.  J.  Eq.),  31  Atl.  172;  Helme  v. 
Strater,  52  N.  J.  Eq.  591;  30  Atl. 
333;  Sattler  v.  Hallock,  160  N.  Y. 
291;  73  Am.  St.  Rep.  686;  46  L.  R. 
A.  679;  54  N.  E.  667;  Woolsey  v. 
Funk,  121  N.  Y.  87;  24  N.  E.  191; 
Methodist,  etc.,  Society  v.  Water 
Co.,  20  Ohio  C.  C.  578;  10  Ohio  C. 
D.  648;  Williamson  v.  Loan  Asso- 
ciation, 54  S.  C.  582;  71  Am.  St. 
Rep.  822;  32  S.  E.  765;  Murray  v, 
Mfg.  Co.,  37  S.  C.  468;  16  S.  E. 
143;  Heidenheimer  v.  Cleveland 
(Tex.),  17  S.  W.  524;  Woodward  v. 
Edmunds,  20  Utah  118;  57  Pac. 
848;  Mutual,  etc.,  Association  v. 
Taylor,  99  Va.  208;  37  S.  E.  854; 
Hosmer  v.  McDonald,  80  Wis.  54; 
49  N.  W.  112.  "There  is  no  surer 
-way  to  find  out  what  the  parties 
meant  than  to  see  what  they  have 
done."     Brooklyn    Life    Ins.    Co.    v. 


Dutcher,  95  U.  S.  269,  273;  quoted 
in  Sattler  v.  Hallock,  160  N.  Y.  291, 
301;  73  Am.  St.  Rep.  686;  46  L.  R. 
A.  679;  54  N.  E.  667. 

3  Webster  v.  Clark,  34  Fla.  637; 
43  Am.  St.  Rep.  217;  27  L.  R.  A. 
126;  16  So.  601. 

4  Stewart  v.  Pierce,  116  la.  733; 
89  N.  W.  234. 

5  Leavitt  v.  Improvement  Co.,  54 
Fed.  439. 

6  Borden  v.  Fletcher's  Estate,  431 
Mich.  220;   91   N.  W.   145. 

7  Jenkins  v.  Jensen,  24  Utah  108; 
91  Am.  St.  Rep.  783;  66  Pac.  773. 

sKling  V.  Bordner,  65  O.  S.  86; 
61  N.  E.  148. 

9  State  V.  Cass  County,  60  Neb. 
566 ;  83  N.  W.  733. 

loVineennes  v.  Gas  Light  Co.,  132 
Ind.  114;  16  L,  R.  A.  485;  31  X.  E. 
573. 

11  Philadelphia,  etc.,  Ry.  v.  Trim- 
ble, 10  Wall.  (U.  S.)  367;  Davis,  v, 
Shafer,  50  Fed.  764;  Cold  Blast 
Transportation  Co.  v.  Nut  Co.,  114 
Fed.  77;  57  L.  R.  A.  696;  52  C.  C. 


1752  PAGE    ON    CONTRACTS. 

if  such  practical  construction  has  been  acquiesced  in  for  a  long 
period  of  time.^^  The  conduct  of  the  parties  relied  upon  as 
construction  must  itself  be  free  from  ambiguity.  Thus  vague 
and  general  conversations^^  are  of  little  weight.  So  the  con- 
duct relied  upon  must  be  that  of  parties  personally  interested 
or  cognizant  of  the  actual  intention  of  the  parties.  Thus  little 
if  any  weight  can  be  given  to  a  practical  construction  adopted 
by  the  successors  in  office  of  the  public  officers  who  made  the 
contract  on  behalf  of  the  city.^* 

§1127.     Ambiguous  contract. 

If  a  promise  is  so  ambiguous  as  to  be  susceptible  of  more 
than  one  interpretation  and  the  promisor  knows  which  of  these 
possible  meanings  the  promisee  attaches  to  the  promise,  that 
meaning  will  be  adopted  by  the  court  in  construing  the  con- 
tract.^ The  same  rule  applies  where  the  promisor  has 
reason  to  suppose  that  the  promisee  understands  the  ambigu- 
ous promise  in  a  particular  sense."     This  rule  applies  to  ex- 

A.    25;    Gadsden,    etc.,    Ry.    v.    Im-  i3  Ingraham   v.   Mariner,    194   111. 

provement  Co.,  128  Ala.  510;  29  So.  269;  62  N.  E.  609. 

549;  Pierce  v.  Merrill,  128  Cal.  464;  i*  Cincinnati  v.  Coke  Co.,  53  0.  S. 

79  Am.  St.  Rep.  56;  61  Pac.  64;  In-  278;    41    X.    E.    239;    reversing,    8 

graham  v.  Mariner,  194  111.  269;  62  Ohio  C.  C.  429;  6  Ohio  C.  D.  278. 

N.  E.  609 ;  Western  Railway  Equip-  i  Allen-West    Commission    Co.    v. 

ment  Co.  v.  Iron  Co.,  91  111.  App.  Patillo,   90   Fed.  628;    33   C.  C.  A. 

28;  Diamond  Plate-Glass  Co.  v.  Ten-  194;  American  Loan  &  Trust  Co.  v. 

nell,  22  Ind.  App.  132;  52  N.  E.  168;  Ry.,  47  Fed.  343;   Chicago  Lumber 

Menage    v.    Rosenthal,     175    Mass.  Co.  v.  Mfg.  Co.,  80  la.  369 ;  45  N.  W. 

358;    56  N.  E.  579;   St.  Paul,  etc.,  893;  Wood  v.  Allen,  111  la.  97;  82 

Ry.  V.  Blackmar,  44  Minn,  514;  47  N.  W.  451;  Schroeder  v.  Nielson,  39 

N.  W.  172;  C.  D.  Smith  Drug  Co.  v.  Neb.  335;  57  N.  W.  993;  Hoffman  v. 

Saunders,  70  Mo.  App.  221;  Howell  Ins.  Co.,  32  N.  Y.  405,  413;   88  Am. 

V.  Johnson,  38  Or.  571;  64  Pac.  659;  Dee.  337;  Barlow  v.  Scott,  24  N.  Y. 

Arnold  v.  Farr,  61  Vt.  444;  17  Atl,  40;  Kendrick  v.  Ins.  Co.,  124  N.  C. 

1004.  315;   70  Am.  St.  Rep.  592;  32  S.  E. 

12  Northeastern    Ry,    v.    Hastings  728.     In  some  states  as  in  Iowa  this 

(1900),   App.    Cas.    260;    69    L.    J.  rule  has  been  enacted  as  a  statute. 

Ch.  N.  S.  516;  82  L.  T.  429.      (Here  2  Kendrick  v.  Ins.  Co.,   124  N.  C. 

a  construction  placed  upon  a  contin-  315;  70  Am.  St.  Rep.  592;  32  S.  E. 

Tious   contract   for   forty  years   was  728. 
disregarded.) 


GENEEAL  PKINCIPLES  OF  CONSTRUCTION.  1753 

^ess  contracts  as  well  as  to  implied  ones,^  and  to  written  con- 
tracts as  well  as  to  oral  ones.*  It  does  not  apply  to  mere  nego- 
tiations as  distinguished  from  offers,  intended  on  acceptance,  to 
become  contracts.^  If  the  other  party  does  not  know  of  the 
construction  placed  upon  the  contract,  the  understanding  of  the 
one  party  has  no  legal  effect.^  Thus  where  A's  attorney  drew 
the  contract  and  A  directed  its  phraseology,  but  by  inadvertence 
of  coimsel  it  was  so  worded  that  B's  understanding  was  prhna 
facie  expressed,  though  it  might  possibly  have  been  consistent 
with  A's  meaning,  A's  intention  cannot  control/  If  the  mean- 
ing of  the  contract  is  clear,  the  understanding  of  one  party  as 
to  its  meaning  does  not  affect  its  construction®  unless  it  operates 
as  estoppel  by  inducing  the  other  party  to  act.* 

§1128.    First  clause  governs. 

A  rule  sometimes  laid  down,  though  rarely  observed,  is  that 
in  case  of  conflict  between  two  clauses  that  first  in  place  is  to 
control.^  This  rule  has  little  to  recommend,  as  a  contract  is 
entered  upon  as  an  entirety  and  not  word  by  word.  It  is  used 
to  justify  meanings  reached  by  the  application  of  other  princi- 
ples of  construction,  and  its  practical  value  is  slight. 

§1129.     Function  of  court  and  jury  in  construction. 

The  construction  of  a  contract  is  a  question  for  the  court  if 
^he  terms  of  the  contract  and  the  extrinsic  facts  which  may 
affect  construction  are  free  from  dispute.^     This  rule  applies 

3  Lull  V.  Bank,  110  la.  537;  81  N,  »  Crass  v.  Scruggs,  115  Ala.  258; 
W.  784.  22  So.  81. 

4  Cobb  V.  McElroy,  79  la.  603 ;  44  i  Vickers  v.  Commercial  Co.,  67 
N.  W.  824.  X.  J.  L.  665;  52  Atl.  467;  Wiscon- 

sPatton  V.  Arney,  95  la.  664;  64  sin.  etc.,  Bank  v.  Wilkin,  95  Wis. 
y.  W.  635.  Ill;  60  Am.  St.  Rep.  86;  69  X.  W. 

6  Dobbins  v.  Cragin,  50  X.  J.  Eq.      354. 

640;  23  Atl.  172.  i  McFadden     v.     Henderson.     128 

7  Dobbins  v.  Cragin,  50  X.  J.  Eq.  Ala.  221;  29  So.  640;  Arkansas  Fire 
640;  23  Atl.  172.  Ins.  Co.  v.  Wilson,  67  Ark.  553;  77 

8  Crass  V.  Scruggs.  115  Ala.  258;  Am.  St.  Rep.  129;  48  L.  R.  A.  510; 
22  So.  81;  Rouss  v.  Creglow,  103  la.  55  S.  W.  933;  ^McLelland  v.  Single- 
60;  72  X.  W.  429.  tary,    113   Ga.   601;    38   S.    E.   942; 


1754 


PAGE    ON    CONTRACTS. 


where  the  written  contract  consists  of  several  writings,  as  where 
it  consists  of  letters  exchanged  between  the  parties,"  or  of  a 
circular  issued  by  a  building  and  loan  association  in  reliance 
on  which  stock  has  been  taken.^  It  applies  where  the  written 
contract  has  been  lost  and  its  contents  are  proved  by  secondary 
evidence.*  It  applies  to  contracts  part  oral  and  part  written^ 
or  to  contracts  entirely  oral,®  if  the  facts  from  which  the  terms 
of  the  contract  are  to  be  ascertained  are  undisputed  and  only 
one  inference  is  possible  therefrom.  The  construction  of  a 
contract  is  for  the  court  even  if  the  jury  is  to  pass  on  the  ques- 
tion of  its  discharge  by  a  later  contract.^  Thus  the  court  must 
in  such  cases  decide  by  what  law  the  contract  is  governed  in 
case  of  a  so-called  conflict  of  law  f  whether  a  contract  is  ille- 
gal;^ whether  a  written  instrument  purports  on  its  face  to  be 
a  complete  contract.^"     If,  on  the  other  hand,  the  terms  of  the 


Traders',  etc.,  Ins.  Co.  v.  Humphrey, 
207  III.  540;  69  N,  E.  875;  affirm- 
ing, 109  111.  App.  246;  Foster  v. 
Chicago,  197  111.  264;  64  N.  E.  322; 
affirming,  96  111.  App.  4;  Illinois 
Central  Ry.  Co.  v.  Foulks,  191  111. 
57;  60  N.  E.  890;  affirming,  92  111. 
App.  391 ;  Ault  Wooden-Ware  Co.  v. 
Baker,  26  Ind.  App.  374;  58  N.  E. 
265;  Grasmier  v.  Wolf  (la.),  90 
N.  W.  813;  Sherk  v.  Holmes,  125 
Mich.  118;  83  N.  W.  1016;  McClurg 
V.  Whitney,  82  Mo.  App.  625;  Hin- 
man  v.  Mfg.  Co.,  65  Neb.  187;  90  N. 
W.  934;  McCormick,  etc.,  Co.  v. 
Davis,  61  Neb.  406;  85  N.  W.  390; 
Saltier  v.  Hallock,  160  N.  Y.  291; 
73  Am.  St.  Hep.  686;  46  L.  R.  A. 
679 ;  54  N.  E.  667 ;  Brite  v.  Mfg.  Co., 
129  N.  C.  34:  39  S.  E.  6.34;  Keefer 
V.  School  District,  203  Pa.  St.  334; 
52  Atl.  245;  Leaphart  v.  Bank,  45 
S-  C.  563;  '5  Am.  St.  Rep.  800;  33 
L.  R.  A.  700;  23  N.  E.  939;  Hughes 
V.  Rudy,  15  S.  D.  460;  90  N.  W. 
136;  Amory  Mfg.  Co.  v.  Gulf,  etc., 
R.  R.  Co.,  89  Tex.  419;  59  Am.  St. 
Rep-  55;   37  S.  W.  856. 


2  Scanlan  v.  Hodges,  52  Fed.  354 ; 
3  C.  C.  A.  113;  Lindsay  v.  Ins.  Co., 
115  N.  C.  212;  20  S.  E.  370;  De 
Camps  V.  Carpin,  19  S.  C.  121 ;  Teas- 
dale  V.  Manchester,  104  Tenn.  267; 
56  S.  W.  853;  Ranney  v.  Higby,  6 
Wis.  62. 

3  Williamson  v.  Loan  Association, 
54  S.  C.  582;  71  Am.  St.  Rep.  822; 
32  S.  E.  765. 

4Wellman  v.  Jones,  124  Ala.  580; 
27  So.  416. 

5  Sea  Insurance  Co.  v.  Johnston, 
105  Fed.  286;  44  C.  C.  A.  477. 

<5  The  "  construction  of  an  oral  as 
well  as  of  a  written  contract  is  for 
the  court."  Penn,  etc.,  Insurance 
Co.  V.  Crane,  134  Mass.  56,  58;  45 
Am.  Rep.  282. 

TDanziger  v.  Shoe  Co.,  204  111. 
145;  68  N.  E.  534;  affirming,  107 
111.  App.  47. 

sDemland  v.  Loan  Co.,  20  Oliio 
C.  C.  223;  11  Ohio  C.  D.  249. 

9  Carpenter  v.  Taylor,  164  N.  Y. 
171;  58  N.  E.  53. 

10  Harrison  v.  McCormick,  89  Cal. 
327;  23  Am.  St.  Rep.  469;  26  Pac. 
830. 


GENERAL  PEINCIPLES  OF  CONSTRUCTION.  1755 

contract  are  in  dispute,  or  it  is  possible  to  draw  more  than  one 
inference  from  the  established  facts  which  are  relied  on  to 
show  the  intention  of  the  parties,  the  jury  must  determine 
such  facts  or  decide  which  of  such  inferences  is  the  correct  one. 
The  court  should  in  such  cases  submit  the  question  of  fact  to  the 
jury  under  proper  alternative  instructions  as  to  the  construc- 
tion to  be  given  in  the  event  of  each  possible  finding  of  fact 
by  the  jury.^^  This  rule  applies  in  written  contracts  where  the 
admissible  extrinsic  evidence  is  conflicting  or  admits  of  differ- 
ent inferences.^"  Thus  where  the  evidence  is  conflicting  as  to 
the  meaning  of  a  technical  term  in  dispute,^^  or  where  questions 
as  to  what  are  "  traveling  expenses,"^*  or  what  is  a  reasonable 
amount  of  ''  printed  matter  and  samples,"^^  depend  on  conflict- 
ing extrinsic  evidence,  the  jury  must  determine  the  intention  of 
the  parties.  So  if  the  question  is  which  of  two  unidentified 
plans  is  referred  to  in  a  written  contract,  this  should  be  sub- 
mitted to  the  jury.^®  This  rule  applies  where  the  terms  of  a 
contract  partly  written  and  partly  oral  ^^  or  entirely  oral  are  in 
dispute. 

§1130.     Construction  cannot  extend  to  reformation. 

Under  cover  of  construction  a  court  cannot  reform  a  written 
contract  to  make  it  express  the  real  intention  of  the  parties, 
which  by  mistake  is  not  expressed  in  the  words  thereof,^  Thus 
a  clause  fixing  a  price  per  ear,  "  excepting  only  empty  freight 
cars  and  such  loaded  freight  cars  as  are  destined  to  or  originate 

iiBoykin   v.   Bank,   72   Ala.   262;  i*  ^Yilc■ox   v.    Baer,    85   Mo.   App. 

47  Am.  Rep.  408;  Martin  v.  Dowd,      587. 

—  Ida.  — ;  69  Pac.  276;  Alworth  v.  is  Jensen    v.    Perry,    126    Pa.    St, 

Gordon,    81    Minn.   445;    84   N,   W.  495;   12  Am.  St.  Rep.  888;    17  Atl. 

454;    Coquillard  v.   Hovey,  23  Neb.  665. 

622;  8  Am.  St.  Rep.  134;  37  N.  W.  le  Cook  v.  Littlefield,  98  Me.  299; 

479;  Blaisdell  v.  Davis,  72  Vt.  295;  56  Atl.  899. 

48  Atl.  14.  17  City  of  Philadelphia  v.  Stewart, 
i2Durand  v.  Heney,  33  Wash.  38;  201  Pa.  St.  526;  51  Atl.  348. 

73  Pac.  775.  i  Robbins    v.    Rollins,    127    U.    S. 

13  Schneider   Granite  Co.   v.  Mill-      622;  Te  Poel  v.  Shutt,  57  Neb.  592; 

ing  Co.,  78  Mo.  App.  622.  78  N.  W.  288;  Sinclair  v.  Hicks,  116 

N.  C.  606;  21  S.  E.  395. 


"i-i^S  PAGE    ON    CONTRACTS. 

at  points  outside  tlie  city,  on  or  beyond  the  first  party's  line," 
cannot  be  restricted  to  such  empty  cars  as  originate  outside  the 
city,  but  applies  to  all  empty  cars.^ 

2  Louisville,  etc.,  Ry.  v.  Ry.,  100 
Ky.  690;  39  S.  W.  42. 


JOINT  AND  SEVEKAL,  LIABILITY.  1757 


CHAPTER   LII. 

JOINT  AND  SEVERAL  LIABILITY. 

§1131.    Nature  of  liability  of  two  or  more  promisors. 

If  two  or  more  persons  constitute  one  party  to  a  contract, 
the  question  as  to  the  nature  of  their  rights  and  liabilities  pre- 
sents itself.  If  two  or  more  persons  are  promisors  in  a  con- 
tract, their  liability  may  be  joint,  or  several,  or  joint  and  sev- 
eral. If  their  liability  is  joint,  each  of  the  promisors  is  liable, 
and  may  be  held  for  the  entire  liability  arising  under  the  con- 
tract.^ A  several  contract  is  one  in  which  each  of  the  prom- 
isors undertakes  only  a  limited  amount  of  the  entire  liability,^ 
or  which  in  each  severally  undertakes  the  entire  liability.^  A 
joint  and  several  contract  is  one  which  at  the  election  of  the 
promisee  he  may  treat  either  as  a  joint  contract  or  as  a  several 
contract.  In  Louisiana,  by  statute,  different  terms  are  em- 
ployed. "  A  joint  obligation  "  is  used  to  express  substantially 
the  idea  which  at  Common  Law  is  expressed  by  "  several  con- 
tract," while  the  term  "  solidary  obligation  "  is  used  to  express 
the  idea  which  the  Common  Law  expresses  by  "  joint  contract." 
"  A  joint  obligation  under  the  laws  of  Louisiana  binds  the  par- 
ties thereto  only  for  their  proportion  of  the  debt,  whilst  a  solid- 
ary obligation,  on  the  contrary,  binds  each  of  the  obligors  for 
the  whole  debt."* 

§1132.    Intention  controls. —  Words  importing  joint  liability. 

Whether  the  liability  of  the  promisors  is  joint,  or  several,  or 
joint  and  several,  depends  upon  the  intention  of  the  parties  as 

1  Mason   v.    Eldred,    6    Wall.    (U.  Am.  Dec.  430;   Payne  v.  JelleflF,  67 
S.)   231.  Wis.  246;  30  N.  W.  526. 

2  Evands  v.   Sanders,   10  B.  Mon.  *  Groves  v.  Sentell,  153  U.  S.  465, 
(Ky.)  291.  476. 

3Lurton  v.  Gilliam,  2  111.  577;  33 


1758  PAGE    ON    CONTBACTS. 

ascertained  from  the  contract  by  the  ordinary  rules  of  construe 
tion.  Prima  facie  in  the  absence  of  statute  the  liability  of 
two  or  more  persons  on  the  same  contract  is  a  joint  liability/ 
Words  which  indicate  the  common  assumption  of  an  obligation 
strengthen  this  inference.  Thus  the  use  of  such  words  as  "  we 
promise,"^  "  we  will  undertake,"^  "  the  plaintiffs  are  to  pay,"* 
"  the  directors  promise,"^  followed  by  the  signature  of  the  prom- 
isors, imports  a  joint  liability.  However,  the  context  may 
show  that  such  a  promise  is  several  and  not  joint.  Thus  a 
promise  to  pay  a  certain  sum  for  one  road  grader,  "  to  be  paid 
by  us  in  proportion  to  road  tax  in  above-mentioned  districts  on 
lands  and  property  which  we  now  own  "  in  such  districts,*'  or  to 
'"  pay  to  the  city  the  cost  of  the  curbstone  so  placed  opposite  our 
land  "  signed  by  owners  in  severalty^  is  several.  The  use  of 
•words  such  as  "  we  agree,"*  may  show  an  intention  to  assume  a 
joint  and  several  liability.  A  contract  contained  the  words, 
"  We  the  undersigned  do  business  under  the  name  of  Oliphant 
&  Co."  ..."  We  also  agree."  This  was  signed  by  the 
firm  name  only.  A  renewal  of  this  option  made  a  part  of  the 
original  was  signed  by  all  the  members  of  the  firm.  This 
was  held  as  to  the  covenant  not  to  engage  in  business  to  be  joint 
and  several.®     A  contract  between  two  railroad  companies,  as 

1  White  V.  Tyndall,  13  App.  Cas.  5  McKensey   v.   Edwards,    88    Ky. 

263;    Noyes    v.    Barnard,    63    Fed.  272;  21  Am.  St.  Rep.  339;   3  L.  R. 

782;  11  C.  C.  A.  424;  Eller  v.  Lacy,  A.  397;  10  S.  W.  81.5. 

137  Ind.  436;   36  N.  E.  1088;   Eve-  6  Western    Wheel    Scraper    Co,   v. 

leth  V.  Sawyer,  96  Me.  227;  52  Atl.  Locklin,   100  Mich.   339;   58   N.   W. 

639;    Hill    v.    Combs,    92   Mo.   App.  1117. 

242;  Alpaugh  v.  Wood,  53  N.  J.  L.  7  Springfield  v.  Harris,  107  Mass, 

638;  23  Atl.  261;  Elliott  v.  Bell,  37  532. 

W.  Va.  834;  17  S.  E.  399.  8  Trenton    Potteries    Co.    v.    Oli- 


2Barnett  v.  Jiiday,  38  Ind.  86 
Taylor  v.  Reger,  18  Ind.  App.  466 
63  Am.  St.  Rep.  352;  48  X.  E.  262 


phant,  58  N.  J.  Eq.  507;  78  Am, 
St.  Rep.  612;  46  L.  R.  A.  255;  43 
Atl.  723. 


Albany,   etc..   Co.   v.   Bank,   17   Ind.  "  Trenton    Potteries    Co.    v.    Oli- 

App.  .531;  60  Am,  St.  Rep.  178;  47  phant,   58   N.   J,   Eq.   507;    78   Am. 

N.  E,  227.  St.  Rep.  612;  46  L,  R.  A.  255;  43 

3  New  Haven,  etc.,  Ry.  v.  Hayden,  Atl.  723 ;  affirming  in  part  and  re- 
119  Mass.  361.  versing  in  part,  56  N.  J.  Eq.  680; 

4  Eller  V,  Lacy,  137  Ind.  436;   36  39  Atl.  923. 
N.  E.  1088, 


JOINT  AND  SEVERAL  LIABILITY.  1759 

one  party,  and  a  sleeping-car  company  as  the  otber,  whereby 
certain  sleeping-cars  were  to  be  run  "over  the  line  of  said  roads 
between  "  two  cities  "  in  connection  with  the  night  passenger 
express  through  trains  between  said  cities,"  was  held  to  be  a 
joint  contract/*^  By  statute  in  some  jurisdictions  contracts*  joint 
in  form  are  in  effect  turned  into  joint  and  several  contracts/^ 
By  statute  in  Louisiana  a  note  containing  the  words  "  we  prom- 
ise "  is  a  several  note,  binding  each  maker  only  for  his  propor- 
tionate share/^ 

§1133.     Words  importing  several  liability. 

Language  which  shows  an  intention  on  the  part  of  each  prom- 
isor to  assume  only  a  part  of  the  entire  liability  imports  a  sev- 
eral contract/  Thus  such  language  as  "  we  promise  each  to 
pay  "  a  certain  proportion  of  the  debt,  as  a  pro  rata  share  of  the 
purchase  price,^  or  of  the  expenses  of  litigation  in  which  the 
same  question  is  presented,  involving  the  separate  interests  of 
the  promisors,^  or  "  we  promise  to  pay  the  amount  set  opposite 
our  respective  names,"  as  in  contracts  for  subscriptions,*  or 
"  we,  the  undersigned,  promise  to  pay  the  following  subscrip- 
tions," with  an  amount  opposite  the  name  of  each  subscriber,^ 
imports  a  several  contract.  Hence  one  subscriber  cannot  use 
as  a  defense  the  fact  that  some  of  the  other  subscribers  are 

10  Stanley  v.  R,  R.,  18  O.  S.  552.  3  La.  Ann.  162;  Larkin  v.  Butter- 
(Henee    construed    so    as    to    apply      field,  29  Mich.  254. 

only  to  through  trains  running  on  3  Adriatic  Fire  Ins.  Co.  v.  Tread- 
both  roads  as  a  continuous  line.)  well,  108  U.  S.  361. 

11  Sawin  v.  Kenney,  93  U.  S.  289  4  O'Conner  v.  Hooper,  102  Cal. 
(Ark.)  ;  Gummer  v.  Mairs,  140  Cal.  528;  36  Pac.  939;  Moss  v.  Wilson, 
535;  74  Pac.  26;  Farmers'  Exchange  40  Cal;  159;  Robertson  v.  March,  4 
Bank  v.  Morse,  129  Cal.  239;  61  111.  198;  Davis,  etc.,  Co.  v.  Murray, 
Pac.  1088;  Jarnagin  v.  Stratton,  95  102  Mich.  217;  60  N.  W.  437;  Davig 
Tenn.  619;  30  L.  R.  A.  495;  32  v.  Creamery  Co.,  48  Neb.  471 ;  67  N. 
S.  W.  625.  So  where  the  payee  W.  436;  Darnall  v.  Lyon  (Tex.  Civ. 
signs  as  an  apparent  joint  maker.  App.),  19  S.  W.  506;  Connecticut, 
Fisher  v.  Diehl,  94  Md.  112;  50  etc.,  Ry.  v.  Bailey,  24  Vt.  465;  58 
Atl.  432.  Am.  Dec.  181;  Hodges  v.  Nalty,  104 

12  Groves  v.  Sentell.  153  U.  S.  465.       Wis.  464;  80  N.  W.  726;  Davis,  etc., 
iMoss    V.    Wilson,    40    Cal.    159;       Co.  v.  Cupp,  89  Wis.  673;  62  N.  W. 

Colt  V.  Learned,  118  Mass.  380.  520. 

2McArthur  v.  Board,  119  la.  562;  ^  Landwerlen  v.  Wheeler,  106  Ind. 

9.^  N.  W.  580;   Fuselier  v.  Lacour,  523;  5  N.  E.  888. 


1760  PAGE    ON    CONTEACTS. 

minors  or  insolvent,  since  such  fact  does  not  increase  his  lia- 
bility.® The  presumption  in  contracts  of  subscription  is  that 
a  several  liability  is  intentended/  Hence  a  promise  "  to  pay  the 
above  amount  "^  has  been  held  to  import  a  several  liability. 
How^^er,  if  the  language  used  shows  a  clear  intent  to  incur  a 
joint  liability  there  is  nothing  in  the  nature  of  a  contract  of 
subscription  that  makes  this  impossible.  Thus  the  words  "we, 
the  subscribers,  agree  to  pay  "  a  gross  sum^  are  held  to  impose 
a  joint  liability.  A  contract  of  subscription  to  carry  out  cer- 
tain purposes  whereby  the  subscribers  undertake  each  to  pay  a 
certain  sum  is  several  as  to  such  payments,  but  is  joint  as  to  the 
covenants  to  devote  the  fund  thus  raised  to  certain  specified 
purposes.^*'  Hence  a  repudiation  by  a  part  only  of  the  sub- 
scribers does  not  end  the  contract.  The  adversary  party  may 
perform  and  recover  the  several  subscriptions  from  the  sub- 
scribers.^^ Hence,  though  no  joint  recovery  can  be  had  on  the 
subscriptions,  the  subscribers  should  be  joined  as  defendants  in 
an  action  involving  the  common  fund.^^ 

§1134.    Words  importing  joint  and  several  liability. 

If  the  language  used  shows  an  intention  to  assume  a  liability, 
either  joint  or  several  in  its  nature,  at  the  oiDtion  of  the  prom- 
isee, this  imports  a  joint  and  several  obligation.^  Thus  the  use 
of  such  language  as  "  we,  or  either  of  us,"^  "  we  jointly  and 
severally  promise,"^  or  the  use  of  the  singular  number,  such  as 
"  I  promise,"*  followed  by  the  signature  of  two  or  more  prom- 

6  Chicago,  etc.,  Co.  v.  Higgin-  22  L.  R.  A.  80;  53  K  W.  756;  and 
botham   (Miss.),  29  So.  79.  see  to  the  same  eflfect  Current  v.  Ful- 

7  Hall  V.  Thayer,  12  Met.  (Mass.)  ton,  10  Ind.  App.  617;  38  N.  E. 
130;  Davis  v.  Belford,  70  Mich.  120;  419. 

37  N.  W.  919.  12  Cornish  v.  West,  82  Minn.  107; 

8  Davis  V.  Belford,  70  Mich.  120;       52  L.  R.  A.  355;  84  N.  W.  750. 

S7  N.  W.  919.  1  Salomon   v.    Hopkins,    61    Conn. 

9  Davis  V.  Shafer,  50  Fed.  764.  47;  23  Atl.  716;  Maiden  v.  Webster, 

10  Current  v.  Fulton,  10  Ind.  App.  30  Ind.  317;  Hemmenway  v.  Stone, 
617 ;     38    N.    E.    419 ;     Gibbons    v.       7  Mass.  58 ;  5  Am.  Dec.  27. 

Bente,   51   Minn.  499;    22  L.  R.  A.  2  Pogue  v.  Clark,  25  111.  333. 

80;  53  N.  W.  756.  s  Rees  v.  Abbott.  Cowp.  832. 

11  Gibbons  V.  Bente,  51  Minn.  499 ;  4  Salomon   v.   Hopkins,    61    Conn. 


JOINT  AND  SEVERAL  LIABILITY.  1761 

isors,  imports  a  joint  and  several  liability.  So  a  note  contain- 
ing the  words  "  I  promise  to  pay,"  signed  at  the  bottom  by  A 
and  on  the  back  before  delivery  by  B,  was  held  to  be  a  joint 
and  several  note.^  In  ISTew  York,  however,  it  has  been  held 
that  a  note  in  the  form  "  I  promise  "  is  necessarily  a  several 
note  only.^  The  liability  of  partners  is  a  joint  and  several 
liability/ 

§1135.     Liability  of  sole  promisor. 

While  the  intention  of  the  parties  is  paramount  in  determin- 
ing the  nature  of  the  liability  of  two  or  more  promisors,  it  is 
impossible,  no  matter  how  clear  the  intention  of  the  parties, 
to  impose  a  joint  liability  upon  a  sole  promisor.  A  contract 
made  with  one  person  alone  is  necessarily  a  several  contract, 
even  if  words  which  are  appropriate  to  joint  contracts,  such  as 
"  we  promise,"^  are  employed. 

§1136.     Effect  of  joint  liability. —  Parties  to  actions. 

The  adjective  law  is  so  closely  connected  with  the  substan- 
tive law  that  a  statement  of  the  effect  of  these  different  types 
of  contract  is  in  outward  form  almost  exclusively  a  matter  of 
procedure,  though  it  affects  the  substantive  rights  of  the  parties. 
All  the  joint  promisors  are  liable  upon  the  joint  contract,^  so 

47;   23  Atl.  716;   Monson  v.  Drake-  521;  86  Am.  St.  Rep.  559;  85  N.  W. 

ley,  40  Conn.  552;  16  Am.  Rep.  74;  1075. 

Maiden    v.    Webster,    30    Ind.    317;  6  Brownell    v.    Winnie,    29    N.   Y. 

Walford  v.  Bowen,  57  Minn.  267;  59  400;  86  Am.  Dec.  314. 

N.   W.   195;    Ladd  v.   Baker,   26   N.  7  Wood    v.    Carter,    —    Neb.    — ; 

H.  76 ;  57  Am.  Dec.  355 ;  Wallace  v.  93  N.  W.  158. 

Jewell,   21   O.   S.   163;    8   Am.   Rep.  i  Holmes  v.   Sinclair,   19   111.    71; 

48;   Arbuckle  v.   Templeton,  65  Vt.  Whitmore  v.   Niekerson,    125   Mass. 

205;    25    Atl.    1095;    Keller   v.   Mc-  496;  28  Am.  Rep.  257. 

Huflfman,    15    W,    Va.    64;    Dill    v.  i  Allin     v.     Shadburne,     1     Dana 

White,  52  Wis.  456;   9  N.  W.  404;  (Ky.)   68;  25  Am.  Dec.  121;  Green 

Dart  V.   Sherwood,   7   Wis.   523;    76  v.  Rick,  121  Pa.  St.  130;  6  Am.  St. 

Am.  Dec.  228.  Rep.   670;    2   L.   R.   A.  48;    15  Atl. 

5  Booth  V.  Huff,   116    Ga.   8;    94  497;    Sully  v.    Campbell,   99   Tenn. 

Am.  St.  Rep.  98;  42  S.  E.  381;  Dow  434;  43  L.  R.  A.  161;  42  S.  W.  15; 

Law    Bank    v.    Godfrey,    126    Mich.  Camp  v.  Simon,  23  Utah  56;  63  Pac. 


332. 


Ill 


1762  PAGE    ON    CONTRACTS. 

that  it  has  been  held  that  a  promise  to  release  one  on  his  paying 
his  proportionate  share  of  the  debt  is  without  consideration;^ 
all  should  be  made  defendants,  and  a  judgment  rendered 
against  all/  except  such  as  cannot  be  served  with  process/  and 
after  such  judgment  has  been  obtained  the  plaintiff  may  issue 
execution  against  any  of  the  defendants  he  chooses.  If  some 
of  the  joint  obligors  are  insolvent  the  payee  can  enforce  pay- 
ment of  the  entire  debt  against  those  who  are  solvent.^  Secret 
arrangements  made  between  the  joint  contractors  cannot  affect 
their  liability  to  the  promisee.  Thus  A,  B  and  C  signed  a  note 
and  mortgage,  joint  in  form,  with  the  understanding  that  A 
should  take  and  pay  for  two  thirds  of  the  property  and  B  and 
C  together  the  remaining  one  third.  B  and  C  were  liable  to 
the  promisee  for  the  entire  debt.^ 

§1137.     Death  of  joint  promisor. 

The  death  of  a  joint  promisor  discharges  his  estate  and  leaves 
the  survivors  liable  for  the  entire  amount  of  the  debt.^  In 
equity  relief  against  the  estate  of  the  deceased  promisor  could 
be  given  if  the  survivors  were  insolvent.^  The  survivor  could 
have  contribution  from  the  estate  of  the  deceased  promisor.* 
By  statute  in  many  states  the  death  of  a  joint  promisor  leaves 

2  Davidson  v.  Burke,  143  111.  139;  c  Sully  v.  Campbell,  99  Tenn.  434; 
36  Am.  St.  Rep.  367;  32  N.  E.  514.  43  L.  R.  A.  161;  42  S.  W.  15. 

3  Oilman  v.  Rives,  10  Pet.  (U.  S.)  i  Ashby  v.  Ashby,  7  B.  &  C.  444; 
298 ;  Bragg  v.  Wetzel,  5  Blackf .  Burgoyne  v.  Trust  Co.,  5  O.  S.  586 ; 
(Ind.)   95;  18  Am.  Dec.  131;  Meyer  Murphey  v.  Weil,  92  Wis.  467;   66 

V.  Estes,  164  Mass.  457;  32  L.  R.  A.  N.  W.  532. 

283;    41   N.   E.   683;    Dumanoise  v.  2  Moore   v.    Rogers,    19    111.    347; 

Townsend,  80  Mich.  302;  45  X.  W.  New  Haven,  etc.,  Co.  v.  Hayden,  119 

179 ;  Lemon  v.  Wheeler,  96  Mo.  App.  Mass.   361 ;    Hamersley  v.   Lambert, 

651;   70  S.  W.  924;  Pollard  v.  Col-  2  Johns.  Ch.  508;  Burgoyne  v.  Trust 

lier,  8  Ohio  43 ;  Lucas  v.  Sanders,  1  Co.,  5  0.  S.  586 ;  Ayer  v.  Wilson,  2 

McMul.  (S.  C.)  311.  Mill  (S.  C.)  319;  12  Am.  Dec.  677. 

4  Perkins  County  v.  IMiller,  55  3  Erwin  v.  Dundas,  4  How.  (U, 
Neb.  141;  75  N.  W.  577.  S.)   58. 

5  Camp  V.  Simon,  23  Utah  56;  63 
Pac.  332. 


JOINT  AND  SEVERAL  EIABILITT.  1763 

his  estate  liable/  or  turns  the  contract  into  a  joint  and  several 
one.^ 


§1138.    Judgment  against  one  joint  promisor. 

A  judgment  rendered  against  one  joint  promisor  in  an  action 
in  which  the  remaining  joint  promisors  could  have  been  made 
parties  is  a  bar  to  a  subsequent  action  against  such  other  joint 
promisors.^  So  if  an  action  is  brought'  against  two  or  more 
joint  promisors,  the  promisee  cannot  dismiss  the  action  against 
some  and  have  judgment  against  others.^  If  all  the  promisors 
are  within  the  jurisdiction  of  the  court  and  served  with  sum- 
mons, it  is  error  to  render  judgment  against  one  as  on  default, 
and  enter  judgment  on  the  merits  in  favor  of  the  other  joint 
promisors.^  If  an  action  is  brought  on  a  joint  contract,  no  re- 
covery can  be  had  against  one  promisor  on  his  several  contract 
in  jurisdiction  where  the  Common  Law  rule  has  not  been  modi- 
fied by  statute  so  as  to  permit  of  greater  freedom  of  amend- 
ment.* An  action  was  brought  against  a  county  treasurer  and 
his  bondsmen  on  a  joint  bond  covering  his  first  term.  The 
evidence  showed  a  defalcation  during  his  second  term.  It  was 
held  that  as  no  judgment  could  be  rendered  against  the  bonds- 
men on  such  joint  bond,  no  several  judgment  could  be  rendered 
against  the  treasurer.^  By  statute  in  some  states  the  promisee 
may  sue  less  than  all  the  promisors.**  Such  statutes  in  effect 
make  a  joint  contract  joint  and  several. 

4  Potts  V.  Dounee,  173  N.  Y.  335;  2  Van  Leyen  v.  Wreford,  81  Mich. 
66  X.  E.  4;  Eckert  v.  Myers,  45  O.       606;  45  N.  W.  1116. 

S.   525;    15   N.    E.    862;    Taylor  'v.  3  Kmgsland    v.    Koeppe,    137    111. 

Taylor,     5    Humph.     (Tenn.)      110;  344;  13  L.  R.  A.  649;  28  X.  E.  48. 
Chadwick  v.  Hopkins,  4  Wyom.  379;  4  Gleason  v.  Milk  Supply  Co.,  93 

62  Am.  St.  Rep.  38;  34  Pac.  899.  Me.  544;   74  Am.  St.  .Rep.   370;   45 

5  Philadelphia,  etc.,  Co.  v.  Butler,  Atl.  825 ;  Atkins  v.  Brown,  59  Me. 
181  Mass.  468:   63  X.  E.  949:  Weil  90. 

V.  Guerin,  42  O.  S.  299 ;  Burgoyne  v.  5  King  County  v.  Ferry,  5  Wash. 

Trust  Co..  5  O.  S.  586.  536;  34  Am.  St.  Rep.  880;  19  L.  R. 

iSloo  V.  Lea,  18  Ohio  279.     Con-  A.  500;  32  Pac.  538. 

tra     by     statute     in     some     states.  6  Miller  v.  Sullivan,  89  Tex.  480; 

Mason  v.   Eldred,   6   Wall.    (U.   S.)  35  S.  W.  362. 
231    (Mich.). 


■176-i  PAGE    ON    CONTKACTS. 

§1139.     Release  of  one  joint  promisor. 

A  technieal  release  under  seal,  given  to  one  joint  promisor, 
"will  inure  to  the  benefit  of  all/  unless  the  promisee  expressly 
reserves  his  right  to  proceed  against  the  remaining  promisors." 
This  rule  applies  to  the  technical  release  under  seal  only.^  An 
oral  release  does  not  have  this  effect;*  nor  does  a  release  for  a 
Valuable  consideration  discharge  even  the  promisor  to  whom  it 
Is  given,  unless  by  statute.^  A  covenant  not  to  sue  made  with 
one  joint  promisor  does  not  discharge  the  others.® 

§1140.    Effect  of  several  contract. 

If  the  promisors  are  severally  liable,  the  promisee  must  sue 
each  for  his  proportion  of  the  indebtedness.  He  cannot  join 
two  or  more  several  promisors  in  an  action  upon  the  contract 
if  they  object  thereto.^  The  death  of  one  of  promisors  sev- 
erally liable  does  not  discharge  his  estate.^ 

§1141.    Effect  of  joint  and  several  contract. 

If  the  promisors  are  jointly  and  severally  liable  upon  their 
promise,  the  promisee  may  at  his  option  sue  all  within  the 
jurisdiction  of  the  court  jointly,  or  he  may  sue  each  of  them 
separately.^     The  promisee's  election  of  either  of  these  reme- 

1  Hunt  V.  Rousmaniere,  1  Pet.  (U.  74;  52  Am.  Dec.  561 ;  Shaw  v.  Pratt, 

S.)   1;  Hale  v.  Spaulding,  145  Mass.  22  Pick.   (Mass.)   305. 

482;   1  Am.  St.  Rep.  475;   14  N.  E.  *  Valley  Savings  Bank  v.  Mercer, 

534;  Randahl  v.  Lindholm,  86  Minn.  —  Md.  — ;  55  Atl.  435. 

16;     89    X.    W.    1129;     Scofield    v.  5  Hatzel  v.  Moore,  120  Fed.  1015. 

Clark,  48  Neb.  711;   67  N.  W.  754;  «  Harrison  v.  Close,  2  Johns.    (N. 

Rowley  v.   Stoddard,    7   Johns.    (N.  Y.)  448;  3  Am.  Dec.  444. 

Y.)  207;  Crawford  v.  Roberts,  8  Or.  i  Price  v.  Ry.,  18  Ind.  137;  Perry 

324;  Maslin  v.  Hiett,  37  W.  Va.  15;  v.  Turner,  55  Mo.  418. 

16  S.  E.  437.  2McCready   v.   Freedly,   3   Rawle 

zMerriman    v.    Barker,    121    Ind.  (Pa.)   251. 

74;    22   N.   E.    992;    Whittemore   v.  i  Minor  v.  Bank,   1   Pet.    (U.   S.) 

Oil  Co.,  124  X.  Y.  565:   21  Am.  St.  46;  Coburn  v.  Goodall,  72  Cal.  498; 

Rep.  708:  27  X.  E.  244.  1    Am.   St.   Rep.    75;    14   Pac.    190; 

3  Haney.  etc.,  Co.  V.  Creamery  Co..  Olmstead  v.   Bailey,   35   Conn.   584; 

108  la.  313;  79  X.  W.  79:  William-  Peckham  v.  Xorth  Parish,  16  Pick. 

son  V.  McGinnis,  11  B.  Mon.    (Ky.)  (Mass.)    274. 


JOINT  AND  SEVEKAL  LIABILITY.  1765 

dies  bars  the  other.'  Bringing  suit  is  held  in  some  jurisdic- 
tions to  be  such  election/  while  in  others  only  satisfaction  is  a 
final  election.^  A  several  judgment  rendered  against  one  joint 
and  several  promisor  in  an  action  in  which  another  promisor  is 
not  served  with  process  does  not  bar  the  right  of  action  against 
such  other  promisor.^  He  cannot,  however,  join  in  one  action 
any  number  less  than  all.''  This  objection  must,  however,  be 
interposed  before  going  to  trial  on  the  merits  or  it  will  be 
waived.^  If,  however,  in  such  an  action  judgment  is  rendered 
against  one  promisor  by  confession,  the  action  may  be  continued 
against  the  others.^  A  discharge  of  one  joint  and  several  prom- 
isor under  seal  inures  to  the  benefit  of  all,"  unless  the  right  to 
proceed  against  the  remaining  promisors  is  expressly  reserved 
in  the  release. 

§1142.     Rights  of  joint  or  several  promisees. 

If  two  or  more  persons  are  promisees  in  a  contract  their 
rights  arising  thereunder  may  be  either  joint  or  several. 
Whether  their  rights  are  joint  or  several  depends  upon  the 
nature  of  their  interest  and  the  intention  of  the  parties  as  it 
appears  from  the  face  of  the  contract.  If  the  consideration 
moves  from  the  promisees  together  a  promise  to  them  is  prima 
facie  joint.^  However  the  fact  that  a  promisee  has,  by  a 
separate    contract   with    a    third    person,    given   the   latter   an 

2  J5?a?  parie  Eowlandson,  3  P.  Wms.  ^  Barry  v.  Foyles,  1  Pet.  (U.  S.) 
405;  Ex  parte  Brown,  1  Ves.  &  B.  311;  Minor  v.  Bank,  1  Pet.  (U.  S.) 
60;   United  States  v.  Price,  9  How.      46. 

(U.  S.)    83;    Weil  v.  Guerin,  42  0.  8  United  States  v.  Leffler,  11  Pet. 

S.  299.  (U.  S.)   86. 

3  Weil  V.  Guerin,  42  0.  S.  299.  »  Hochmark    v.    Richler,    16    Colo. 
iProsser   v.   Evans    (1895),    1   Q.  265;   26  Pac.  818;  Benjamin  v.  Mc- 

B.   108;   People  v.  Harrison,  82  111.  Connell,    9    111.    536;    46    Am.    Dec. 

84.  474;    American    Bank   v.    Doolittle, 

5  Clinton   Bank  v.  Hart,   5   0.   S.  14    Pick.     (Mass.)     123;     Crane    v. 

33.  Ailing,  15  N,  J.  L.  423. 

eCummings  v.  People,  50  111.  132;  i  Eveleth  v.  Sawyer,  96  Me.  227; 

Fay  V.  Jenks,  78  Mich.  312;   44  N.  52   Atl.   639;    Bobbins  v.  Ayres,    10 

W.  380.     Confra,  by  statute.  Council  Mo.  538;  47  Am.  Dee.  125;   Slaugh- 

Bluffs    Savings    Bank    v.    Griswold,  ter  v.  Davenport,  151  Mo,  26;  51  S. 

50   Neb.   753;    70   N.   W.   376.  W.  471. 


1766  PAGE    ON    CONTEACTS. 

interest  in  the  contract  does  not  make  the  latter  a  joint  prom- 
isee.' If  the  consideration  moves  from  the  promisees  sepa- 
rately, a  promise  to  them  is  prima  facie  several.^  A  contract 
between  four  producer  of  coal,  whereby  one  "  agrees  to  repre- 
sent the  entire  interests  and  sales  of  the  coal  of  the  other  three 
parties,"  is  a  several  contract  as  to  such  promisees/  So  if  a 
member  of  a  partnership  buys  out  the  interests  of  his  co-partners 
and  agrees  to  hold  them  harmless  from  liabilities  owing  by  the 
firm,  such  contract  is  several  as  to  the  promisees.^  In  either 
case  this  presumption  may  be  rebutted  by  clear  and  unequivo- 
cal language  which  shows  that  the  promise  is  made  to  them 
either  jointly  or  severally.^  The  interest  of  the  promisees  can- 
not by  any  form  of  words  be  made  joint  and  several.'^  While 
the  mere  form  of  the  promise  cannot  make  the  interest  of  the 
promisees  joint  and  several  it  has  been  held  that  the  nature  of 
the  transaction  may  in  some  exceptional  instances  have  this 
effect.  This  security  was  given  jointly  to  several  creditors  to 
protect  their  several  claims ;  it  was  held  that  they  could  enforce 
the  application  of  such  security  to  their  claims  either  jointly  or 
severally.^ 

§1143.     Effect  of  joint  interest. —  Promisees  must  join  in  action. 

The  joint  promisees  must  all,  if  living,  join  in  the  action.^ 
Even  the  name  of  a  joint  promisee  who  does  not,  in  fact,  wish 

2  Brown    v.    Salisbury,    123    Fed.  99;   46  K  E.  220;   Eveleth  v.  Saw- 
203.  yer,  96  Me.  227 ;  52  Atl.  639 ;  Capen 

3  Hall  V.  Leigh,  8  Crancli    (U.  S.)  v.  Barrows,  1  Gray  (Mass.)   376. 
50;   Burton  v.  Henry,  90  Ala.  281;  «  Lyon  v.  Ballentine,  63  Mich.  97; 
7  So.  925.  6  Am.  St.  Rep.  284 ;  29  N.  W.  837. 

4Shipman  v.  Mining  Co.,   158  U.  i  Painter  v.  Munn,  117  Ala.  322; 

S.  356.  67   Am.   St.   Rep.    170;    23    So.   83; 

5  Morgan    v.    Wardell,    178    Mass.  Magruder  v.  Belt,  7  App.  D.  C.  303; 

350;  55  L.  R.  A.  33;  59  N.  E.  1037.  Chamberlain  v.  Lesley,  39  Fla.  452; 

cHall  V.  Leigh,  8  Cranch    (U.  S.)  22  So.  736;   Archer  v.  Bogue,  4  111. 

50;    Schultz    v.   Howard,    63    Minn.  526;    Quisenberry   v.   Artis,    1   Duv. 

196;  56  Am.  St.  Rep.  470;  65  N.  W.  (Ky.)  30;  Hewes  v.  Bay  ley,  20  Pick. 

363.        .  (Mass.)  96;  Slaughter  y.  Davenport, 

TSlingsby's  Case,   Coke,   Part  V.,  151  Mo.  26;   51   S.  W.  471;  Dob  & 

18b;  Bradburne  V.  Botfield,  14  M.  &  Dob   v.   Halsey.    16   Johns.    (X.   Y.) 

W.   559;    Starret   v.   Gault,    165   111.  34:     8    Am.    Dec.    293;    Tapscott   v. 


JOINT  AND  SEVEKAL  LIABILITY.  1767 

to  sue  must  be  included"  if  he  is  indemnified  against  liability 
for  costs.  Some  statutes  now  provide  for  including  au  un- 
willing joint-promisee  among  the  defendants,  stating  the  reason 
therefor,^  Under  the  doctrine  that  the  action  must  be  in  the 
name  of  the  real  party  in  interest,  some  exceptions  to  the  rule 
that  joint  promisees  must  join  are  recognized  at  Modern  Law. 
A  bond  given  in  accordance  with  statute  to  obtain  an  attach- 
ment, though  joint  in  form  may  be  sued  upon  by  such  of  the 
obligees  as  are  injured  by  the  issuance  of  such  attachment.* 
However,  an  opposite  view  has  been  taken  of  an  injunction 
bond,  where  all  the  obligees  have  been  required  to  join,  even 
if  one  only  is  injured.^ 

§1144.     Death,  of  joint  promisee. 

At  Common  Law  on  the  death  of  a  joint  promisee  his  interest 
passed  to  the  surviving  promisees.^  Equity  would  compel  the 
survivors  to  account  to  the  personal  representative  of  the  de- 
ceased co-promisee  for  the  latter's  interest  in  the  contract.^  In 
many  jurisdictions  these  rules  have  been  modified  by  statute, 
and  the  administrator  of  the  deceased  joint  promisee  is  al- 
lowed to  join  with  the  surviving  promisees. 

§1145.     Release  by  joint  promisee. 

At  law  a  release  given  by  a  joint  promisee  discharged  the 
debt  as  to  all  the  promisees.^  Thus  a  release  given  by  one  part- 
Williams,  10  Ohio  442;  Sweigart  v.  Co.,  19  Mont.  313;  48  Pac.  305. 
Berk,  8  S.  &  R.  (Pa.)  308;  Clapp  v.  i  Martin  v.  Crump,  2  Salk.  444; 
Pawtiicket  Institution,  ISH.  I.  489;  Comb  474;  sub  nomine,  Martin  v. 
2  Am.  St.  Eep.  91.5:  8  Atl.  697;  Crompe,  1  Ld.  Pvayra.  340;  McCalla 
Davis  V.  Ins.  Co.,  70  Vt.  217;  39  v.  Rigg,  3  A.  K.  Mar.  (Ky.)  259; 
Atl.  1095;  Angus  v.  Robinson,  59  Donnell  v.  Manson,  109  Mass.  576; 
Vt.  585;  59  Am.  Rep.  758;  8  Atl.  Hedderly  v.  Downs,  31  Minn.  183; 
497.  17  jSr.  W.  274;  Kinsler  v.  McCants, 

2  Wright   V.    McLemore.    10    Yerg.  4  Rich.  L.    (S.  C.)    46;   53  Am.  Dec. 

(Tenn.)    235.  711. 

sCullen  V.  Knowles    (1898),  2  Q.  2  Martin  v.   Crump,   2   Salk.  444; 

B.  380.  Comb.    474;    sub    nom.,    Martin    v. 

4  Alexander    v.    .Jaeoby,    23    O.    S.  Crompe,  1  Ld.  Raym.  340. 

358.  1  Rawstorne  v.   Gandell,   15  M.  & 

5:\Iontana  Mining  Co.   v.   Milling  W.    304;    Clark   v.    Patton,    4   J.    J. 


ITGS  PAGE    ON    CONTRACTS. 

ner  binds  bis  co-partners.^  It  bas  been  beld  tbat  a  release  by 
one  of  two  or  more  joint  promisees  does  not  necessarily  bar 
tbe  rigbts  of  tbe  otber  promisees  in  equity,^  and  if  tbe  release 
bas  been  given  by  a  joint  promisee  in  fraud  of  tbe  rigbts  of  bis 
co-promisees  and  in  collusion  witb  tbe  promisor,  equity  will 
grant  affirmative  relief,  and  set  sucb  release  aside.* 

§1146.    Effect  of  several  interest. 

Several  promisees  must  eacb  maintain  bis  own  action;  and 
cannot  join  in  a  common  action.^  On  tbe  deatb  of  one  of  two 
or  more  several  promisees,  bis  rigbts  pass  to  bis  legal  representa- 
tives and  not  to  tbe  remaining  promisees.^ 

Mar.    (Ky.)    33;  20  Am.  Dec.  203;  69;    Skaife  v.  Jackson,   3   Barn.  & 

Wiggin  V.  Tudor,  23  Pick.    (Mass.)  C.  421. 

434;    Eastman    v.   WrigM,    6   Pick.  i  Hall  v.  Leigh,  8  Cranch   (U.S.) 

(Mass.)    316.  50;    Curry  v.   Ry.,  58   Kan.   6;   48 

2  Phillips  V.  Clagett,  11  M.  &  W.  Pac.  579;  Rorabacher  v.  Lee,  16 
84;  Piersons  v.  Hooker,  3  Johns.  (N.  Mich.  169;  Geer  v.  School  District, 
Y.)  68;  3  Am.  Dec.  467.  6  Vt.  76. 

3  Upjohn  V.  Ewing,  2  0.  S.  13.  2  Carthrae    v.    Brown,    3    Leigh 
*Piercy  v.  Fynney,  L.  R.  12  Eq.       (Va.)   98. 


NATUEE  OF  LIABILITY  ASSUMED.  1769 


CHAPTER  LIII. 

NATURE  OF  LIABILITY  ASSUMED. 
§1147.     Form  of  signature  not  creating  personal  liability. 

The  nature  of  the  liability  created  by  signing  a  written  instru- 
ment is  a  question  of  construction.  The  general  rule  undoubt- 
edly is  that  the  entire  contract  must  be  taken  into  consideration 
and  from  the  whole  of  it  the  intention  of  the  parties  must  be 
ascertained.  The  liability  which  it  appears  he  intended  to 
assume  must  be  enforced  against  the  party  who  has  assumed  it.^ 
This  rule,  how^ever,  like  other  broad  and  safe  rules,  is  too  vague 
to  guide  us  in  determining  the  meaning  of  specific  forms  of 
contracts.  When  we  attempt  to  deduce  more  specific  statements 
of  the  law  we  are  met  with  the  fact  that  the  courts  are  very 
far  from  harmonious  on  the  question  of  what  intention  thej 
will  deduce  from  given  phraseology.  If  an  agent  wishes  to 
execute  a  contract  in  such  form  as  to  bind  his  principal  and  not. 
himself,  the  safest  form  of  signature  is  "  X  (principal)  by  A 
(agent)."  This  form  of  signature  shows  clearly  that  the  agent 
does  not  intend  to  assume  any  personal  liability."  Thus  a  note 
beginning  "  I  or  we  promise  "  and  signed  "  C.  &  A.  Co.,  per 
A,  Sec,  B,  Gen.  Mangr.,"  is  the  note  of  the  corporation  only. 
The  word  "  per  "  refers  to  both  A  and  B.^  The  signature  "  A 
(agent)  for  X  (principal),"  while  not  technically  so  correct,  is 
also  sufficient  to  show  that  A  does  not  intend  to  assume  any 
personal  liability.'*     Thus  a  note  beginning  "  I  promise  "  and 

1  Whitney  v.  Wyman,  101  U.  S.  531;  24  Am.  St.  Rep.  351;  12  L.  E 
392.  A.  714;  15  S.  W.  417. 

2  Williams  v.  Harris,  198  111.  501;  3  Williams  v.  Harris,  198  111.  501; 
64  N.  E.  988;  reversing,  98  111.  App.  64  N.  E.  988;  reversing,  98  111.  App. 
27;  Tucker  Mfg.  Co.  v.  Fairbanks,  27. 

98  Mass.  101;  Emerson  v.  Mfg.  Co.,  4  Rawlings  v,  Robson,  70  Ga.  595; 

12    Mass.    237;     7    Am.    Dec.    66;       Bartlett  v.  Tucker,  104  Mass.  336; 
Sparks    v.    Transfer    Co.,    104    Mo.      6  Am.  Rep.  240. 


1770  PAGE    ON    CONTRACTS. 

signed  "  Pro  X,  A,"  was  held  to  be  the  note  of  X  onlj.°  So  a 
note  beginning  "  we  jointly  and  severally  promise  "  and  signed 
"  A  &  B  for  X,"  was  held  to  bind  X  only.^  Some  authorities, 
however,  treat  such  form  of  signature  as  imposing  a  personal 
liability.'^  Thus  a  signature  "  Robert  Early  (for  Sam'l  Early)," 
was  held  by  reason  of  the  brackets  to  bind  Robert  Early  per- 
sonally.^ So  a  note  beginning  "  I  promise  "  and  signed  "  For 
the  M.  H.  &  F.  S.  Co.,  W.  Macbean,  President,"  was  held  to 
impose  personal  liability  on  Macbean.^  So  a  note  signed  "  A, 
agent  for  the  Churchman,"  imposes  an  individual  liability  on 
A.^*'  The  addition  of  the  word  "  as  "  before  the  designation 
of  the  official  capacity  is  often  held  to  show  an  intention  not 
to  assume  a  personal  liability.  Thus  a  note  beginning  "  The 
trustees "  of  a  certain  church  "  as  such  trustees,  promise  to 
pay,"  and  signed  "  A,  as  trustee  "  of  such  church,  does  not  im- 
pose any  personal  liability."  As  is  indicated  elsewhere,^^  the 
addition  of  a  designation  which  is  not  that  of  an  agent  does 
not  in  law  show  an  intention  not  to  assume  personal  liability, 
whatever  the  parties  may  have  believed.  Thus  a  note  begin- 
ning "  we  promise  to  pay  "  and  signed  by  certain  persons  with 
the  addition  of  the  words  "  as  stockholders  "  imposes  personal 
liability." 

§1148.     Signature  by  one  person  with  addition  of  personal  de- 
scription. 

If  the  form  of  a  signature  is  "  A,  agent,"  or  some  equivalent 
expression,  the  word  "  as  "  being  omitted  before  ^'  agent,"  the 
weight  of  authority  is  that  in  the  absence  of  statute  A  incurs 

5  Long  V.  Colburn,  11  Mass.  97;  loDeWitt  v.  Walton,  9  N.  Y.  571. 
6  Am.  Dec.  160.  n  Little  v.  Bailey,  87  111.  239. 

6  Rice  V.  Gove,  22  Pick.  (Mass.)  12  See  §§  990,  995.  997,  1001,  1004. 
158;   33  Am.  Dee.  724.  13  Savings    Bank    v.    Market    Co., 

7  0ffiitt  V.  Avers,  7  T.  B.  Mon.  122  Cal.  28;  54  Pae.  273.  (Extrin- 
(Ky.)  356.  sic    evidence    is    not    admissible    to 

8  Early  v.  Wilkinson,  9  Gratt.  shovsr  that  such  note  was  given  only 
(Va.)  68.  to  ratify  certain  acts  of  the  direc- 

9  Macbean   v.   Morrison,    1    A.   K.  tors. ) 
Mar.    (Ky.)    545. 


NATURE  OF  LIABILITY  ASSUMED. 


1771 


a  personal  liability/  This  rule  is  of  old  Common  Law  origin. 
At  a  time  when  it  was  customary  for  every  person,  on  signing 
an  instrument,  to  add  his  station  and  rank  in  life  or  occupa- 
tion, as  a  descripiio  personw,  the  word  "  agent,"  like  any  other 
word  showing  occupation,  might  well  serve  to  describe  the 
person  rather  than  to  show  in  what  capacity  he  was  contracting. 
The  rule  thus  established  has  survived  to  a  day  when  the  use 
of  a  designation  of  an  occupation  as  a  description  of  the  person 
is  almost  unknown  in  written  contracts;  and  when  it  is  un- 
doubtedly the  popular  belief  that  the  addition  of  the  word 
agent  to  a  signature  prevents  personal  liability.  Thus  a  sig- 
nature "  A,  trustee,"  is  held  to  impose  personal  liability.^ 
Even  where  great  liberality  in  admitting  extrinsic  evidence  to 
show  the  intention  of  the  parties  is  displayed,  it  is  held  that  the 
signature  "  A,  administratrix,"  while  a  fact  to  be  considered 
in  discovering  the  intention  of  the  parties  is  no  more  con- 
clusive that  no  personal  liability  was  intended  than  would  be 
"  A,  widow,"  or  "  A,  native  of  Oregon."^  A  distinction,  ac- 
cording to  some  authorities,  must  be  made  between  "  agent 
for  "  and  "  agent  of  " :  the  former  showing  an  intention  not 
to  assume  a  personal  liability,  while  the  latter  is  treated  in 
law  as  a  mere  descriptio  perso^ice.^  A  note  signed  by  an 
individual  name  with  the  addition  of  "  Mfg.  Agt.  &  Supt.  of 
contracts "  imposes  a  personal  liability."  So  a  note  signed 
"  A,   trustee,"   imposes   a   personal  liability.®     So   to  hold   an 

iMacdonald     v.     Bond,     195     111.  493;    22   Am.   Rep.   175;    McKenney 

122;    62    N.    E,    881;    affirming    96  v.  Bowie,  94  Me.  397;  47  Atl.  918; 

111.  App.   116;    Braiin  v.  Hess,   187  Farrell   v.   Eeed,   46    Neb.    258;    64 

111.  283;   79  Am.  St.  Rep.   221;   58  N.  W.  959. 


N.  E.  371;  Keidan  v.  Winegar,  95 
Mich.  430;  20  L.  R.  A.  705;  54  N 
W.  901;  Stinson  v.  Lee,  68  Miss 
113;  24  Am.  St.  Rep.  257;  9  L.  R, 
A.  830;  8  So.  272;  Sparks  v.  Trans 
fer  Co.,  104  Mo.  531;  24  Am.  St 
Rep.  351;  12  L.  R.  A.  714;  15  S.  W 
417;  Exchange  Bank  v.  Lewis  Coun 


3  Kitchen  v.  Holmes,  42  Or.  252; 
70   Pac.   830. 

4Tannatt  v.  Bank,  1  Colo.  278; 
9  Am.  Rep.  156;  Burlingame  v. 
Brewster,  79  111.  515;  22  Am.  Rep. 
177;  Tucker  Mfg.  Co.  v.  Fairbanks, 
98  Mass.  101. 

5  Keeley  Brewing  Co.  v.  Decorat- 


ty,  28  W.  Va.  273.  ing  Co.,  194  111.  580;  62  N.  E.  923. 

2Diivall   V.   Craig,   2   Wheat.    (U,  e  Pargason  v.  Ford,   119  Ga.  343; 

S.)    45;    Powers   v.    Briggs,    79   111.      46  S.  E.  431;  McClellan  v.  Robe,  93 


1772  PAGE    ON    CONTEACTS. 

indorser  liable  on  a  note  signed  "  A,  agent,"  demand  must  be 
made  on  A  and  not  on  the  undisclosed  principal/  If  a  church 
is  not  named  in  the  body  of  a  note,  and  the  trustees  sign 
individually,  the  addition  of  the  words  "  Trustees  of "  the 
church  in  question  is  not  sufficient  to  show  that  no  personal 
liability  was  intended.^  So  a  signature  "  A,  vestryman," 
"  Grace  Church  "  imposes  a  personal  liability  upon  A.^ 

Even  on  this  point  the  courts  are  by  no  means  unanimous. 
Some  authorities  hold  that  a  designation  of  agency  may,  in 
connection  with  the  wording  of  the  instrument,  show  that  no 
personal  liability  is  intended/"  So  a  note  signed  "  A,  B,  C, 
vestrymen  of  the  Episcopal  Society,"  was  held  not  to  impose 
personal  liability  on  A,  B  and  C/^  Thus  a  note  signed 
"  James  E.  Wilson,  Pres't.  T.  X.  Co.,"  was  held  to  be  the 
obligation  of  the  corporation/^  So  a  note  beginning  "  we 
promise  "  and  signed  "  A,  treasurer,"  and  stamped  with  a  seal 
bearing  the  corporate  name  was  held  to  be  the  note  of  the 
corporation  and  not  of  A/*  Under  the  negotiable  instruments 
act,  no  personal  liability  is  imposed  on  one  who  signs  in  a 
representative  capacity.  Accordingly  a  note  signed  by  "  A, 
trustee,"^*  imposes  no  personal  liability. 

§1149.     Signature  by  two  or  more  persons  with  addition  of  per- 
sonal description. 

If  two  or  more  persons  sign,  and  the  question  of  the  existence 
of  personal  liability  is  presented,  there  is  as  much  of  a  conflict 

Ind.    298;     Fiske    v.    Eldridge,     12  Mass.   461;    8   Am.   Dec.    146;    Dis- 

Gray       (Mass.)      474;     Farrell     v.  patch  Line  v.  Mfg.   Co.,   12   N.  H. 

Eeed,  46  Neb.  258;   64  N.  W.   959.  205;    37   Am.   Dee.   203;    Safford  v. 

TStinson   v.   Lee,    68   Miss.    113;  Wyckoflf,  1  Hill   (X.  Y.)   11;  4  Hill 

24  Am.   St.  Rep.  257;    9  L.  R.  A.  (N.  Y.)    442. 

830;   8  So.  272,  n  Johnson    v.    Smith,    21    Conn. 

8  Burlingame  v.  Brewster,  79  111.  627. 

515;    22    Am.    Rep.    177;    Hayes   v.  i2  01cott  v.  Ry.,  27  N.  Y.  546;  84 

Brubaker,     65     Ind.     27;     Hays    v.  Am.   Dec.    298. 

Crutcher,  54  Ind.  260.  is  Miller  v.  Roach,  150  Mass.  140; 

sTilden  v.  Barnard,  43  Mich.  376;  6  L.  R.  A.  71;   22  N.  E.  634. 

38  Am.  Rep.  197;  5  N.  W,  420.  i4Megowan    v.    Peterson,    173    N. 

10  Fuller     v.     Hooper,     3     Gray  Y.  1 ;  65  N.  E.  738. 
(Mass.)    334;   Ballou  v.  Talbot,   16 


NATURE  OF  LIABILITY  ASSUMED.  1773 

as  "where  one  only  signs,  but  the  states  are  divided  on  different 
lines.  Thus,  if  a  note  is  signed  by  two  or  more  persons  with 
an  official  designation,  such  as  "  president "  or  "  secretary  "  op- 
posite the  name  of  each,  we  find  a  conflict  of  authority. 
Some  courts  hold  that  such  a  form  of  signature  imposes  no 
individual  liability.^  Thus  a  note  beginning  "  the  president 
and  directors  will  pay  "  and  sig-ned  "  A,  President,"  "  B,"  and 
so  forth,  was  held  to  be  the  obligation  of  the  company  and 
not  to  impose  a  personal  liability."  Other  authorities  hold  that 
such  a  form  of  execution  creates  a  personal  liability.^  Thus  a 
note  beginning  "  we  promise "  and  signed  "  J.  E.  Stafford, 
Pres.,  J.  Zapf,  Mgr.,  Albany  Furniture  Co.,"  was  held  to  im- 
pose joint  individual  liability.*  If  a  note  is  signed  with  the 
name  of  a  corporation,  followed  by  the  names  of  two  or  more 
officers,  with  the  name  of  the  office  opposite  the  name  of  each 
person,  another  conflict  of  authority  exists.  Some  jurisdictions 
hold  that  such  a  note  is  the  note  of  the  corporation  only.^ 
Thus  a  note  signed  "  A,  Secretary,"  "  B,  President,"  payable 
to  "  ourselves,"  and  indorsed  "  Worcester  Brewing  Co.,  B, 
President,  A,  Secretary,"  was  held  to  be  the  note  of  the  cor- 
poration'.^ Other  courts  hold  that  such  a  contract  creates  an 
individual  liability.  Thus  a  note  beginning  "  we  promise," 
and  signed  "  The  Pendleton  Glass  Company,  by  B.  F.  Aiman, 
President;  C.  B.  Orvis,  Vice  President;  Charles  H.  Roach, 
Secretary ;  A.  B.  Taylor,  Benj.  Rogers,  J.  R.  Boston,  directors," 
was  held  to  impose  individual  liability  on  the  directors."^  A 
note  beginning  "  we  promise  to  pay  "  and  signed  "  Belle  Plaine 

1  Farmers',    etc.,    Bank    v.    Colby,  *  Albany,    etc.,    Co.    v.    Bank.    17 

64    Cal.    352;    28    Pac.    118;    Arm-  Ind.    App.    531;    60    Am.    St.    Rep. 

strong  V.  Canal  Co.,   14  Utah  450;  178;   47  N.  E.  227. 

48   Pac.   690.  5  American  National  Bank  v.  Mfg. 

2Yowell  V.  Dodd,  3  Bush.    (Ky.)  Co.,  1  Neb.  Unofficial  322;  95  N.  W. 

581;  96  Am.  Dec.  256.  672. 

3  Albany,    etc.,    Co.    v.    Bank,    17  «  Produce  Exchange  Trust  Co.  v. 

Ind.    App.    531;    60    Am.    St.    Rep.  Bieberbach,  176  Mass.  577 ;  58  N.  E. 

178;  47  N.  E.  227;  Whitney  v.  Sud-  162. 

duth,   4  Met.    (Ky.)    296;    Titus   v.  7  Taylor   v.   Reger,    18    Ind.    App. 

Kyle,  10  0.  S.  444;   Scott  v.  Baker,  466;  63  Am.  St.  Rep.  352;  48  N.  E. 

3  W.  Va.  285.  262. 


1774  PAGE    ON    CONTBACTS. 

Canning  Co.,  H.  Wessel,  Sec'y.,  A.  J.  Hartman,  Pres.,"  im- 
poses individual  liability  upon  the  officers.* 

§1150.     Signature  by  names  of  principal  and  agent. 

If  the  note  is  signed  by  the  name  of  the  principal,  with  the> 
name  of  the  agent  subscribed  below  that  of  the  principal,  with- 
out the  use  of  the  word  "  by  "  to  show  agency,  a  question  is 
presented  on  which  there  is  a  division  of  authority.  A  question 
of  this  sort  usually  arises  on  a  note  of  a  corporation  which 
must  be  executed  by  some  one  of  its  agents,  and  which  is  signed 
by  the  name  of  the  corporation  followed  by  the  name  of  one 
of  its  agents,  with  the  addition  of  "  President,"  "  Secretary," 
or  some  such  official  designation.  The  weight  of  authority  is 
that  such  a  note  is  the  note  of  the  corporation  exclusively,  and 
that  no  personal  liability  attaches  to  the  agent  whose  name  is 
thus  signed.^  There  is  some  authority  for  holding  that  the 
agent  who  signs  in  such  a  form  incurs  a  personal  liability.^ 

§1151.     Body  of  instrument  indicating  nature  of  liability. 

The  wording  of  the  clause  in  which  the  promise  .is  made 
must  be  considered  in  determining  the  nature  of  the  liability 
imposed.  A  note  beginning  "  We,  the  trustees  of  Musconetcong 
Grange,  ISTo.  114,  known  as  W.  Fleming  &  Co.,"  promise,  and 
signed  with  the  word  "  Trustees  "  and  the  individual  names 
of  the  trustees,  imposes  a  personal  liability  on  the  trustees.^ 

8  McC'andless  v.   Canning  Co.,    78  675;   16  L.  R.  A.  143;  23  Atl.  853; 

la.    161;    16   Am.    St.  Jlep.   429;    4  Latham  v.  Flour  Mills,  68  Tex.  127; 

L.  R.  A.  396;  42  N.  W.  635.  3   S.   W.   462;    Leibscher   v.   Kraus, 

iFalk  V.  Moebs,   127   U.   S.   597;  74  Wis.  387;   17  Am.  St.  Rep.  171; 

Bean  v.  Pioneer  Mining  Co.,  66  Cal.  5  L.  R.  A.  496;  43  N.  W.  166. 

451;   56  Am.  Rep.   106;   6  Pac.  86;  2  Mathews    v.    Mattress    Co.,    87 

Scanlon  v.   Keith,   102   111.   634;   40  la.  246:   19  L.  R.  A.  676;  54  N.  W. 

Am.  Rep.  624 ;  Gillet  v.  Bank,  7  111.  225 ;    Heffner    v.    Brownell,    70    la. 

App.  499;   Gleason  v.  Milk   Supply  591;  31  N.  W.  947;  75  la.  341;   3& 

Co.,  93  Me.  544;   74  Am.  St.  Rep.  N.    W.    640.     The    earlier    case    of 

370;  45  Atl.  825;  Castle  v.  Foundry  Wheelock  v.  Wilson,   15  la.  464,  is 

Co.,  72  Me.   167;   Atkins  v.  Brown,  overruled. 

59  Me.  90;   Draper  v.  Heating  Co.,  1  Vliet  v.   Simanton.   63   N.  J.  L. 

5  All.    (Mass.)    338:  Reeve  v.  Bank,  458:  43  Atl.  738;  and  see  Hypes  v. 

54  N.  J.  L.  208;   33  Am.   St.  Rep.  Griffin,  89  111.  134;  31  Am.  Rep.  71; 


NATURE  OF  LIABILITY  ASSUMED.  1775 

So  a  note  beginning  "  The  directors  promise  '"  anri  signed  by 
the  directors,  imposes  personal  liability."  A  note  beginning 
"  we  promise  "  "  for  the  Boston  Glass  Manufactory  "  .und  signed 
by  A,  B,  and  C,  individually,  was  held  to  be  the  individual 
note  of  A,  B,  and  C.^  So  an  instrument  which,  in  the  body 
thereof  purports  to  be  executed  by  A  "  for  the  National  Um- 
brella Company,"*  or  by  A  "  of  the  X  Company,"^  imposes 
in  each  case  a  personal  liability  on  A.  Similar  phraseology  is 
held  in  other  cases  not  to  impose  personal  liability.  Thus  a 
note  beginning  "  The  Howard  County  Agricultural  Association 
who  execute  this  note  by  her  directors  "  "  do  promise  "  and 
signed  "  A,  Secretary ;  B,  C,  directors  Howard  County  Agricul- 
tural Association,"  does  not  impose  personal  liability."  Under 
the  Maine  statute  a  note  beginning  "  We,  the  subscribers  for  " 
a  certain  corporation,  signed  by  the  individual  names  of  the 
makers,  imposes  liability  in  the  corporation,  and  not  on  the 
individuals  signing.'^  An  acceptance,  written  on  a  letter  bearing 
the  corporation  letter  head,  and  signed  by  an  agent  individually, 
written  in  reply  to  a  proposition  addressed  to  the  corporation, 
binds  the  corporation.^ 

§1152.     Liability  assumed  by  public  officers. 

An  important  difference  between  contracts  of  public  agents 
and  contracts  of  private  agents  is  in  the  construction  of 
liability  intended  to  be  assumed.  We  have  seen  that  in  contracts 
of  private  agents  the  mere  addition  of  the  official  capacity  to  the 

Powers   V.   Briggs,    79    111.   493;    22  3  Bradlee    v.    Glass    Manufactory, 

Am.   Rep.    175.  16  Pick.    (Mass.)   347. 

2  McKensey   v.    Edwards,    88    Ky.  4  General  Electric  Co.  v.  Gill,  127 

272;  21  Am.  St.  Rep.  339;   3  L.  R.  Fed.  241. 

A.   397;    10   S.   W.    815.      (However  5  Railway   Speed   Recorder   Co.   v. 

in  such  a  case  it  is  said  that  the  Tool  Co.,  126  Fed.  223. 

question   of   the   nature   of   liability  6  Armstrong    v.    Kirkpatrick,    79 

imposed  must  be  determined  on  an-  Ind.    527. 

swer  and  not  on  demurrer.     McKen-  ^  Simpson  v.  Garland,  72  Me.  40; 

sey  V.  Edwards,  88  Ky.  272 ;  21  Am.  39  Am.  Rep.  297. 

St.   Rep.   339;   3  L.   K.  A.   397;    10  « Towers  v.   Cattle  Co.,   83   Minn. 

S.  W.   815;    citing  Pack  v.   White,  243;   86  N.  W.  88. 
78  Ky.  243.) 


1776  PAGE    ON    CONTRACTS. 

signature  does  not  prevent  personal  liability  from  being  imposed 
on  the  agent ;  and  it  does  not  prevent  the  contract  from  being 
treated  as  his  personally/  In  contracts  of  public  agents,  there 
is,  unfortunately,  a  lack  of  harmony  on  this  question,  as  there 
is  in  contracts  of  private  agents.  There  may  be  said,  how- 
ever, to  be  a  strong  tendency  in  contracts  of  public  agents,  to 
hold  that  the  public  corporation  is  bound  and  the  agent  is  not 
in  many  cases  where  the  opposite  result  would  be  reached  in 
contracts  of  private  agents.  Thus  a  lease  made  to  a  city, 
signed  by  the  mayor  individually  and  sealed  with  his  seal  is 
the  contract  of  the  city  and  not  of  the  mayor  personally.^  So 
an  appeal  bond  purporting  to  be  the  obligation  of  the  city,  but 
signed  by  the  mayor  and  the  clerk  with  their  official  titles 
added  to  their  names  is  valid  as  the  obligation  of  the  city.* 
An  order  directed  to  a  township  clerk,  directing  him  to  make 
a  specified  payment  out  of  township  funds  and  signed  "  A,  B, 
C,  Trustees,"  does  not  impose  personal  liability  on  A,  B  and  C* 
So  a  contract  beginning  "  We,  trustees,"  and  promising  to  re- 
pay "  money  borrowed  to  build  "  a  certain  school  house,  signed 
individually,  imposes  no  personal  liability.^  A  reward  offered 
by  "  A,  B,  C,  Selectment  of  Milton,"  imposes  personal  liability 
on  such  signers.*^  A  contract  signed  by  the  individual  names 
of  public  officers,  and  not  showing  on  its  face  any  intention  to 
make  a  contract  on  behalf  of  the  public  is  the  individual  contract 
of  such  officers.'^ 

1  See  §  1148  e#  seg.  5  Warford    v.    Temple     (Ky.),    73 

2  Chicago   V.    Peck,    196   111.   260;       S.    W.    1023. 

63  N-.  E.  711;  affirming  98  111,  App.  6  Brown  v.  Bradlee,  156  Mass.  28; 

434.  32   Am.   St.  Hep.  430;    15  L.  R.  A. 

3  (City  of)    Fon  du  Lac  v.  Atto,       509;  30  N.  E.  85. 

113  Wis.  39;  90  Am.  St.  Rep.  830;  7  Western     Publishing    House    v.. 

88  N.  W.  917.  Murdick,    4    S.    D.    207;    21    L.    lU 

iWillett   V.    Young,    82    la.    292;  A.  671;  56  X.  W.  120. 
11  L.  R.  A.  115;  47  N.  W.  990. 


TIME.  1777 


CHAPTER  LIV. 

TIME. 
§1153.    Construction  of  terms  concerning  time  of  performance. 

The  intention  of  the  parties  controls  in  questions  of  time  of 
performance.  Accordingly  it  is  dangerous  to  attempt  to  lay 
down  arbitrary  rules  for  ascertaining  such  intention.  A  few 
illustrations  of  the  results  reached  by  the  courts  in  specific  cases 
may  be  given,  however.  A  contract  to  pay  or  deliver  "  by  '* 
a  certain  day  gives  the  whole  of  such  day  for  performance.^ 
Thus  a  subscription  conditioned  on  raising  a  certain  sum  "  by  " 
a  certain  day  is  enforceable  where  the  requisite  amount  isi 
subscribed  at  a  meeting  held  on  the  night  of  such  day.^  A 
promise  to  pay  "  on  or  before  "  a  certain  day  is  treated  as  a 
promise  to  pay  on  that  day,  with  an  option  to  pay  before  the 
time  designated.^  A  contract  to  re-imburse  one  for  loss  sus- 
tained by  reason  of  his  purchase  of  stock  "  at  or  before  the 
expiration  of  five  years,"  means  five  years  from  the  date  of 
the  contract,  and  not  five  years  from  the  loss.^  A  promise  to 
perform  within  a  certain  time  from  a  given  event  is  to  be  con- 
strued by  counting  from  the  completion  of  the  event.  Thus 
a  provision  for  furnishing  proofs  of  loss  sixty  days  after  the 
fire  causing  loss  means  sixty  days  after  the  fire  has  ended,  if  it 
lasts  for  more  than  one  day.^  A  provision  for  delivering  certain 
bonds  within  six  months  after  a  foreclosure  sale  means  within 

1  Preston  v.  Dunham,  52  Ala.  259;  49  N.  E.  113;  Helmer  v.  Kro- 
217;  Massie  V.  Belford,  68  111.  290;  lick,  36  Mich.  371;  Mattison  v. 
Stevens  v.  Blunt,  7  Mass.  240;  Marks,  31  Mich.  421;  18  Am.  Eep. 
Coonley  v.  Anderson,  1  Hll  (N.  Y.)  197. 

519.  4  Wilson    V.    Bieknell,    170    Mass. 

2  Elizabeth   City   Cotton   Mills   v.      259;  49  N.  E.  113. 

Dunstan,  121  N.  C.  12;  61  Am.  St.  5  National  Wall  Paper  Co.  v.  Ins. 

Rep.  654;  27  S.  E.  1001.  Corporation,   175  N.  Y.  226;   67  N. 

3  Wilson    V,    Bieknell,    170    Mass.      E.  440. 

112 


1778  PAGE    ON    CONTRACTS. 

six  months  after  the  sale  is  consummated  by  the  delivery  of 
the  deed."  A  contract  to  exchange  realty  when  a  certain  loan 
is  procured,  or  "  within  forty  days  at  the  most,"  means  forty 
days  from  the  time  that  the  loan  is  procured.^  A  contract 
giving  the  purchaser  of  standing  timber,  until  the  first  day  of 
June,  1898,  to  remove  it,  "  with  the  privilege  of  another  year 
if  needed  to  remove  "  it,  means  a  year  from  the  first  of  June, 
1898.^  If  the  last  day  of  performance  falls  on  Sunday,  per- 
formance on  Monday  is  a  sufficient  compliance  with  the  con- 
tract.^ A  promise  to  pay  or  perform  in  a  certain  number  of 
months  prima  facie  means  calendar  months.^"  Under  a  con- 
tract for  performance  in  a  certain  time  the  day  of  the  date 
is  excluded  from  the  computation,  and  the  last  day  of  perform- 
ance is  included."  A  contract  which  does  not  expressly  state 
within  what  time  it  is  to  be  performed  may  refer  to  another 
contract  in  such  a  way  as  to  show  that  the  time  fixed  in  such 
other  contract  is  the  time  intended  by  the  parties.^^  Thus  a 
contract  to  give  employment  or  to  pay  royalties  during  the 
^^  term  "  of  a  prior  contract  for  the  use  of  a  patent  for  five 
years,  with  the  option  of  five  more,  has  been  held  to  mean 
the  ten-year  term,  even  though  the  option  as  to  the  second  period 
of  five  years  was  not  in  fact  taken  advantage  of.^^ 

§1154.    Reasonable  time  intended  if  time  not  fixed. 

If  no  time  for  performance  is  fixed  by  the  contract,  the  im- 
plication is  that  a  reasonable  time  for  performance  is  intended.^ 

« Houston,  etc.,  Ry.  v.  Keller,  90  12  Poole  v.  Plush  Co.,   171  Mass. 

Tex.   214;    37   S.   W.   1062.  49;   50  N.  E.  451;  Ryberg  v.  Good- 

7Te  Poel  V.  Shutt,  57  Neb.  592;  now,  59  Minn.  413;  61  N.  W.  455. 
78    N.    W.    288.  13  Poole  v.  Plush  Co.,   171   Mass. 

8  Oconto    Co.    V.    Lundquist,    119  49;  50  N.  E.  451. 

Mich.  264;  77  N.  W.  950.  1  McFadden     v.     Henderson,     128 

9  The  Harbinger,  50  Fed.  941 ;  In-       Ala.    221;    29    So.    640;    Griffin    v. 


gram    v.    Wackernagel,    83    la.  -82 
48  N.  W.  998. 

10  Doyle  V.   Bank,    131   Ala.   294 
90  Am.  St.  Rep.  41 ;  30  So.  880. 

11  Doyle  V.   Bank,    131    Ala.    294 


Ogletree,  114  Ala.  343;  21  So.  488; 
Comer  v.  Way,  107  Ala.  300;  54 
Am.  St.  Rep.  93;  19  So.  966;  Bry- 
ant V.  Ry.,  119  Ga.  607;  46  S.  E. 
829;    Atchison,   etc.,   R.   R.   v.   Bur- 


90  Am.  St.  Rep.  41;  30  So.  880.  lingame  Township,  36  Kan.  628;  59 


TIME. 


1770 


If  performance  is  made  "within  such  reasonable  time,  no  default 
exists ;  nor  can  default  exist  until  a  reasonable  time  has  elapsed.* 
Refusal  to  perform  for  such  time  in  the  future  as  is  not  reason- 
able prevents  the  objection  that  the  time  within  which  per- 
formance was  requested  was  not  reasonable."^  On  the  other 
hand,  failure  to  perform  within  a  reasonable  time  constitutes 
a  breach.*  Performance  of  such  a  contract  after  a  reasonable 
time  is  unavailing  if  the  adversary  party  has  not  consented  to 
an  extension  of  time.^  The  principle  that  a  reasonable  time 
is  implied  if  no  time  is  fixed  applies  to  contracts  for  the  sale 
of  land,®  or  of  personalty,^  as  a  contract  to  assign  a  patent,* 
to  building  contracts,®  to  contracts  for  work  and  labor,  hauling 
logs,^°  or  driving  logs,^^  or  procuring  a  loan,^"  or  effecting  a 
sale  of  real  estate,^^  or  to  furnish  a  vessel  and  deliver  lumber,^* 


Am.  Rep.  578;  14  Pac.  271;  Howe  v. 
Taggart,  133  Mass.  284;  Calkins  v. 
Chandler,  36  Mich.  320;  24  Am. 
Rep.  593;  Van  Arsdale  v.  Brown, 
18  Ohio  C.  C.  52;  9  Ohio  C.  D.  488; 
Gammon  v.  Bunnell,  22  Utah  421; 
64  Pac.  958;  Dennis  v.  Stoughton, 
55  Vt.  376;  Poling  v.  Lumber  Co., 
_  w.  Va.  — ;  47  S.  E.  279. 

2  Bell  V.  Mendenhall,  78  Minn.  57  ; 
80  N.  W.  843. 

3  Reynolds  v.  Reynolds,  74  Vt. 
463;    52   Atl.   1036. 

4  Hume  V.  Mullins  (Ky.),  35  S. 
W.  551 ;  Gainor  v.  Boom  Co.,  86 
Mich.  112;  48  N.  W.  787;  Lynd  v. 
Printing  Co.,  20  J?.  I.  344;  39  Atl. 
188. 

sMeader  v.  Allen,  110  la.  588;  81 
N.  W.  799. 

6  Noyes  v.  Barnard,  63  Fed.  782; 
Michael  v.  Foil,  100  N.  C.  178;  6 
Am.  St.  Rep.  577;  6  S.  E.  264; 
Williamson  v.  Neeves,  94  Wis.  656; 
69  N.  W.  806. 

7  Watkins  v.  Morris,  16  Mont. 
309;  40  Pac.  600;  Smith  v.  Ma- 
chine Co.,  46  S.  C.  511;  24  S.  E. 
376;  Boyce  v.  Timpe  (la.),  89  N. 
W.  83. 


sNiles  V.  Graham,  181  Mass.  41; 
62  N.  E.  986. 

9  House.  Lane  v.  Hardware  Co., 
121  Ala.  296;  25  So.  809;  Brodek 
V.  Farnum,  11  Wash.  565;  40  Pac. 
189.  Steam  plant.  North  v.  Mal- 
lory,  94  Md.  305;  51  Atl.  89;  Elec- 
tric-lighting plant.  Florence,  etc., 
Co.  V.  Hanby,  101  Ala.  15;  13  So. 
343.  Flour ing-mill.  Van  Stone  v. 
Mfg.  Co.,  142  U.  S.  128. 

10  Griffin  v.  Ogletree,  114  Ala. 
343;  21  So.  488;  Greenwood  v.  Da- 
vis, 106  Mich.  230;  64  N.  W.  26. 

11  Bonifay  v.  Hassell,  100  Ala. 
269;  14  So.  46;  Gainor  v.  Boom 
Co.,  86  Mich.  112;  48  N.  W.  787; 
Day  V.  Gravel,  72  Minn.  159;  75 
N.  W.  1. 

12  Collier  v.  Weyman,  114  Ga. 
944;  41  S.  E.  50. 

13  Boyd  V.  Watson,  101  la.  214; 
70  N.  W.  120.  Contra,  that  such  a 
contract  is  revocable  at  the  will  of 
the  owner  of  the  realty.  Woods  v. 
Hart,   50   Neb.   497;    70   N.   W.   53. 

i4\A^iting  V.  Gray,  27  Fla.  482; 
11  L.  R.  A.  526;  8  So.  726. 


1780  PAGE    ON    CONTRACTS. 

01'  to  cut  and  remove  timber/^  or  to  forbear  a  legal  right/"  as 
enforcing  a  lien/'^  So  an  option,  the  time  for  the  exercise  of 
which  is  not  fixed,  mnst  be  exercised  in  a  reasonable  time,^* 
So  a  contract  to  rej)urchase  stock  at  the  end  of  a  given  time 
if  the  vendee  holds  it  then  and  wishes  to  sell  it,  has  been  held 
to  give  the  vendee  a  reasonable  time  after  the  end  of  such 
I^eriod  to  make  his  election. ^^  The  purchaser  of  realty  has 
ordinarily  a  reasonable  time  to  examine  the  abstract  of  title 
before  paying  the  purchase  price.'"  So  a  contract  to  furnish 
capital  as  needed  gives  a  reasonable  time  after  notice  that  it  is 
needed  to  furnish  it."^  So  a  contract  to  submit  a  cause  to  the 
judge  at  the  next  term  of  court,  a  jury  to  be  waived  and  no 
appeal  or  error  to  be  taken,  requires  that  the  complaint  should 
be  filed  in  time  to  allow  a  reasonable  time  to  file  an  answer.^^ 
A  contract  which  provides  for  a  test  after  delivery  of  the  article 
sold,  and  before  final  acceptance,  gives  a  reasonable  time  for 
making  such  test.*"  In  some  cases  a  time  other  than  merely 
a  reasonable  time  is  implied  from  the  terms  of  the  contract. 
A  contract  for  the  loan  of  money  without  provision  for  the  time 
of  repayment  implies  repayment  on  demand.^*  A  continuous 
contract  of  employment,  no  time  of  duration  being  fitted,  is 
terminable  at  the  will  of  either  party."^     This  principle  applies 


15  Ferguson  v.  Arthur,   128  Mich.  22  Pendleton    v.    Light    Co.,     121 
297;  87  N.  W.  259.  N.    C.    20;    27    S.    E.    1003.      (Tha 

16  Moore  v.  McKenney,  83  Me.  80 ;  complaint  was  offered  for  filing  in 
21  Atl.  749.  this    case   on    the    last    day    of    the 

17  Anderson    v.    Wainwright,     67  term  when  the  judge  was  about  to 
Ark.  62;  53  S.  W.  566.   (An  argree-  leave  the  bench.) 

ment  to  refrain  from  sale,  and  col-  23  Edison,  etc.,  Co.  v.  Navigation 

lect  the  debt  out   of   the   rents.)  Co.,  8  Wash.  370;  40  Am.  St.  Rep. 

isCatlin  v.  Green,  120  N.  Y.  441;  910;  24  L.  E.  A.  315;  36  Pac.  260; 

24  N.  E.  941.  see  also  Turner  v.  Foundry  Co.,  97 

i9Maurer  v.  King,  127  Cal.  114;  Mich.    166,    634;     56    N.    W.    356; 

59   Pac.    290;    La   Dow   v.   Bement,  57  N,  W.  192. 

119   Mich.    685;    45   L.   Pv.   A.   479;  24  Jacoby  v.  Jacoby,  103  Fed.  473- 

79  N.  W.  1048.  25  De    Briar    v.    Minturn,    1    Cal. 

20  Pennsylvania     Mining     Co.     v,  450;    Greer    v.    Mfg.    Co.,    1    Penn- 

Thomas,   204   Pa.    St.   325;    54   Atl.  (Del.)    581;  43  Atl.  609;  Louisville 

101.  &  K  E.  Co.  V.  Offutt,  99  Ky.  427; 

2iNiles  V.  Graham,  181  Mass.  41;  59  Am.  St.  Eep.  467;  36  S.  W.  181; 

62  N.  E.  986.  McCullough   Iron  Co.  v.  Carpenter. 


TIME.  1781 

even  if  the  compensation  is  fixed  at  a  certain  sum  per  year.^* 
However,  a  contract  by  A  to  employ  B  as  long  as  A  is  engaged 
in  the  saw-mill  business  on  the  Ohio  River  does  not  give  to  A 
the  right  to  discharge  B  at  will."^ 

§1155.     Reasonable  time. —  Whether  question  of  law  or  fact. 

What  is  a  reasonable  time  for  performance  is  a  question  of 
fact  to  be  determined  as  a  fact,  in  view  of  the  circumstances  of • 
the  case/  Accordingly  if  an  action  is  brought  on  an  agreement 
to  accept  a  conveyance  and  in  consideration  thereof  to  execute 
a  written  contract  to  pay  a  certain  mortgage,  and  to  reconvey 
on  payment  of  the  amount  of  such  mortgage,  and  the  defense 
is  that  plaintiff  delayed  an  unreasonable  time  before  performing 
the  conditions  precedent  on  his  part  to  be  performed,  it  is  not 
error  for  the  court  to  refuse  to  charge  that  a  delay  of  four 
months  would  be  unreasonable."  On  the  other  hand,  a  notice 
for  performance  in  eighty  days,  given  to  the  vendor,  followed 
by  demand  for  performance  in  five  days,  followed  by  a  delay 
of  six  weeks  before  bringing  a  suit  for  sj^ecific  performance,  has 
been  held  as  a  fact  to  give  to  the  vendor  a  reasonable  time  for 
performance.^     In  many  cases  it  has  been  said  that  this  question 


67  Md.  554;  11  Atl.  176;  Edwards  shall  make  use  of  B's  patents.  Ray- 

V,  Seaboard  R.  Co.,  121  N.  C.  490;  mond  v.  White,  119  Mich,  438;   78 

28  S.  E.  137;  Martin  v.  New  York  N.  W.  469. 

L.  Ins.  Co.,  148  N.  Y.  117;  42  N.  E.  i  Drake   v.    Goree,   22   Ala.    409 

416;  Copp  V.  Colorado  Coal  &  I.  Co.,  Watts    v.    Sheppard,    2    Ala.    425 

46  N.  Y,  Supp.  542;   20  Misc.  702;  Campbell   v.   Heney,    128   Cal.    109 

Christensen    v.    Borax   Co.,    26    Or.  60  Pae.  532;   Jenkins  v.  Lykes,   19 

302;  38  Pac.  127;  Kirk  v,  Hartman,  Fla.  148;  45  Am.  Rep.  19;  Morrison 

63   Pa.    St.   97;    Booth   v.   National  v.  Wells,  48  Kan.  494;  29  Pac.  601; 

India-Rubber  Co.,   19  R.  I.  696;   36  Elder  v.  Rourke,  27  Or.  363;  41  Pac. 

Atl.    714;    Prentiss   v.   Ledyard,    28  6;    Hays  v.   Hays,    10  Rich.  L.    (S. 

Wis.  131.  C.)   419;  Boyington  v.  Sweeney,  77 

26  Greer    v.    Mfg.     Co.,     1    Penn.  Wis.  55;  45  N.  W.  938. 

(Del.)   581 ;  43  Atl.  609.  2  Peabody   v.    Fellows,    181    Mass. 

27  Yellow   Poplar    Lumber   Co.    v.  26;  62  N.  E.  1053. 

Rule,   106  Ky.  455;    50   S.   W.   685.  3  Harding  v.  Olson,   177  111.  298; 

So    under    a    contract    whereby    A  52  N.  E.  482;  aflSrming  76  111.  App. 

agrees  to   employ  B   as   long  as   A  475. 


1782  PAGE    ON    CONTRACTS. 

is  one  of  law/  wliere  the  essential  facts  are  not  in  dispute.^ 
This,  however,  means  nothing  more  than  that  if  this  fact,  like 
any  other  fact,  is  either  conceded  by  the  parties  to  exist  or 
is  established  by  uncontradicted  evidence,  it  cannot  be  said  to 
be  a  fact  in  issue,  to  be  decided  as  the  facts  in  issue  are  decided. 

§1156.     Time  fixed  by  extrinsic  act. 

The  time  of  performance  may  be  fixed  with  reference  to 
the  doing  of  some  specified  act.^  This  is  usually  held  to  be 
a  provision  inserted  to  fix  the  time  of  performance,  but  not 
to  make  the  doing  of  such  other  act  a  condition  precedent. 
Hence  if  such  other  act  is  never  done,  the  act  contracted  for 
must  be  done  in  at  least  a  reasonable  time.  This  principle  has 
been  applied  to  a  promise  to  pay  when  the  maker  has  finished  a 
church  then  building,"  or  "  as  soon  as  the  crop  can  be  sold  or  the 
money  raised  from  any  other  source,"^  or  when  the  promisor 
shall  sell  the  place  he  lives  in,*  or  to  pay  in  twelve  months  "  or  as 
soon  as  I  can  sell  the  above  amount  of  Allen's  Vegetable  Tonic,"' 
or  to  credit  the  amount  of  the  debtor's  cigars  sold  by  the  creditor, 
upon  the  debt  and  thus  extinguish  it,^  or  when  other  specified 
property  is  sold  at  a  specified  price  ;^  or  to  pay  in  four  months 
or  as  soon  as  the  promisor  shall  collect  a  certain  note  f  or  to 
pay  by  a  certain  date  "  on  the  condition  that  the  banks  of 
Tennessee  have  resumed  specie  payment  at  that  time ;  if  not, 
as  soon  thereafter  as  they  do  resume  specie  payment  " ;''  or  to 

4Luckhart  v.  Ogden,  30  Cal.  547;  4  Crooker  v.  Holmes,  65  Me.  195; 

Attwood  V.  Clark,  2  Me.  249;  Echols  20  Am.  Rep.  687.      (Hence  judgment 

V.  Eailroad  Co.,  52  Miss.  610.  and  levy  on  such  property  does  not 

5  Cotton  V.  Cotton,   75  Ala.   345;  relieve  the  promisor   from   liability 

Hill  V.  Hobart,  16  Me.  164;  Hedges  to  pay  in  a  reasonable  time.) 

V.  R.  R.,  49  N.  Y.  223.  s  Harlow  v.  Boswell,  15  111.  56. 

1  Remy  v.  Olds,  88  Cal.  537 ;  26  6  Jacoby  v,  Jacoby,  103  Fed.  473. 
Pac.  355;  Collins  v.  Park,  93  Ky.  7  Xoia^^j  ^  ^ull,  24  Or.  479;  33 
6;  18  S.  W.  1013;  McKinnon  Mfg.  Pae.  983.  As  to  pay  a  commission 
Co.  V,  Fish  Co.,  102  Mich.  221 ;  60  by  conveying  realty  when  other  real- 
X.  W.  472.  ty    is    exchanged.     Alvord   v.    Cook, 

2  Eaton  v.  Yarborough,  19  Ga.  174  Mass.  120;  75  Am.  St.  Rep. 
82.  288;   54  N.  E.  499. 

3Xunez  V.  Dautel,   19  Wall.    (U.  s  MeCarty  v.  Howell,  24  111.  341. 

S.)  560.  9  Walters  V.  McBee,  1  Lea(Tenn.) 

S64. 


TIME.  1783 

pay  by  a  certain  day  "  or  as  soon  thereafter  as  said  railroad 
comj^any "  shall  make  certain  payments  to  the  promisor  ;^** 
and  to  a  contract  to  deliver  lumber  at  a  certain  time  "  or  as 
soon  thereafter  as  vessel  can  be  got  ready/^  A  note,  payable 
ninety  days  after  the  return  of  a  specified  shij),  is  payable 
in  case  such  ship  is  lost,  ninety  days  after  the  time  usually 
required  for  such  a  trip/^  Thus  if  a  promise  is  made  to  pay 
a  certain  sum  when  it  is  realized  from  the  sale  of  the  products 
of  certain  lands,  such  sum  is  due  at  once  as  soon  as  the  promisor 
has  made  literal  performance  impossible  by  selling  such  land.^* 
An  agreement  to  pay  the  consideration  for  a  conveyance  to 
the  grantor's  grandson  when  he  reaches  the  age  of  twenty-one 
is  not  discharged  by  his  death  before  reaching  such  age^  but 
his  legal  representatives  may  recover  the  amount  when  such 
grandson  would  have  been  twenty-one  had  he  lived/*  An 
express  provision  that  payment  shall  not  be  made  until  a  certain 
event  occurs,  leaves  no  room  for  construction,  and  is  given  full 
force  and  effect.  Thus  if  a  provision  is  inserted  in  a  contract 
that  a  party  who  saws  logs  into  lumber  is  not  to  be  paid  until 
the  adversary  party  has  sold  the  lumber,  payment  is  not  due 
until  such  sale.^^  A  promise  to  pay  when  able  is  held  in  some 
jurisdictions  to  imply  a  promise  to  pay  in  at  least  a  reasonable 
time.  This  principle  has  been  applied  to  contracts  to  pay 
"  when  I  can  make  it  convenient,"^*'  "  as  fast  as  I  can  spare  the 
same  from  my  salary,"^^  as  fast  as  the  promisor  was  financially 
able  without  sacrificing  his  interests  in  a  given  corporation,  for 
stock  in  which  the  contract  in  question  was  made,^^  or  "  when 
payor  and  payee  mutually  agree."^"     In  other  jurisdictions  a 

10  Crass  v,  Scruggs,  115  Ala.  258;  ig  Lewis  v.   Tiptoir,   10  O.   S.   88; 
22  So.  81.  75  Am.  Dec.  498. 

11  Whiting  V.  Gray,  27  Fla.  482;  li  Culver    v.    Caldwell,    137    Ala. 
11  L.  R.  A.  526;  8  So.  726.  125;  34  So.  13. 

12  Randall    v.    Johnson,    59    Miss.  is  Chadwick  v.  Hopkins,  4  Wyom. 
317;  42  Am.  Rep.  365.  379;   62   Am.   St.  Hep.   38;    34  Pac. 

isPoirier  v.   Gravel,   88   Cal.   79;  899.      (A   delay  of   four   years   was 

25  Pae.  962.  held  more  than  a  reasonable  time.) 

14  Haines    v.    Weirick,     155    Ind.  1 9  Page  v.   Cook,    164   Mass.    116; 
548;  58  N.  E.  712.  49  Am.  St.  Rep.  449;    28  L.  R.  A. 

15  Gardner  v.  Edwards,  119  N.  C.  759;  41  N.  E.  115. 
566;  26  S.  E.  155. 


1784  PAGE    ON    CONTRACTS. 

promise  to  pay  as  the  debtor  "  might  feel  able  to  pay,"  is  held 
to  leave  the  time  of  payment  in  the  bona  fide  and  honest  judg- 
ment of  the  debtor,  though  a  legal  liability  is  created  by  such 
contract.^"  If  the  debtor  is  in  fact  financially  able  to  pay,  he 
is  bound  to  make  the  payment  stipulated  under  such  contract.^'' 

§1157.     Performance  not  due  till  end  of  stipulated  time. 

If  a  certain  time  is  fixed  within  which  performance  may  be 
made,  the  party  owing  performance  has  the  entire  time  thus 
fixed,  within  which  to  perform.  Thus  under  an  option  to  be 
exercised  within  a  certain  time,  by  which  the  vendor  is  required 
to  convey  land  on  seven  days'  notice,  such  notice  may  be  given 
at  any  time  before  the  expiration  of  the  option,  irrespective  of 
whether  the  period  of  seven  days  will  end  after  such  time  or 
not.^  If  A  agrees  to  secure  a  certain  bid  for  B's  stock  within, 
a  year,  A  has  the  whole  of  such  year,  and  an  offer  mailed  so 
as  to  reach  B  on  the  last  day  of  such  year  is  held  to  be  suffi- 
cient." So  a  contract  of  subscription  conditioned  on  raising  a 
certain  sum  by  a  certain  day  is  binding  if  the  sum  is  raised  at 
a  meeting  held  on  the  night  of  such  day.^  So  a  contract  to 
complete  a  boat  by  a  certain  time  is  not  broken  until  such  time 
has  elapsed.*  So  a  contract  to  remove  timber  in  certain  desig- 
nated years  gives  the  whole  of  such  years  in  which  to  remove  it.^ 
Performance  of  a  contract  to  sell  land  during  A's  life-time  can- 
not be  compelled  in  any  shorter  time.^  So  in  a  contract  of  sale, 
if  the  vendor  has  the  whole  of  a  season  in  which  to  deliver,  the 
vendee  cannot  fix  a  time  within  the  season  for  delivery.''  If  a 
son  agrees  to  pay  interest  to  his  father  during  the  latter's  life, 

20Pistel  V.  Ins.  Co.,  88  Md.  552;  Dimstan,  121  N.  C.  12;  61  Am.  St. 

43  L.  K.  A.  219;  42  Atl.  210.  Rep.  654;  27  S.  E.  1001. 

21  Flather  v.  Machine  Co.,   71   N.  *  Vandegrift    v.    Engineering   Oo., 

H.  398;  52  Atl.  454.  161  N.  Y.  435;  55  N.  E.  941;  48  L, 

iGuyer  v.  Warren,   175  111.  328;  R.  A.  685. 

51  N.  E.  580.  5  Larson  v.  Cook,  85  Wis.  564;  55 

2  Duchemin      v.       Kendall,       149  N.  W.  703. 

Mass.  171;  3  L.  R.  A.  784;  21  N.  E.  e  Michael  v.  Foil,   100  N.  C.  178; 

242.  6  Am.  St.  Rep.  577 ;  6  S.  E.  264. 

3  Elizabeth    City   Cotton   Mills  v.  7  Dingley  v,  Oler,  117  U.  S.  490. 


TIME.  1785 

on  an  amount  advanced,  and  to  settle  with  the  father's  estate, 
such  amount,  even  if  a  debt,  is  not  due  before  the  father's  death.' 

§1158.    Premature  tender. 

If  the  contract  fixes  a  certain  time  for  performance,  the  party 
from  whom  performance  is  due  has  no  right  to  perform  before 
that  time.  Hence,  premature  tender  is  ineffectual.^  It  does 
not  discharge  a  mortgage  given  to  secure  the  debt,  payment 
whereof  is  thus  tendered.^  So  if  payment  is  to  be  made  in  part 
in  money  and  in  part  in  an  interest-bearing  note,  premature 
tender  of  the  entire  debt  in  money  is  ineffectual.^  So  it  has 
been  held  that  if  a  vendee  of  stock  has  the  right  to  rescind  at 
the  end  of  one  year,  tender  of  the  stock  before  the  end  of  the 
year  is  premature  and  ineffectual.* 

§1159.     Time  of  essence  of  contract. —  Meaning  of  term. 

The  statement  that  time  is  of  the  essence  of  a  contract,  means 
that  the  provision  fixing  the  time  of  performance  is  looked  upon 
as  a  vital  term  of  the  contract,  the  breach  of  which  may  operate 
as  a  discharge  of  the  entire  contract.  Accordingly,  if  time  is  of 
the  essence  of  the  contract,  failure  to  perform  at  the  time  speci- 
fied gives  to  the  adversary  party  the  right  of  treating  the  con- 
tract as  discharged.^  If  time  is  not  of  the  essence  of  the  contract, 
failure  to  perform  at  the  time  specified  does  not  justify  the 
adversary  party  in  treating  the  contract  as  discharged.^     It  is 

sHammett    v.    Brown,    44    S.    C.  v.  Xolte  (Cal.),  24  Pac.  840;  Staley 

397;  22  S.  E.  482.  v.  Thomas,  68  Md.  439;  13  Atl.  53; 

1  Bowen  v.  Julius,   141   Ind.  310;  Talbott   v.   Heinze,   25  Mont.   4;    63 

40  N.  E.  700.  Pac.   624;    Sanborn   v.    Murphy.    86 

-'Bowen  v.  Julius,   141   Ind.   310;  Tex.  437;   25  S.  W.  610;   Jordan  v. 

40   N.   E.   700;   Moore  v.   Kime,   43  Coulter,  30  Wash.  116;  70  Pac.  257; 

Neb.  517;  61  N.  W.  736.  Owen   v.   Henderson,    16   Wash.   39; 

3  Barbour  v.  Hickey,  2  App.  D.  C.  58  Am.  St.  Rep.  17 ;  47  Pac.  215. 
207;  24  L.  R.  A.  763.  2  Armstrong  v.  Breen.   101   la.  9; 

4Schultz   V.    O'Rourke,    18    Mont.  69   N.  W.   1125;   University  of  Des 

418;  45  Pac.  634.  Moines  v.  Trust  Co.,  87  la.  36;   53 

1  Slater  v.  Emerson.  19  How.    (U.  N.  W.  1080;   Usher  v.  Hollister,  58 

S.)    224;    McFadden    v.    Henderson,  Kan.  431 ;  49  Pac.  525. 
12s   Ala.  221;  29  So.  640;  Vorwerk 


1786 


PAGE    ON    CONTEACTS. 


eufficient  if  the  contract  is  performed  within  a  reasonable  time 
after  that  specified  in  the  contract.  The  question,  whether 
time  is  not  of  the  essence  of  the  contract,  is  a  question  of  con- 
struction. When  this  question  is  determined,  the  effect  of  the 
failure  of  the  party  in  default  to  perform  at  the  time  stipulated 
is  a  question  of  breach.  The  question  whether  time  is  of  the 
essence  of  the  contract,  therefore,  might  be  treated  under  either 
or  both  of  the  headings  of  construction  or  discharge. 

§1160.     Time  of  essence  at  law. 

At  law  the  general  rule  is  that  time  is  of  the  essence  of  the 
contract  unless  a  contrary  intent  appears  from  the  face  of  the 
contract.^  A  contract  for  the  sale  of  chattels,  especiall;)*  those 
of  fluctuating  value,  is  a  contract  of  which  time  is  of  the  essence. 
This  rule  is  especially  applicable  to  mercantile  contracts,^ 
such  as  wholesale  contracts  of  sale  of  clothing,^  uniform-cloth,^ 


1  Cleveland  Rolling  Mill  v.  Rhodes, 
121  U.  S.  255 ;  Slater  v.  Emerson,  19 
How.  (U.  S.)  224;  Hull,  etc.,  v. 
Coke  Co.,  113  Fed.  256;  Savannah 
Ice-Delivery  Co.  v.  Transit  Co.,  110 
Ga.  142;  35  S.  E.  280;  Underwood 
V.  Wolf,  131  111.  425;  19  Am.  St. 
Rep.  40;  23  N.  E.  598;  Merritt  v. 
Construction  Co..  91  Md.  453;  46 
Atl.  1013;  McGrath  v.  Gegner,  77 
Md.  331;  39  Am.  St.  Rep.  415;  26 
Atl.  502 ;  Garrison  v.  Cooke,  96  Tex. 
228;  97  Am.  St.  Rep.  906;  61  L.  R. 
A.  342;  72  S.  W.  54;  Bounds  v. 
Hickerson,  26  Tex.  Civ.  App.  608; 
63  S.  W.  887. 

2  Cleveland  Rolling  Mill  v.  Rhodes, 
121  U.  S.  255;  Norrington  v. 
Wright,  115  U.  S.  188;  Filley  v. 
Pope,  115  U.  S.  213;  Lefferts  v. 
Weld,  167  Mass.  531;  46  N.  E.  107; 
Rommel  v.  Wingate,  103  Mass.  327; 
Pope  V.  Porter,  102  N.  Y.  366;  7 
N.  E.  304.  "  In  the  contracts  of 
merchants,   time   is   of   the   essence. 


The  time  of  shipment  is  the  usual 
and  convenient  means  of  fixing  the 
probable  time  of  arrival,  with  a  view 
of  providing  funds  to  pay  for  the 
goods  or  of  fulfilling  contracts  with 
third  persons.  A  statement  descrip- 
tive of  the  subject-matter  or  of  some 
material  incident,  such  as  the  time 
or  place  of  shipment,  is  ordinarily  to 
be  regarded  as  a  warranty  in  the 
sense  in  which  that  term  is  used  in 
insurance  and  maritime  law,  that  is 
to  say,  a  condition  precedent  upon 
the  failure  or  non-performance  of 
which  the  party  aggrieved  may  re- 
pudiate the  whole  contract."  Nor- 
rington  v.  Wright,  115  U.  S.  188, 
203;  quoted  in  Cleveland  Rolling 
Mill  v.  Rhodes,  121  U.  S.  255,  261. 

3  White  V.  Wolf,  185  Pa.  St.  369; 
39  Atl.  1011.  (Delay  would  prevent 
the  vendee  from  cataloguing  and  ad- 
vertising the  clothing.) 

4  Jones  V.  United  States,  96  U.  S. 
24. 


TIME. 


1787 


or  iron.^  A  contract  for  the  sale  of  a  cargo  of  hemp  to  he 
shipped  from  Manila  hy  a  sailing  vessel  direct  to  New  York, 
or  via  Hong  Kong  during  the  month  of  April  or  May  is  not 
performed  by  shipping  it  at  Manila  by  a  steamer  arriving  at 
Hong  Kong  on  the  third  of  Jmie  and  transhipping  it  by  sailing 
vessel  leaving  Hong  Kong  on  June  fifth.**  Thus  contracts  to 
pay  insurance  premiums  at  a  given  time  as  a  condition  of  keep- 
ing the  policy  alive,  must  be  performed  strictly  at  the  time 
specified.^  Time  is  not,  however,  of  the  essence  of  a  contract 
to  surrender  a  policy  within  six  months  after  lapse.®  A  char- 
ter-party^ which  stipulates  for  performance  at  a  given  time, 
must  be  performed  strictly  at  the  time  specified.  Thus  if  a 
charter-party  provides  that  a  vessel  shall  proceed  from  Mel- 
bourne to  Calcutta  "  with  all  possible  despatch,"  the  fact  that 
the  vessel  proceeds  from  Melbourne  to  Manila  and  so  arrives 
at  Calcutta  three  months  later  than  she  would  had  she  gone 
direct  from  Calcutta  discharges  the  contract,  even  if  she  arrives 
at  Manila  before  the  charterer  has  secured  another  vessel.^** 
So  time  is  of  the  essence  of  building  contracts  in  which  a 
definite  time  for  completing  the  work  is  stipulated  for ;"  or  of 
a  contract  to  build  a  gas-holder,^^  or  to  complete  a  railroad 
bridge  by  a  certain  day,^^  or  to  remove  a  building  by  a  certain 
day.^*  Time  is  of  the  essence  of  a  contract  giving  a  license  to 
enter  and  remove  timber  during  a  certain  time.^^  Contracts  to 
cut  timber  in  a  given  time  other  than  licenses,  such  as  a  contract 

5  Cleveland  Rolling  Mill  V.  Rhodes,  n  Phillips,  etc.,   Co.  v.   Seymour, 

121     U.     S.     255;     Norrington     v.  91  U.  S.  646;  Morrison  v.  Wells,  48 

Wright,  115  U.  S.  188.  Kan.    494;    29    Pac.    601;    Allen    v. 

eLefferts  v.  Weld,  167  Mass.  531;  Cooper,  22  Me.  133;  Johnson  v.  Slay- 

46  N.  E.  107.  maker,   18  Ohio   C.  C.   104:   9  Ohio 

7  Klein  v.  Ins.  Co.,  104  tJ.  S.  88;  C.  D.  500. 

New  York  Life  Ins.  Co.  v.  Statham,  12  Wood  v.  Gaslight  Co.,  Ill  Fed. 

93  U.  S.  24.  463;  49  C.  C.  A.  427. 

8  Manhattan  Life  Ins.  Co.  V.  Pat-  i3  Slater  v.  Emerson,  19  How.  (U. 
terson.    109   Ky.   624;    53   L.   R.  A.  S.)    224. 

378;  60  S.  W.  383.  i*  Osgood    v.    Boston,    165    Mass. 

9  The  Alert,  61  Fed.  504.  281;   43  N.  E.   108. 

loLowber  v.  Bangs,  2  WalL    (U.  isutley  v.  Lumber  Co.,  59  Midi. 

S.)    728.  263;  26  N.  W.  488. 


il788  PAGE    ON    COJTTRACTS. 

of  employment  with  the  owner,  the  employee  to  remove  the 
timber  in  a  certain  time,^"  or  a  contract  conveying  an  interest 
in  standing  timber,  to  be  removed  in  a  certain  time/'  are  con- 
tracts of  which  time  is  not  of  the  essence. 

§1161.     Time  not  of  essence  in  equity. 

In  equity,  on  the  other  hand,  the  general  rule  may  be  said 
to  be  that  time  is  not  of  the  essence  of  the  contract.^  "  It  must 
aflBrmatively  appear  that  the  parties  regarded  time  or  place  as 
an  essential  element  in  their  agreement  or  a  court  of  equity 
will  not  so  regard  it."^  In  order  to  make  time  of  the  essence 
of  the  contract  in  equity,  there  must  be  either  an  express 
provision,  making  time  of  the  essence,^  or  the  nature  of  the 
subject-matter  must  be  such  as  to  require  prompt  performance 
at  the  time  stipulated.  The  reason  for  this  difference  between 
law  and  equity  is,  that  in  law  the  promisee  acquires,  as  a  rule, 
no  interest  in  the  property  under  an  executory  contract  until 
he  either  performs  or  tenders  performance.  In  equity,  on  the 
other  hand,  the  vendee  acquires  an  interest  in  the  property 
contracted  for  when  the  contract  of  sale  is  made,  and  the 
assignment  of  a  particular  day  for  the  payment  of  the  purchase- 
money  is  looked  upon  as  merely  formal,  to  secure  payment  in 
a  reasonable  time.*  A  contract  for  the  payment  of  money  at 
a  given  time  is   ordinarily   a   contract  of  which  time   is  not 

16  Thacker.    etc.,    Co.    v.    Mallory,  Porter  v.  White,   128  X.   C.  42 ;   38 

27  Wash.  670;  68  Pac.  199.  S.  E.  24;   Jarvis  v.  Cowger,  41  W. 

iTHalstead    v.    Jessup,    150    Ind.  Va.  268;  23  S.  E.  522. 

85;  49  N.  E.  821.  2  Secombe  v.  Steele,  20  How.    (U. 

1  Brown  v.  Deposit  Co.,  128  U.  S.  S.)    94,  104. 

403;  Hepburn  v.  Auld.  5  Cranch  (U.  3  Brown  v.  Deposit  Co.,  128  U,  S. 

S.)    262;    Tate  v.  Development  Co.,  403;    Tate   v.   Development   Co.,   37 

37  Fla.  439;   53  Am.  St.  Rep.  251;  Fla.  439;   53  Am.  St.  Rep.  251;   20 

20  So.  542;  Chabot  v.  Park  Co.,  34  So.    542;    Chabot    v.    Park    Co.,    34 

Fla.  258;  43  Am.  St.  Rep.   192;   15  Fla.  258;  43  Am.  St.  Rep.  192;   15 


So.  756;  Reid  v.  Mix.  63  Kan.  745 
55  L.  R.  A.  706;  66  Pac.  1021 ;  Keni 
per  V.  Walker  (Ky.),  32  S.  W.  1093 
Sanford  v.  Weeks,  38  Kan.  319 
5  Am.  St.  Rep.  748;    16  Pac.  465 


So.   756;    Frink  v.   Thomas,   20   Or. 
265;  12  L.  R.  A.  239:  25  Pac.  717. 

4  Secombe  v.  Steele,  20  How.   (U. 
S.)  94. 


TIME.  1789 

of  the  essence;^  and  so  is  a  contract  to  release  a  mortgage.® 

§1162.     Express  provision  making  time  of  essence. 

If  there  is  an  express  provision  making  time  of  the  essence 
of  the  contract,  full  effect  must  be  given  to  it.^  Thus  a  pro- 
vision and  express  condition  that  in  case  of  failure  •  of  the 
vendee  to  perform,  the  vendor  should  have  the  right  to  declare 
the  contract  void  makes  time  of  the  essence.^  So  if  time  is 
not  originally  of  the  essence  of  the  contract,  but  after  default 
the  promisee  gives  notice  fixing  a  reasonable  time  for  per- 
formance, and  insisting  upon  performance  within  that  time, 
time  may  become  of  the  essence  of  the  contract.^  However  if 
time  is  not  originally  of  the  essence  of  the  contract,  a  notice 
given  by  one  party  before  performance  is  due  cannot  make 
it  of  the  essence.* 

§1163.    Nature  of  property  contracted  for. 

The  nature  of  the  property  concerning  which  the  contract 
is  made  may  show  that  time  was  of  the  essence  of  the  contract. 

5  Tate  V.  Development  Co.,  37  Fla.  Am.    St,    Eep,    781;    38    Pac.    1003. 

439;   53  Am.   St.  Rep.  251;   20   So.  2  Stinson    v.    Dousman,    20    How. 

542;   Barnard  v.  Lee,   97  Mass.  92;  (U.  S.)    461.     So  Bennett  v.  Hyde, 

Allred  v.  Burns,  106  N.  C.  247;   10  92  Cal.  131;  28  Pac.  104;  Woodruff 

S.  E.  1034;  Frink  v.  Thomas,  20  Or.  v.  Water  Co.,  87  Cal.  275;  25  Pac. 

265;   12  L.  R.  A.  239;  25  Pac.  717;  354;    Martin    v.    Morgan,    87    Cal. 

Sylvester  v.  Born,  132  Pa.  St.  467;  203;  22  Am.  St.  Rep.  240;  25  Pac. 

19  Atl.  337;   Jarvis  v.  Cowger,  41  350. 

W.  Va.  268;  23  S.  E.  522.  3  Asia  v.  Hiser,  38  Fla.  71;  20  So. 

6Reid  V.  Mix,  63  Kan.   745;    55  796;    Chabot  v.   Park   Co.,   34   Fla. 

L.  R.  A.  706;  66  Pac.  1021.  258;   43  Am.   St.  Rep.   192;    15   So. 

1  Cheney  v.  Libby,   134  U.  S.  68;  756;  Burnap  v.  Sharpsteen,  149  111. 

Clock  v.  Colony  Co.,  123  Cal.  1;  69  225;  36  N.  E.  1008;  Miller  v.  Rice, 

Am.   St.  Rep.   17;    55  Pac.   713;   43  133  111.  315;  24  N.  E.  543;  Barnard 

L.  R.  A.  199;  Martin  v.  Morgan,  87  v.  Lee,  97  Mass.  92;  Foster  v.  Ley, 

Cal.  203;   22  Am.  St.  Rep.  240;   25  32  Neb.  404;    15  L.  R.  A.   737;   49 

Pac.    350;    Chabot  v.   Park   Co.,   34  N.   W.   450;    King  v.   Ruckman,   20 

Fla.  258;  43  Am.  St.  Rep.   192;   15  N.   J.    Eq.    316;    Hatch   v.   Cobb,    4 

So.  756;  Miller  V.  Rice,  133  111.  315;  Johns.   Ch.    (N.   Y.)    559;    Kirby  v. 

24   N.   E.   543;    Clarno   v.   Grayson,  Harrison,   2   Ohio   St.   326;    59   Am. 

30  Or.  Ill;  46  Pac.  426;  Axford  v.  Dec.  677;   Frink  v.  Thomas,  20  Or. 

Thomas,  160  Pa.  St.  8;  28  Atl.  443;  265;  12  L.  R.  A.  239;  25  Pac.  717. 

Reddish  v.  Smith,  10  Wash.  178;  45  •*  The  Lucile  Manor,  70  Fed.  233. 


1790  PAGE    ON    CONTEACTS. 

If  the  property  is  one  of  fluctuating  values,  time  is  ordinarily 
looked  upon  as  of  the  essence,  such  as  a  contract  for  the  sale 
of  mineral  land,^  or  stock  in  a  corporation.^     If,  on  the  other 
hand,  the  value  is  not  fluctuating,  time  is  ordinarily  supposed 
to  be  not  of  the  essence  of  the  contract  in  equity.     A  contract 
for  the  sale  of  realty  is  ordinarily  a  contract  of  which  time 
is  not  of  the  essence,^  such  as  a  contract  to  take  up  certain 
mortgages  on  realty,  sell  it  and  apply  the  proceeds  to  a  certain 
debt,*  or  a  contract  to  release  a  right  of  v^^ay  to   a  railway 
company.^     A  party  to  a  contract  who  has  delayed  perform- 
ance to  speculate  upon  the  change  in  value  of  the  property 
contracted  for,  and  tenders  perforrnance  after  the  value  is  so 
changed  as  to  make  performance  especially  advantageous  to 
himself,   cannot  have  specific   performance."     Thus   delay  till 
the  title  is  cleared  and  the  land  has  risen  in  value  from  twenty- 
two  dollars  an  acre  to  eighty  dollars  an  acre  prevents  specific 
performance.^     Conversely,  delay  which  does  not  result  in  a 
change  in  value  does  not  of  itself  defeat  specific  performance. 
So  if  the  depreciation  in  the  value  of  the  land  occurs  before 
the  time  fixed  for  delivering  the  deed  delay  does  not  prevent   the 
vendor  from  obtaining  specific  performance.®  Time  is  not  of  the 
essence  of  a  contract  to  print  and  deliver  certain  books  by  a 
specified  time;^  nor  is  it  of  the  essence  of  the  right  of  the 
insured  under  his  policy  to  demand  a  paid-up  policy  in  case 
of  lapse.^" 


1  Waterman  v.  Banks,   144  U.  S.  5  Hoffman  v.  Ry.,  157  Pa.  St.  174^ 

394.  27  Atl.  564. 

2Umfiid  V.  Brooks,  14  \Yash.  675;  6  Rogers   v.   Sanders,    16  Me.   92; 

45  Pac.  310.  33  Am.  Dec.  635. 

sSecombe  v.  Steele,  20  How.    (U.  7  Brashier  v.  Gratz,  6  Wheat.    (U. 

S.)  94 ;  Ahl  V.  Johnson,  20  How.  (U.  S.)    528. 

S.)   511;  Beverly  v.  Blackwood,  102  «  Qarber  v.  Sutton,  96  Va.  469;  31 

Cal.    83;     36    Pac.    378;     Frink    v.  S.  E.   894. 

Thomas,   20   Or.   265;    12   L.   R.   A.  » Pacific,  etc.,  Co.  v.  Loofbourow. 

2.39;  25  Pac.  717;  Watson  v.  Coast,  129  Cal.  24;  61  Pac.  944. 

35  W.  Va.  463;  14  S.  E.  249.  lo  Manhattan  Life  Ins.  Co.  v.  Pat- 

4  Beverly  v.  Blackwood,  102  Cal.  terson.    109    Ky.    624;    95    Am.    St, 

83;   36  Pac.  378.  Rep.   393;   60  S.  W.  383. 


TIME.  1791 

§1164.     Time  of  subsidiary  provision  not  of  essence. 

Time  is  not  regarded  as  di  the  essence  of  a  contract  where  it 
concerns  a  provision  a  breach  of  which  does  not  constitute  a  total 
failure  of  consideration.^  Thus  where  the  two  upper  stories 
were  leased,  and  were  ready  for  occupancy  where  agr^^ed  upon, 
the  lessee  cannot  avoid  the  lease  because  the  rest  of  the  building 
was  not  completed  at  the  time  agreed  upon.^  Even  under  a 
contract  of  subscription  of  which  time  is  usually  the  essence^ 
failure  of  a  university  to  erect  a  second  building  at  the  time 
agreed  upon,  after  erecting  the  first  building  on  time  and  open- 
ing for  work,  is  not  breach  of  an  essential  term.* 

§1165.     Time  of  essence  in  subscriptions. 

Contracts  of  subscription,  whereby  the  promisor  agrees  to 
pay  money  if  a  certain  work  is  completed  by  a  specified  time, 
such  as  a  subscription  to  aid  a  railway;^  or  an  agreement  to 
grant  a  right  of  way  f  or  a  subscription  to  induce  the  removal 
of  a  factory  to  a  given  city  by  a  given  time,^  are  contracts  of 
which  time  is  of  the  essence. 

§1166.     Time  of  essence  in  options. 

The  contract  has  thus  far  been  considered  in  determining 
whether  time  is  of  the  essence  or  not.  When  we  turn  from  con- 
tracts to  options,  we  find  that  both  at  law  and  equity  an  option 
which  is  in  the  nature  of  an  offer  outstanding  for  a  certain 

1  University  v.  Trust  Co..  87  la.  116  Mich.  674;  75  N.  W.  130;  Port 
36;  53  N.  W.  1080;  Lynch  v.  Bech-  Huron,  etc.,  Ry.  v.  Richards,  90 
tel,  19  Mont.  548;  48  Pac.  1112;  Mich.  577;  51  N.  W.  680;  Garrison 
Coos  Bay,  etc.,  Co.  v.  Dixon,  30  Or.  v.  Cooke,  96  Tex.  228;  97  Am.  St. 
584;  48  Pac.  360.  Rep.   906;    61   L.  R.  A.   342;    72   S. 

2  Lynch  v.  Bechtel,  19  Mont.  548;  W.  54.  Contra,  Witmer  Bros.  Co.  v. 
48  Pac.   1112.  Weid,  108  Cal.  569;  41  Pac.  491. 

3See§  1165.  2  Thornton   v.    Ry.,    84   Ala.    109; 

4  University  v.   Trust  Co.,   87  la.  5    Am.    St.    Rep.    337;    4    So.    197. 

36;  53  N.  W.  1080.  (Suit  in  equity.) 

1  Cincinnati,  etc..  R.  R.  v.  Bensley,  3  Bohn    Mfg.    Co.     v.    Lewis,    45 

51    Fed.   738;    19   L.   R.   A.    796;    2  Minn.  164;  47  N.  W.  652. 
C.    C.    A.    480;    Jordan   v.    Newton, 


1Y92  PAGE    ON    CONTRACTS. 

period  of  time,  must  be  accepted  within  the  time  limited,  or  it 
lapses.  Accordingly,  time  is  held  to  be  of  the  essence  of  options 
both  at  law  and  in  equity/  "  Where,  as  in  this  case,  the  con- 
tract invests  the  one  party  with  no  title  whatever,  imposes  no 
obligation  upon  him,  leaves  it  optional  with  him  to  do  a  certain 
thing  at  a  specified  time,  in  such  case  time  in  the  broadest 
sense  of  the  rule,  is  of  the  essence  of  the  contract,  and  the 
failure  of  such  party  to  comply  with  its  terms  deprives  him 
of  the  right  to  demand  the  enforcement  of  the  contract."^  This 
rule  applies  to  options  for  the  sale  of  realty,^  of  a  railway,*  or 
of  personalty,  such  as  corporate  stock  ;^  or  a  horse,®  or  to  tlie 
right  given  to  the  maker  of  a  note  to  have  it  canceled  if  he 
performs  a  specified  act  at  a  given  time/  So  the  right  of  a 
debtor  to  elect  to  pay  a  debt  in  something  other  than  money  is 
a  right  of  which  time  is  of  the  essence/  The  fact  that  nego- 
tiations are  prolonged  under  an  option  up  to  the  evening  of  the 
last  day  of  its  duration  does  not  extend  it  beyond  the  time  fixed 
by  it/  So  a  contract  whereby  a  mortgagee  agrees  to  accept  on 
foreclosure  a  sum  less  than  the  amount  due  him,  part  of  the 
amount  bid  to  go  to  a  junior  mortgagee,  if  payment  is  made  by 
a  specified  time,  is  a  contract  of  which  time  is  of  the  essence/" 

1  Stembridge    v.     Stembridge,     87  *  Columbian  Equipment  Co.  v.  Ry., 
Ky.  91;  7  S.  W.  611;  Dyer  v.  thiffy,      74  Fed.  920. 

39   W.  Va.,   148;   19   S.  E.   540;   24  s  Stevens    v.    Hertzler,    109    Ala. 

L.  E.  A.  339.  423 ;  19  So.  838 ;  Chaflfee  v.  Ry.,  146 

2  Stembridge    v.     Stembridge,     87      Mass.  224;   16  N.  E.  34. 

Ky.  91,  94;  7  S.  W.  611.  e  Roberts  v.  Norton,  66  Conn.   1; 


3  Martin  v.  Morgan,  87  Cal.  203 
22  Am.  St.  Rep.  240;  25  Pac.  350 
Stembridge  v.  Stembridge,  87  Ky 
91;  7  S.  W.  611;  Coleman  v.  Ap 
plegartb,  68  Md.  21 ;  6  Am.  St.  Rep 
417;  11  Atl.  284;  Johnson  v.  Port 
wood,  89  Tex.  235;  34  S.  W.  596 
787;  Cummings  v.  Realty  Co.,  86  33  S.  E.  490 
Wis.  382;  57  N.  W.  43. 


33  Atl.  532. 

7  Stout  V.  Watson,  45  Minn.  454 ; 
48  N.  W.  195. 

8  See  §  1392. 

9  Cummings    v.    Realty    Co.,    86 
Wis.   382;   57  N.  W.  43. 

loEargle  v.  Lorick,  55  S.  C.  431; 


PENALTIES  AND  LIQUIDATED  DAMAGES.  1793 


CHAPTER   LV. 

PENALTIES  AND  LIQUIDATED  DAMAGES. 
§1167.     Nature  of  penalty  and  liquidated  damages. 

A  contract  for  a  penalty  is  an  agreement  to  pay  a  stipulated 
sum  in  case  of  default,  intended  to  coerce  performance,  to  pun- 
ish default,  or  to  secure  j)ayment  of  the  actual  damages/  A 
contract  for  liquidated  damages  is  a  contract  by  which  the 
parties  in  advance  of  breach  fix  the  amount  of  damages  which 
will  result  therefrom,  and  agreed  upon  its  payment.^  The  place 
of  this  topic  in  the  law  of  contracts  is  open  to  question.  Con- 
tracts for  penalties,  as  we  shall  see  later,  are  unenforceable,  and 
may  without  any  impropriety  be  said  to  be  void.  Such  contracts 
might  therefore  be  discussed  under  the  head  of  void  contracts. 
On  the  other  hand  it  is  so  well  settled  that  if  a  contract  is  for 
a  penalty  it  is  void  that  questions  are  rarely  raised  upon  this 
branch  of  the  topic.  The  question  which  is  commonly  presented 
for  decision  is  whether  the  contract  is  one  for  penalty  or  liqui- 
dated damages ;  and  this  is  primarily  a  question  of  construc- 
tion. Accordingly,  this  subject  is  discussed  in  connection  with 
construction.  This  topic  might  also  be  considered  in  connec- 
tion with  breach  and  damages.  Questions  thereunder  can  neces- 
sarily arise  only  when  a  breach  exists  or  is  alleged.  The  de- 
termination of  this  question  is  also  decisive  of  the  question 
whether  the  parties  are  limited  by  and  entitled  to  the  amount 
stipulated  for  by  the  contract,  or  whether  they  are  driven  to  the 
proof  of  actual  damages  and  are  governed  by  the  rules  which 
control  the  measure  of  damages. 

1  United    States    v.    Cutajar,    67  Iron  Works,   55   N.  J.   L.   132;    39 

Fed.    530;    Gillilan    v.    Rollins,    41  Am.  St.  Rep.  626;  sul  nomine  Wal- 

Neb.  540;  59  N.  W.  893.  lis  Iron  Works  v.  Park  Association, 

2 Monmouth   Park   Association  v.  19  L.  R,  A.  456;  26  Ati.  140. 
113 


1794  PAGE    ON    CONTEACTS. 

§1168.     Alternative  contracts. 

An  alternative  contract  is  one  which  gives  to  one  of  the  parties 
the  choice  of  doing  one  of  two  or  more  different  acts  as  per- 
formance of  the  contract/  If  one  of  the  alternatives  is  tlie 
payment  of  money,  a  contract  of  this  type  has  some  resemblance 
to  a  contract  for  a  penalty  or  for  liquidated  damages ;  but  it 
must  be  distinguished  from  both  of  them.  The  essential  dif- 
fereiice  is  that  both  penalties  and  liquidated  damages  are  payable 
on  breach  of  one  or  more  covenants  of  a  contract,  whereas  the 
payment  provided  for  in  the  alternative  contract  is  a  perform- 
ance of  the  contract  —  not  a  compensation  for  breach.  The  ah 
ternative  contract  is  enforceable  according  to  its  terms ;  and 
if  the  contingencies  have  occurred  on  which  the  money  is  to  be 
paid,  such  payment  can  be  enforced."  Thus  under  a  contract 
for  the  sale  of  a  medical  practice,  the  vendor  to  have  the  right 
to  resume  practice  after  five  years,  on  payment  to  the  vendee  of 
two  thousand  dollars,  such  payment  was  neither  a  penalty  nor 
liquidated  damages,  but  a  covenant  giving  the  vendor  the  right 
to  make  such  election ;  and  if  he  elects  to  resume  the  practice, 
he  must  pay  such  sum.^  The  question  of  who  can  exercise  the 
right  of  election  is  discussed  elsewhere.*  The  outward  form 
of  the  contract  is  not,  of  course,  decisive  of  the  question,  or  an 
easy  method  of  evading  the  rules  as  to  penalties  would  be 
presented.  If  the  whole  contract  shows  that  the  stipulation  for 
payment  is  inserted,  not  to  give  one  party  an  election,  but  to 
coerce  performance  of  the  alternative  covenant,  such  stipulation 
is  treated  as  a  penalty.^ 

§1169.     History  of  penalty  in  contract  law. 

At  Common  Law,  a  contract  to  pay  a  specified  sum  of  money 
upon  the  happening  of  a  certain  event,  was  enforced  according 

1  Smith  V.  Bergengren,   153  Mass.  3  Smith  v.  Bergengren,  153  Mass. 
236;  10  L.  R.  A.  768;  26  N.  E.  690.      236;  10  L.  R.  A.  768;  26  N.  E.  690. 

2  Smith  V.  Bergengren.  153  Mass.  *  See  §  1392. 

236;  10  L.  B.  A.  768;  26  N.  E.  690;  5  Condon  v.  Kemper.  47  Kan.  126; 

Curnan  v.  By.,    138  N.  Y.  480;   34      13  L.  R.  A.  671;  27  Pae.  829. 
N.  E.  201. 


PENALTIES  AND  LIQUIDATED  DAMAGES.  1795 

to  its  terms.  The  fact  that  the  sum  of  money  designated  was 
agreed  upon  to  punish  breach  or  to  coerce  performance,  did  not 
have  any  effect  in  making  such  a  contract  unenforceable.  If 
the  contract  was  a  simple  one,  a  valuable  consideration  was  of 
course  necessary;  and  if  the  consideration  for  the  promise  was 
itself  money,  questions  of  adequacy  of  consideration  might  arise. 
If  the  contract  was  under  seal,  questions  of  this  sort  were  not 
presented.^  Equity,  however,  looked  at  the  intent  and  not  the 
outward  form  of  the  contract,  and  relieved  against  penalties  and 
forfeitures."  The  doctrine  that  equity  relieved  against  forfeit- 
ures originally  referred  to  cases  of  mistake,  surprise,  imposition, 
and  the  like ;  but  this  restriction  was  abandoned  at  a  compara- 
tively early  time,  and  it  became  settled  that  equity  could  re- 
lieve against  a  penalty  or  a  forfeiture  for  the  non-payment  of 
money,  since  the  damages  caused  by  the  delay  could  be  esti- 
mated exactly  in  the  form  of  interest.^  It  has  been  said  that 
equity  will  not  relieve  against  penalty  or  forfeiture,  where  the 
breach  is  anything  other  than  the  non-payment  of  money.*  In 
the  majority  of  cases  this  distinction  is  practically  sufficient, 
and  farther  discussion  of  the  accuracy  of  this  statement  will 
be  omitted.  The  other  principle,  namely,  that  equity  looked  at 
the  intent  of  the  parties  rather  than  the  outward  form,  operated 
to  give  relief  against  penalties  in  many  cases  which  would 
fall  without  the  limits  of  the  mere  doctrine  of  relief  against 
penalties  as  such.  If,  upon  appjying  the  ordinary  rules  of 
construction  to  a  given  contract,  it  appeared  that  the  stipula- 
tion for  the  payment  of  the  specified  sum  of  money  was  intended 
as  a  security  for  the  actual  damages,  caused  by  the  breach, 
or  to  coerce  performance,  equity  would  relieve  against  the  en- 
forcement of  the  contract  in  its  outward  form  and  restrict  the 
injured  party  to  the  recovery  of  his  actual  damages.^  By  a 
statute  in  England,  the  injured  party  in  an  action  for  a  penalty 
given  by  a  contract,  was  restricted  to  the  collection  of  the  actual 

1  Sun,  etc.,  Association  v.  Moore,  3  Wallis  v.  Smith,  21  Cli.  D.  243, 
183  U.  S.  642;  Watts  v.  Camors,  115       see  260. 

U.  S.   353.  4  Wallis  v.  Smith,  21  Ch.  D.  24.3, 

2  Lowe  V.  Peers,  4  Burr.  2225.  see  260. 

5  Lowe  V.  Peers,  4  Burr.  2225. 


1796  PAGE    ON    CONTEACTS. 

damages.®  In  tlie  United  States,  partly  by  the  adoption  of  this 
English  statute  as  a  part  of  our  Common  Law,  and  partly  by 
our  own  statutes,  this  power  is  very  generally  exercised  by  the 
courts  of  Common  Law.  The  doctrine  of  equity  as  to  what  is 
a  penalty  and  what  is  a  stipulation  for  liquidated  damages  have 
been  to  this  extent  adopted  into  our  Common  Law. 

§1170.    Legal  effect  of  each  compared. —  Penalty. 

The  importance  of  the  distinction  between  liquidated  dam- 
ages and  penalty,  consists  in  the  effect  which  the  courts  give  to 
the  two  kinds  of  stipulation.  At  Modern  Law  a  contract  for 
a  penalty  is  unenforceable  and  practically  void.  The  actual 
damage,  and  that  alone,  may  be  recovered.  This  may  be,  on 
the  one  hand,  less  than  the  amount  of  the  penalty,^  and  on  the 
other  it  may  exceed  it."  The  actual  damages  sustained  must 
be  shown  f  otherwise  only  nominal  damages  can  be  recovered.* 
There  is  some  authority  for  treating  a  provision  for  a  penalty 
as  prima  facie  evidence  of  the  amount  of  damage  suffered,  in 
the  absence  of  evidence  to  the  contrary.^ 

6  8  and  9  William  III.,  c.  11.  2  Watts    v.    Camors,     115    U.    S. 

1  Watts    V.     Camors,     115    U.    S.  353 ;  Williston  v.  Mathews,  55  Minn. 

353;  Van  Buren  v.  Digges,  11  How.  422;    56    N.    W.    1112;    Morrill    v. 

(U.  S.)   461;  Chicago  House- Wreck-  Weeks,   70  N.  H.   178;   46  Atl.   32; 

ing  Co.  V.   United   States,   106  Fed.  Gloucester  City  v.  Eschbach,  54  N. 

385;  53  L.  R.  A.   122;   45  C.  C.  A.  J.   L.    150;    23   Atl.   360;    Moore   v. 

343;   Henry  v.  Ry.,  91  Ala.  585;   8  Colt,   127  Pa.   St.  289;    14  Am.   St. 

So.   343;   Hennessy  v.  Metzger,   152  Rep.  845;  18  Atl.  8;  Commerce,  etc., 

111.   505;   43  Am.   St.  Rep.   267;    38  Co.  v.  Morris,  27  Tex.  Civ.  App.  553; 

N.   E.    1058;    Low  v.  Nolte,   16   111.  65  S.  W.  1118. 

475;    Lord    v.    Gaddis,    9    la.    265;  3  Wilson    v.    Dean,     10    la.    432; 

Foley  V.  McKeegan,  4  la.  1;  66  Am.  Johnson  v.  Cook,  24  Wash.  474;   64 

Dec.    107;    Hahn    v.    Horstman,    12  Pac.  729. 

Bush.(Ky.)   249;  Perkins  v.  Lyman,  *  Eva   v.  McMahon,   77   Cal.   467; 

11  Mass.  76;  6  Am.  Dec.  158;  Ham-  19   Pac.    872;    O'Keefe   v.   Dyer,   20 

aker  v.  Schroers,  49  Mo.  406;  Lind-  Mont.  477;  52  Pac.  196;  Johnson  v. 

say  v.  Anesley,  28  N.  C.  186;  Kelley  Cook,  24  Wash.  474;  64  Pac.  729. 

v.  Seay,  3  Okla.  527;   41  Pac.  615;  s  Elston   v.   Roop,    133   Ala.   331; 

Bigouy  V.  Tyson,  75  Pa.  157;  Bear-  32     So.     129.      (It    was    not     clear 

den  V.   Smith.   11   Rich.  L.    (S.   C.)  whether    this    provision    was    for    a 

554;    Johnson    v.    Cook,    24    Wash,  penalty  or  for  liquidated  damages.) 
474;    64  Pac.   729. 


PENALTIES   AND   LIQUIDATED  DAMAGES.  1797 

§1171.     Liquidated  damages. 

If  a  stipulation  is  one  for  liquidated  damages,  the  amount 
contracted  for  may  be  recovered.^  Proof  of  actual  damage  is 
unnecessary."  There  must,  however,  be  at  least  more  than 
nominal  damages.^  Furthermore,  if  the  actual  damages  exceed 
those  contracted  for,  the  injured  party  is  bound  by  the  stipula- 
tion of  the  contract,  and  cannot  recover  the  actual  amount  of 
damages.*  It  is  therefore  held  that  a  stipulation  for  liquidated 
damages  applies  to  cases  in  which  there  has  been  a  botm  fide 
attempt  to  perform  the  contract,  but  does  not  apply  to  willful 
and  deliberate  injury,  if  the  damages  arising  therefrom  exceed 
those  stipulated  for.^  Such  a  provision  in  case  of  failure  of 
water  supply  does  not  apply  where  such  failure  is  due  to  de- 
fendant's failure  to  make  repairs  stipulated  for.^  To  prevent 
recovery  of  actual  damages,  the  provision  claimed  to  be  for 
liquidated  damages  must  furthermore  be  exclusive.  If  the  party 
not  in  default  is  merely  given  an  election  on  default  to  be 
exercised  at  his  option,  he  is  not  thereby  precluded  from  recov- 
ering damages.^  Thus  in  a  sub-contract  for  building  an  ore 
dock,  it  was  provided  that  if  a  material-man  did  not  furnish 
timber  according  to  contract,  the  contractor  might  buy  it  in 
open  market  and  charge  the  necessary  expense  to  the  sub-con- 
tractor's account.  This  provision  was  held  to  be  merely  optional 
with  the  contractor,  and  not  a  stipulation  for  an  exclusive  meas- 

1  Sun,   etc.,  Association  v.  Moore,      Malting  Co.,  30  Wash.  178;  70  Pac. 

183  U.   S.   642;    affirming  Moore  v.      236. 

Publishing     Association,     101     Fed.  3  Hathaway  a'.  Lynn,  75  Wis.  186; 

591;  41  C.  C.  A.  506;  Van  Tuyl  v.  6  L.  R.  A.  551;  43  N.  W.  956. 

Young,    23    Ohio    C.    C.    15;    Pitts-  4  Hennessy    v.    Metzger,    152    111. 

burgh,  etc.,  Co.  v.  Tube  Works  Co.,  505;  43  Am.  St.  Rep.  267;  38  N.  E. 

184  Pa.  St.  251;  39  Atl.  76;  Drum-  1058;  O'Keefe  v.  Dyer,  20  Mont, 
heller  v.  Surety  Co.,  30  Wash.  530;  477;  52  Pac.  196;  Jackson  v.  Hunt, 
71  Pac.  25.  —  Vt.  — ;   56  Atl.   1010. 

2  Clark  V.  Barnard,  108  U.  S.  436;  5  West  Chicago,  etc.,  Ry.  Co.  v. 
Jacqua  v.  Headington,  114  Ind.  309;  Morrison,  etc.,  Co.,  160  111.  288;  43 
16  N.  E.   527;    (City  of)    Salem  v.  N.  E.  393. 

Anson,  40  Or.  339;  56  L.  R.  A.  169;  e  Pengra  v.  Wheeler,  24  Or.  532; 

67  Pac.  190;  Kelso  v.  Reid,  145  Pa.  21  L.  R.  A.  726;  34  Pac.  354. 

St.   606;    27  Am.   St.  Rep.   716;    23  7  Williston  v.  Mathews,  55  Minn. 

Atl.  323;   American,  etc..  Works  v.  422;   56  N.  W.  1112. 


1798  PAGE    O^r    CONTRACTS. 

lire  of  damages.^  A  provision  for  a  deposit  as  security  is  not 
a  contract  for  liquidated  damages  so  as  to  prevent  the  recovery 
of  actual  damages.**  So  a  provision  in  a  lease  for  the  deposit  by 
the  lessee  with  the  lessor  of  a  certain  sum  as  security  for  per- 
formance and  in  case  the  tenancy  is  not  sooner  terminated, 
that  it  is  to  be  applied  on  the  rent  for  the  last  three  months  of 
the  term,  is  not  intended  as  liquidated  damages  if  the  lessee 
makes  default  before  the  end  of  the  term.^" 

§1172.     Effect  of  name  employed. 

The  use  of  the  term  "  penalty,"  or  "  liquidated  damages,"  is 
not  conclusive.^  On  the  one  hand  a  provision  for  "  liquidated 
damages  "  may  appear  from  the  context  of  the  contract  to  be 
really  a  provision  for  a  penalty,  and  will  accordingly  be  ■  so 
treated.^  A  like  result  has  been  reached  where  a  liability  im- 
posed by  statute,  penal  in  its  nature,  is  spoken  of  by  statute  as 
"  liquidated  damages."  It  is,  notwithstanding,  treated  as  a 
penalty.^  On  the  other  hand  a  contract  for  a  "  penalty  "  may 
appear  from  the  context  to  be  a  contract  for  liquidated  damages, 
and  will  be  so  treated.*  So  a  provision  for  a  "  penalty  " — 
"  named  as  stipulated  damages,"^  or  for  a  "  fine,"''  or  "  as  a  for- 

sWilliston  v.  Mathews,  55  Minn.  Loan  Association,  52  Fed.  618;  Dis- 

422;  56  N.  W.  1112.  osway  v.  Edwards,  134  K  C.  254;  46 

9Chaude   v.    Shepard,    122   X.    Y.  S.   E.   501;    Fitzpatrick   v.   Cotting- 

397 ;   25  N.  E.  358.  ham,  14  Wis.  219. 

10  Chaude  v.   Shepard,   122   X.   Y.  3  Anderson    v.    Byrnes,     122    Cal. 

397;   25  X.  E.  358.  272;   .54  Pac.  821. 

iMcCurry    v.    Gibson,     108    Ala.  *  Robinson  v.   Aid   Society,   68  X. 

451;    54  Am.   St.   Rep.   177;    18   So.  J.  L.  723;  54  Atl.  416;  Illinois  Cen- 

806;   Hennessy  v.  Metzger,   152  111.  tral  Ry.   v.   Cabinet  Co.,   104  Tenn. 

505;  43  Am.  St.  Rep.  267;  38  X.  E.  568;  78  Am.  St.  Rep.  933;  50  L.  R. 

1058;  Willson  v.  Baltimore,  83  Md.  A.  729;   58  S.  W.  303. 

203;   55  Am.  St.  Rep.  339;   34  Atl.  5  Tode  v.   Gross,   127   X.  Y.  480; 

774;  May  V.  Crawford,  142  Mo.  390;  24  Am.   St.  Rep.  475;   13  L.  E.  A. 

44  S.  W.  260.  652;   28  X.  E.  469. 

2Kemble  v.  Farren,  6  Bing.   141;  e  Manistee     Iron     Works     Co.     v. 

Chicago      House-Wrecking     Co.      v.  Lumber  Co.,  92  Wis.  21;  65  N.  W. 

United  States,  106  Fed.  385;   53  L.  863. 
R.  A,  122;  45  C.  C.  A.  343;  Tilley  v. 


PENALTIES    AND   LIQUIDATED   DAMAGES.  179i) 

feiture/'^  or  as  a  "  guarantee  or  forefeiture/'*  or  "  as  forfeit,"^ 
have  each  been  held  to  be  provisions  for  liquidated  damages 
where  such  appeared  to  be  their  real  nature.  Prima  facie  the 
term  used  by  the  parties  is  the  correct  one.^°  The  presumption 
of  the  accuracy  of  the  term  used  by  the  parties  is  possibly  some- 
what stronger  when  the  term  employed  is  "  penalty  "  than  when 
it  is  "  liquidated  damages."^^  "  The  parties  themselves  denom- 
inate it  a  penalty ;  and  it  would  require  very  strong  evidence 
to  authorize  the  court  to  say  that  their  own  words  do  not  express 
their  own  intention."^^ 

§1173.     Intention  of  parties  controls. 

The  intention  of  the  parties  is  said  to  be  paramount  and  con- 
trolling.^ This  means,  however,  not  what  they  have  agreed  to 
call  it,  nor  even  what  they  may  in  good  faith  think  it  is;  for 
this  involves  their  opinion  upon  the  law.^  When  their  intent 
is  said  to  be  paramount,  what  is  meant  is  that  if  from  the  sur- 
rounding facts  and  circumstances  it  appears  that  they  are  in 
good  faith  contracting  for  the  actual  amount  of  the  loss  as  esti- 
mated in  advance,  the  contract  is  one  for  liquidated  damages; 
while,  if  they  are  contracting  for  an  arbitrary  sum,  intended 

TMcCurry    v.    Gibson,     108    Ala.  Van  Buren  v.  Digges,  11  How.    (U. 

451;   54  Am.   St.  Rep.  177;    18  So.  S.)  461. 
806.  11  Foley  v.  McKeegan,  4  la.  1 ;  66 

8  Sanders  v.  Carter,  91   Ga.  450;  Am.  Dec.  107;  Smith  v.  Brown,  164 

17  S.  E.  345.  Mass.  584;  42  N.  E.   101;  Smith  v. 

sHardie,  etc.,  Co.  \.  Oil  Mill,  —  Wainwright,  24  Vt.  97. 
Miss.—;  36  So.  262.  laTayloe  v.   Sandiford,   7   Wheat. 

10  "  Liquidated    damages" — prima  (U.S.)   13,17. 
facie    correct.     Stegman    v.    O'Con-  i  Kelly  v.  Fejervary,  111  la.  693; 

nor,  80  L.  T.   (N.  S.)   234;  Kelly  v.  83  N.  W.  791;  Heatwole  v.  Gorrell, 

Fejervary,   111    la.   693;    83   N.   W.  35  Kan.  692;   12  Pae.  135;  Perkins 

791;  Garst  v.  Harris,  177  Mass.  72;  v.  Lyman,  11  Mass.  76;  6  Am.  Dec. 

58    N.    E.    174.     "Penalty" — prima  158;    Taylor  v.   Newspaper   Co..   83 

facie  correct.     Smith  v.  Brown,  164  Minn.  523;   86  N.  W.  760;   Cotheal 

Mass.  584;  42  N.  E.  101;  Wilkinson  v.   Talmage,   9   N.   Y.   551;    61   Am. 

V.  Colley,  164  Pa.  St.  35;  26  L.  R.  Dec.   716. 

A.    114;    30  Atl.   286.     Held   penal-  2  Willson  v.  Mayor  of  Baltimore, 

ties  "in  the  penal  sum  of  estimated  83  Md.  203;   55  Am.  St.  Rep.  339; 

amount   of  freight."     Watts   v.   Ca-  34   Atl.   774. 
mors,  115  U.  S.  353.     "Forfeiture" 


1800  PAGE    OX    CONTEACTS. 

to  coerce  performance  or  punish  default,  they  are  contracting 
for  a  penalty.^  In  case  of  doubt,  the  courts  prefer  to  treat  the 
stipulation  as  one  for  a  penalty,  since  this  construction  makes 
the  actual  amount  of  the  damages  the  amount  of  recovery.* 

§1174.     "Artificial  rules"  for  determining  question. 

To  lay  down  a  general  test,  or  set  of  tests,  for  determining 
whether  a  stipulation  is  for  a  penalty  or  liquidated  damages,  is 
even  more  difficult  than  the  general  attempt  to  lay  down  an 
arbitrary  rule  for  determining  in  advance  what  the  parties  to 
a  contract  mean  by  the  use  of  certain  language.  These  "  arti- 
ficial rules  "^  are  liable  to  fail  of  application  in  any  particular 
contract  by  reason  of  the  context  and  subject-matter  which  may 
show  an  intent  different  from  that  which  the  rule  indicates. 
The  difficulty  is  intensified  in  this  case  by  the  fact  that  on  many 
elementary  questions  as  to  the  application  of  specific  tests,  the 
courts  are  absolutely  at  variance.  A  summary  of  the  English 
cases  on  this  subject  is  given  in  Wallis  v.  Smith,^  in  which  the 
following  classes  are  enumerated :  "  Where  a  sum  of  money  is 
stated  to  be  payable  either  by  way  of  liquidated  damages,  or 
by  way  of  penalty  for  breach  of  stipulations,  all  or  some  of 
which  are,  or  one  of  which  is,  for  the  payment  of  a  sum  of 
money  of  less  amount,  that  is  really  as  penalty,  and  you  can 
only  recover  the  actual  damage,  and  the  court  will  not  sever  the 
stipulations."^  Cases  "  in  which  the  amount  of  damages  is  not 
ascertainable  per  se,  but  in  which  the  amount  of  damages  for  a 
breach  of  one  or  more  of  the  stipulations,  either  must  be  small, 
or  will,  in  all  human  probability,  be  small  —  that  is,  where  it 
is  not  absolutely  necessary  that  they  should  be  small;  but  it 

sSanford    v.    National    Bank,    94  62  S.  W.  516;  Wallis  v.  Carpenter, 

la.    680;    63   N.   W.    459;    Gushing  13  All.   (Mass.)    19;  O'Keefe  v.  Dy- 

V.    Drew,    97    Mass.    445;    May    v.  er,    20    Mont.    477;    52    Pac.    196; 

Crawford,   142  Mo.  390;   44   S.  W.  Baird  v.  Tolliver,  6  Humph.  (Tenn.) 

•260;    Streeper  v.  Williams,  48  Pa.  186;    44   Am.   Dec.   298. 

St.  450.  1  Bagley  v.  Peddie,  16  N".  Y.  469, 

4  Amanda,   etc.,   Co.   v.   Mill   Co.,  471;  69  Am.  Dec.  713;  quoted  Sun, 

28  Colo.  251;  64  Pac.  218;  Hennes-  etc.,  Co.  v.  Moore,  183  U.  S.  642. 

sy  V.  Metzger,  152  111.  505;  43  Am.  2  21  Ch.  D.  243. 

St.  Rep.  267;   38  N,  E.  1058;   Day  3  Wallis  v.  Smith,  21  Ch.  D.  243, 

Bros.   Lumber    Co.   v.    Ison    (Ky.),  256. 


PENALTIES   AND  LIQUIDATED   DAMAGES.       _  ISOl 

is  SO  near  to  a  necessity,  having  regard  to  the  probabilities  of 
the  case,  that  the  court  will  presume  it  to  be  so."*  This  class 
of  cases  the  court  says  is  in  part  open  for  discussion  and  in 
part  included  in  another  class,  i.  e.,  the  one  following.  "  The 
class  of  cases  to  which  I  refer  is  that  in  which  the  damages  for 
the  breach  of  each  stipulation  are  unascertainable,  or  not 
readily  ascertainable,  but  the  stipulations  may  be  of  greater  or 
less  importance,  or  they  may  be  of  equal  importance.  There 
are  dicta  there  which  seem  to  say  that  if  they  vary  much  in 
importance  the  principle  of  which  I  have  been  speaking  applies, 
but  there  is  no  decision.  On  the  contrary,  all  the  reported 
cases  are  decisions  the  other  way ;  although  the  stipulations 
have  varied  in  importance  the  sum  has  always  been  treated  as 
liquidated  damages."^  "  A  class  of  eases  relating  to  deposits. 
Where  a  deposit  is  to  be  forfeited  for  the  breach  of  a  number 
of  stipulations,  some  of  which  may  be  trifling,  some  of  which 
may  be  for  the  payment  of  money  on  a  given  day,  in  all  those 
cases  the  judges  have  held  that  this  rule  does  apply  and  that 
the  bargain  of  the  parties  is  to  be  carried  out.  I  think  that 
exhausts  the  substance  of  the  cases.""  This  classification  is 
apparently,  approved  by  the  Supreme  Court  of  the  United 
States,^  and  in  the  same  case  more  of  these  "  artificial  rules  " 
are  suggested. 

§1175.     Difficulty  of  proving  actual  damages. 

One  test  which  has  been  suggested  is  whether  it  is  easy  or 
difficult  to  prove  the  actual  damages.  Where  this  test  is  recog- 
nized it  is  held  that  if  the  actual  damages  can  be  proved  with, 
reasonable  certainty,  a  stipulation  in  advance,  fixing  the 
amount  thereof,  is  a  penalty.^     This  is  in  some  states  a  statu- 

4WalHs  V.  Smith,  21  Ch.  D.  243,  304;    81    Am.   Dec.    745;    Fasler   v. 

257.  Beard,  39  Minn.  32;  38  N.  W.  755; 
sWallis  V.  Smith,  21  Ch.  D.  243,  Brennan  v.  Clark.  29  Neb.  385;   45 

258.  X.  W.  472;  Lansing  v.  Dodd,  45  N. 
eWallis  v.  Smith.  21  Ch.  D.  243,  J.  L.  525;   Csesar  v.  Rubinson,   174 

258.  N.  Y.  492;   67  N.  E.   58;   Krutz  v. 

7  Sun,  etc..  Association  v.  Moore,  Bobbins,    12   Wash.   7;    50   Am.   St. 

183  U.  S.  642.  Rep.  871;  28  L.  R.  A.  676;  40  Pac 

iHall  V.  Crowley,  5  All.    (Mass.)  415. 


1802  PAGE    ON    CONTRACTS. 

tory  riile.^  The  party  who  claims  that  it  is  difficult  to  prova 
the  amount  of  damages  and  who  is  seeking  to  uphold  the  pro- 
vision for  the  payment  of  money  as  an  agreement  for  liqui- 
dated damages  has  the  burden  of  showing  that  such  damages 
are  difficult  to  ascertain  f  and  the  recital  in  the  contract  that 
such  damages  are  difficult  to  prove  is  ineffectual.*  Under  such 
statutes  a  provision  for  paying  ten  dollars  a  day  for  delay  in 
completing  a  house,^  or  for  forfeiting  twenty  per  cent  of  the 
invoice  price  on  countermanding  an  order  for  personalty,*'  or 
for  paying  a  fixed  sum  per  head  in  case  of  shortage  in  the  num- 
ber of  cattle  contracted  for/  or  for  returning  the  amount  paid 
as  rent  in  case  of  failure  to  furnish  the  amount  of  water  agreed 
upon,^  is  in  each  case  held  a  penalty.  If  the  actual  damages 
are  not  easy  to  prove,  a  stipulation  in  advance  therefor  is  to  be 
treated  jirima  facie  as  a  stipulation  for  liquidated  damages, 
and  it  is  only  when  such  stipulations  have  an  excessive  and 
unreasonable  amount  that  the  provisions  are  to  be  treated  as  a 
penalty."  On  this  theory  a  contract  to  furnish  public  utilities 
such   as   electric  lights,"   or   a   public  bridge,"  or   a   contract 

2  Home,    etc.,    Co.    v.    McNamara,  7  Home,    etc.,    Co.    v.   McNamara, 

111    Fed.    822;    49    C.    C.    A.    642;  111  Fed.  822;  49  C.  C.  A.  642. 

Pacific  Factor  Co.  v.  Adler,  90  Cal.  s  Deunincl:   v.    Irrigation   Co.,    28 

110;   25  Am.  St.  Rep.  102;   27  Pae.  Mont.  255;    72  Pac.  618. 

36;  Drew  v.  Pedlar,  87  Cal.  44.3;  22  9  Green  v.  Price,  13  M.  &  W.  695; 

Am.    St,   Jiep.    257;    25    Pac.    749;  Pressed   Steel   Car   Co.   v.   Ry.,    121 

Mansur,  etc.,  Implement  Co.  v.  Wil-  Fed.  609;   57  C.  C.  A.  635;  Sanders 

let,    10    Olvla.    383;    61    Pac.    1066;  v.    Carter,    91    Ga.    450;    17    S.    E. 

Seim  V.  Krause,   13   S.  D.   530;    83  345;   Hennessy  v.  Metzger,   152  111. 

N.  W.  583.  505 ;  43  Am.  St.  Eep.  267 ;  38  N.  E. 

sDeuninck   v.    Irrigation    Co.,   28  1058;    Garst   v.    Harris.    177    Mass. 

Mont.  255;  72  Pac.  618.  72;   58  N.   E.   174;   Cliase  v.  Allen, 

4  Pacific  Factor  Co.  v.  Adler,  90  13  Gray  (Mass.)  42;  Brennan  v. 
Cal.  110;  25  Am.  St.  Rep.  102;  Clark,  29  Neb.  385;  45  N.  W.  472; 
27    Pac.    36.  Ward   v.    Building    Co.,    125   N.    Y. 

5  Seim  V.  Krause,  13  S.  D.  530;  230;  26  N.  E.  256;  Grasselli  v. 
83  N.  W.  583.  Lowden,  11  0.  S.  349;  Everett  Land 

6  Mansur,  etc..  Implement  Co.  v.  Co.  v.  Maney,  16  Wash.  552 ;  48 
Willet,  10  Okla.  383;  61  Pac.  1066.  Pac.  243. 

For   similar   case   see   Mansur,   etc.,  lo  Brooks    v.    Wichita,    114    Fed. 

Co.  V.  Hardware  Co.,  136  Ala.  597;       297;  52  C.  C  A.  209. 
33   So.   818.  11  Malone  v.  Philadelphia.  147  Pa 

St.   416;    23    Atl.    628. 


PENALTIES   AND   LIQUIDATED   DAMAGES.  1803 

whereby  a  telephone  company  is  to  pay  a  fixed  sum  if  it  merges 
with  a  competitor,^^  is  one  for  breach  of  which  it  is  not  easy 
to  estimate  damages ;  and  hence  covenants  to  pay  fixed  sums 
on  breach  are  covenants  for  liquidated  damages.  Other  ex- 
amples of  such  covenants  are  agreements  to  pay  money  on 
breach  of  a  contract  not  to  publish  libelous  articles/^  to  refund 
money  if  a  dike  should  be  destroyed  exposing  the  promisee's 
land  to  high  tides  ;^*  an  agreement  to  pay  a  certain  sum  as 
liquidated  damages  in  case  of  a  sublessee's  being  ousted  by 
lessee  ;^^  a  provision  that  if  a  partner  shall  violate  his  promise 
to  abstain  from  intoxicating  liquors  he  shall  forfeit  all  his 
interest  in  the  business  and  receive  a  monthly  salary  f'^  an 
agreement  to  pay  a  certain  sum  of  money  on  breach  of  a  contract 
to  form  a  partnership/^  or  a  contract  to  convey  realty/^ 
or  a  contract  to  give  two  weeks'  notice  before  quitting  work/^ 
the  work  in  other  departments  being  dependent  on  the  work 
in  the  department  in  which  this  employee  was  working;  or  a 
contract  to  deduct  a  fixed  amount  from  the  price  of  logs  not 
delivered  on  time,  and  thus  exposed  to  the  weather;""  or  a  con- 
tract to  pay  one  thousand  dollars  in  case  of  a  breach  by  an 
employee  of  his  covenant  not  to  drink  intoxicating  liquor.^^ 
This  test,  however,  has  been  repudiated  by  the  Supreme  Court 
of  the  United  States,'^  and  it  has  been  held  by  them  that  even 
though  the  actual  damages  can  be  readily  ascertained  with  cer- 
tainty, a  stipulation  for  damages  in  advance  is  not  necessarily 
a  penalty. 

12  (City  of)   New  Britain  v.  Tele-  i7  Sanford   v.   National   Bank.    94 
phone   Co.,    74    Conn.    326;    50   Atl.      la.  680;   63  N.  W.  459. 

881,   1015.     For   a   similar   contract  is  Sanders  v.  Carter.  91  Ga.  450; 

by  a  railroad  see  Grand  Trunk  Ry.  17   S.   E,   345;    Talkin   v.   Anderson 

V.    Halton    County,    21    Can.    S.    C.  (Tex.),  19  S.  W.  852. 

716.  19  Tennessee  Mfg.  Co.  v.  James,  91 

13  Emery    v.    Boyle,    200    Pa.    St  Tenn.  154;  30  Am.  St.  Rep.  865;   15 
249;  49  Atl.  779.  L.  R.  A.  211;   18  S.  W.  262. 

14  Jennings     v.     McCormick,      25  20  Kilbourne   v.   Lumber   Co.,    Ill 
Wash.  427;   65  Pac.  764.  Ky.  693;  64  S.  W.  631. 

15  Guerin     v.     Stacy,     175     Mass.  21  Keeble  v.  Keeble,  85  Ala.  552; 
595;   56  N.  E.  892.  5  So.  149. 

IS  Henderson     v.     Murphree,     109  22  gun.  etc.,  Association  v.  Moore, 

Ma.   556;   20  So.  45.  183  U.  S.  642. 


1804  PAGE    ON    CONTRACTS. 

§1176.    Relation  of  stipulated  amount  to  actual  damage. 

Another  test  which  has  been  suggested  is,  whether  the  amount 
stipulated  for  is  greatly  in  excess  of  the  actual  damages  or  not. 
Where  this  test  is  applied,  it  is  held  that  if  the  amount  stipu- 
lated for  is  no  greater  than  the  actual  damages,^  or  if  in  excess 
of  actual  damages  such  excess  is  moderate,  the  stipulation  is  for 
liquidated  damages.  Thus  an  agreement  to  pay  for  the  use 
of  a  button-sewing  machine  at  a  certain  rate  per  thousand  but- 
tons, and  if  the  lessee  does  not  keep  account  of  the  number  of 
buttons  sewed,  the  lessor  to  have  the  option  to  charge  five  dol- 
lars a  day  for  its  use,  is  held  to  be  a  rough  estimate  of  the  value 
of  the  machine  and  not  a  penalty.^  If  the  amount  stipulated 
for  is  excessive,  the  stipulation  is  for  a  penalty.^  Thus  a  pro- 
vision for  paying  in  case  of  breach  of  a  contract  for  work  and 
labor  a  sum  greatly  in  excess  of  the  cost  of  completing  the  con- 
tract,* or  for  paying  a  fine  for  wrongful  use  of  electrotypes 
'*  equal  to  tenfold  the  price  of  the  wrongfully  used  electro- 
types,"^ or  for  paying  in  case  of  breach  "  five  hundred  dollars 
besides  all  damages,"®  have  each  been  held  to  be  agreements  for 

1  Standard  Button-Fastening  Co.  L.  R.  A.  283;  41  X.  E.  683;  Carter 
V.  Breed,  163  Mass.  10;  39  N,  e.  v.  Strom,  41  Minn.  522;  43  N.  W. 
346;  Monmouth  Park  Association  v.  394;  Wheedon  v.  Trust  Co.,  128  K 
Iron  Works.  .55  X.  J.  L.  132;  39  C.  69;  38  S.  E.  255;  Clements  v. 
Am.  St.  Rep.  626;  19  L.  R.  A.  456;  Ry.,  132  Pa.  St.  445;  19  Atl.  274, 
26  Atl.  140 ;  Lansing  v.  Dodd,  45  N.  276 ;  Baird  v.  Tolliver,  6  Humph. 
J.  L.  525;  Hoagland  v.  Segur,  38  (Tenn.)  186;  44  Am.  Dec.  298;  Mc- 
K  J.  L.  230;  Whitfield  v.  'Levj,  35  Intosh  v.  Johnson,  8  Jtah  359:  31 
N.  J.  L.  149;  Illinois  Central  Ry.  Pac.  450;  J.  G.  Wagner  Co.  v, 
V.  Cabinet  Co.,  104  Tenn.  568;  78  Cawker,  112  Wis.  532;  88  N.  W. 
Am.  St.  Rep.  933;  50  L.  R.  A.  729;  599;  Gates  v.  Parmly,  93  Wis.  294; 
58  S.  W.  303.  66   N.  W.   253;   affirmed  on  rehear- 

2  Standard    Button-Fastening    Co.  ing,  93  Wis.  321 ;  67  N.  W.  739. 

V.  Breed,    163   Mass.    10;    39   X.   E.  *  Heisen  v,  Westfall,  86  111.  App. 

346.  576;    Condon   v.   Kemper,    47    Kan. 

3  Gay  Mfg.  Co.  v.  Camp,  65  Fed.  126;  13  L.  R.  A.  671;  27  Pac.  829. 
794;  13  C.  C.  A.  137;  Glasscock  v.  (Cost  of  work  $100,  amount  to  be 
Rosengrant,  55  Ark.  376:   18  S.  W.  paid   $500.) 

379;    Heisen  V.  Westfall.    86  111.  App.  5  Meyer  v.  Estes,   164  Mass.  457; 

576 ;    Condon   v.   Kemper,    47    Kan.  32  L.  R.  A.  283 ;  41  X.  E.  683. 

126:   13  L.  R.  A.  671;  27  Pac.  829;  e  Foote  &  Davies  Co.   v.   Malony, 

Meyer  v.  Estes,   164  Mass.  457;   32  115  Ga.  985;  42  S.  E.  413. 


PENALTIES  AXD  LIQUIDATED  DAMAGES.  1805 

penalties.  "Where  this  test  is  applied,  it  is  the  facts  as  they  exist 
when  the  contract  is  made,  and  not  those  in  existence  when 
the  contract  was  broken,  which  determine  whether  the  amount 
stipulated  for  is  reasonable  or  unreasonable/ 

§1177.     One  penalty  for  breaches  of  different  covenants. 

Another  test  which  has  met  with  general  favor  is  the  follow- 
ing: If  provision  is  made  for  breach  of  several  different  cove- 
nants of  a  contract,  and  a  gross  sum  is  fixed  which  is  to  be 
paid  in  case  of  the  breach  of  any  one  of  such  covenants,  and 
the  covenants  are  of  different  degrees  of  importance  so  that  the 
damage  resulting  from  the  breach  of  one  would  be  much  greater 
than  those  resulting  from  the  breach  of  another,  the  stipulation 
is  held  to  be  a  penalty.^  Thus  a  promise  to  pay  a  fixed  sum 
for  failure  to  build  a  house  or  to  pay  off  all  liens  thereon,^  or 
to  pay  a  certain  additional  amount  per  ton  for  every  ton  of  hay 
or  straw  sold  off  the  premises,  where  the  value  of  manure  from 
hay  is  different  from  that  from  straw,^  or  a  promise  to  pay  a 
certain  sum  in  case  of  any  default  in  a  contract  to  sell  and 
deliver  a  certain  number  of  sheep,*  or  a  promise  to  pay  a  fixed 
sum  for  breach  of  any  one  of  a  number  of  covenants,  ranging 
from  the  payment  of  royalty  to  keeping  gates  closed,^  or  a  bond 

7  Gibson    v.    Oliver,    158    Pa.    St.  Cook,  24   \Yash.  474;   64  Pac.   729; 

277;   27  Atl.  961.  (City   of)    Madison   v.   Engineering 

iWillson    V.    Love     (1896),    1    Q.  Co.,  118  Wis.  480;   95  X.  W.  1097; 

B.  626;   Kemble  v.  Farren,  6  Bing.  Kerslake  v.  Mclnnis,  113  \Yis.  659; 

141 ;   Home,  etc.,  Co.  v.  McNamara,  89  N.  W.  895. 

Ill    Fed.    822;    49    C.    C.    A.    642;  2  Johnson  v.  Cook,  24  Wash.  474; 

Smith   V.   Newell,   37    Fla.   147;    20  64    Pac.    729.      (Amount    agreed    on 

So.  249;   State  v.  Larson,  83  Minn.  $3,000  — value  of  house  $2,000.) 

124;  54  L.  R.  A.  487;   86  X.  W.  3;  3  willson  v.  Love   (1896),  1  Q.  B. 

Carter  v.  Strom,  41  Minn.   522;    43  626. 

N.  W.   394 ;    Squires  v.   Elwood.   33  *  Squires  v.  Elwood,  33  Neb.  126 ; 

Neb.   126;   49  N.  W.  939;   El  Reno  49   N.    W.   939.     See   for   a    similar 

V.   Cullinane,  4  Okla.  457;   46   Pac.  contract    of    a    less    marked    type. 

510;  Berry  V.  Wisdom,  3  O.  S.  241;  Home,   etc.,   Co.  v.  McXamara,    111 

Wilhelm  v.   Eaves,   21   Or.   194;    14  Fed.  822;  49  C.  C.  A.  642. 

L.  R.  A.  297;  27  Pac.  1053;  Keck  v.  s  Keck  v.  Bieber.  148  Pa.  St.  645; 

Bieber.  148  Pa.  St.  645;  33  Am.  St.  33  Am.  St.  Rep.  846;  24  Atl.  170. 
Rep.   846;   24  Atl.   170;   Johnson  v. 


1806  PAGE    ON    CONTRACTS. 

in  the  sum  of  ten  thousand  dollars,  conditioned  on  the  release 
of  a  number  of  debts  varying  in  amount  from  eight  thousand 
dollars  to  ten  thousand  dollars,"  have  each  been  held  to  be  provi- 
sions for  penalties.  This  test  has  proved  so  satisfactory  in  its 
operation  that  it  is  a  matter  of  regret  that  so  many  cases  present 
facts  which  do  not  admit  of  determination  by  it.  Even  this  test, 
however,  is  not  unanimously  adopted.  It  has  been  repudiated 
in  several  courts,  though  often  in  obiter,  as  a  decisive  test;' 
and  it  has  been  said  that  this  principle  has  no  application  to 
cases  where  the  damage  from  each  breach,  though  not  the  same 
in  each,  is  in  each  uncertain,®  but  that  it  applies  only  where 
the  damages  are  readily  ascertainable,  either  on  some,^  or  all,^" 
of  the  breaches,  as  where  one  of  the  covenants  is  to  pay  money.^^ 

§1178.     Breach  of  single  covenant. 

If  the  amount  fixed  is  to  be  paid  in  case  of  breach  of  a  single 
covenant,  it  is,  if  fair  and  reasonable,  to  be  treated  prima  facie 
as  a  covenant  for  liquidated  damage«.^  "  Where  payment  is 
conditioned  on  one  event,  the  payment  is  in  the  nature  of  liqui- 
dated damages."^  Though  there  are  several  covenants  in  a 
given  contract,  still  if  the  amount  to  be  paid  in  case  of  breach 
is  apportioned  to  the  different  covenants,  and  is  fair  and  reason- 
able for  each,  the  stipulation  is  prima  facie  for  liquidated  dam- 
ages.^    Thus  a  provision  in  a  contract  for  transporting  cattle 

eBignall  v.  Gould,  119  U.  S.  495.  sociation   v.    More,    183   U.    S.   642; 

TWallis  V.  Smith,  21  Ch.  D.  243;  Duffy   v.   Shockey,    11   Ind.   70;    71 

Sun,  etc.,  Co.  v.  Moore,   183  U.  S.  Am.  Dec.  348  j  Gushing  v.  Drew,  97 

642;    May    v.    Crawford,    142    Mo.  Mass.  445. 
390;   44  S.  W.  260.  2  Strickland  v.  Williams    (1899), 

sWallis  V.  Smith,  21  Ch.  D.  243;  1    Q.   B.   382,   384;    quoted   in   Sun, 

Cotheal   v.   Talmage,   9   N.   Y.   551;  etc.,    Association   v.   Moore,    183   U. 

61  Am.  Dec.  716.  S.  642,  667,  with  the  warning  that 

9  Kemble  v.  Farren,  6  Bing.  141.  it  must  be  understood  that  the  event 

10  Pierce  v.  Jung,  10  Wis.  30.  is   "  not  the  mere  non-performance 

11  Clement  v.  Cash,  21  N.  Y.  253 ;  of   an    ordinary   agreement   for   th«» 
quoted   with   approval   in   Sun,   etc.,  payment  of  money." 
Association    v.    Moore,    183    U.    S.  3  Boys   v.    Ancell,    5    Bing.   N.    C. 
642,  673.  390;  Morris  v.  Wilson,  114  Fed.  74; 

1  Law    v.    Redditoh    Local    Board      52  C.  C.  A.  22. 
(1892),  1  Q.  B.  127;   Sun.  etc.,  As- 


PENALTIES   AND   LIQUIDATED   DAMAGES.  1807 

that  the  steamer  should  sail  on  the  day  named  "  or  pay  expenses 
of  keep  of  animals  at  rate  of  fifty  cents  per  head  per  day  in 
full,"  is  a  stipulation  for  liquidated  damages/  This  principle 
finds  application  in  agreements  in  building  contracts  to  pay  a 
certain  sum  per  day  for  delay  in  completing  the  work.^ 

§1179.     Forfeiture  of  deposits  and  part  payments. 

Agreements  are  frequently  made  that  one  or  both  parties  to 
a  contract  shall  deposit  a  certain  sum  of  money  which  is  to  be 
the  property  of  the  other  if  the  contract  is  not  performed. 
Such  agreements  are,  if  fair  and  reasonable,  treated  as  stipula- 
tions for  liquidated  damages,  and  enforced.^  Thus  under  a 
contract  for  the  sale  of  realty  a  deposit  of  money,"  or  a  certified 
check,^  may  be  retained  by  the  party  not  in  default.  If  the 
check  is  lost,  equity  will  give  afiirmative  relief.*  So  under  a 
contract  for  the  sale  of  personalty  a  deposit  of  a  certified  check,* 
may  be  retained  by  the  party  not  in  default.  Under  this 
theory  a  provision  in  a  contract  of  employment  whereby  the 
employer  was  to  retain  six  days'  wages  until  the  end  of  the 
term  of  employment  to  secure  performance  was  treated  as  a 
covenant  for  liquidated  damages.**  If  unreasonable,  and  in- 
tended merely  to  coerce  performance,  they  are  treated  as  pen- 
alties.^ Thus  a  provision  in  a  contract  for  the  sale  of  lumber 
whereby  the  vendee  was  to  retain  fifty  cents  per  thousand  to 

4  Morris  v.  Wilson,  114  Fed.  74;  e  Wilson  v.  Godkin,  —  Mich.  — ; 
52  C.  C.  A.  22.                                              98  N.  W.  985. 

5  See  §  1183.  "  Sherburne    v.    Hirst,    121     Fed. 

1  Allison  V.  Dunwody,  100  Ga.  51;       998;   Kennedy  v.  United  States,  24 

28  S.  E.  651;  Sanders  v.  Carter,  91  Ct.  CI.  122;  Carson  v.  Arvantes,  10 
Ga.  450;  17  S.  E.  345;  Sanford  v.  Colo.  App.  382;  50  Pac.  1080;  Will- 
Bank,  94  la.  680;  63  N.  W.  459;  son  v.  Baltimore,  83  Md.  203;  55 
Woodbury  v.  Mfg.  Co.,  96  Ky.  459;  Am.    St.    Rep.    339;    34    Atl.    774; 

29  S.  W.  295.  Tinkham    v.    Satori,    44    Mo.    App. 

2  Womack  v.  Coleman,  89  Minn.  659 ;  Monmouth  Park  Association 
17;  93  N.  W.  663.  v.  Warren,  55  N.  J.  L.  598;  27  Atl. 

3  Moore  v.  Durnam,  63  N.  J.  Eq.  932;  Chaude  v.  Shepard,  122  N.  Y. 
96;  51  Atl.  449.  397;  25  N.  E.  358;  Lindsey  v.  Rock- 

4  Moore  v.  Durnam,  63  N.  J.  Eq.  wall  County,  10  Tex.  Civ.  App.  225; 
96;  51  Atl.  449.  30  S.  W.  380. 

5  Millar    v.    Smith.    28    Tex.    Civ. 
App.  386;  67  S.  W.  429. 


1808  PAGE    ON    CONTRACTS. 

insure  performance  is  treated  as  a  penalty.^  Thus  under  a 
"building  contract,  the  retention  of  a  certain  percentage  of  the 
contract  price  to  secure  performance,  and  to  be  the  property  of 
the  owner  in  case  of  breach  by  the  contractor  is  a  penalty.^  So 
if  one  thousand  dollars  is  deposited  by  the  lessee  to  become  the 
property  of  the  lessor  in  case  of  breach  of  the  covenants  of  the 
lease,  this  is  held  to  be  a  penalty  if  all  the  covenants  of  the 
lease  have  been  performed  except  the  payment  of  forty-five  dol- 
lars of  rent.^"  So  deposits  made  by  a  bidder  to  secure  his  mak- 
ing a  formal  contract  in  accordance  with  the  terms  under  which 
he  bids,  if  his  bid  is  accepted,  have  been  held  to  be  penalties.^^ 
A  similar  conflict  of  view  exists  where  contracts  are  involved 
by  the  terms  of  which  payments  made  thereunder  are  in  case 
of  default  on  the  part  of  the  one  who  makes  them  to  become 
the  property  of  the  adversary  party.  In  some  cases  such  pro- 
visions are  treated  as  valid,  on  the  theory  that  they  are  for 
liquidated  damages,^"  while  in  others  they  are  treated  as  agree- 
ments for  penalties/^  Under  statutory  provisions  forbidding 
contracts  for  liquidated  damages  unless  it  is  impracticable  to 
show  actual  damages,  such  provisions  cannot  be  enforced.^*  As 
in  case  of  deposits,  most  of  these  cases  can  be  reconciled  on 
the  theory  that  some  of  the  contracts  are  for  amount  reasonably 
apportioned  to  the  amount  of  actual  damage,  while  others  are 
for  excessive  and  unreasonable  amounts. 


8  stony     Creek     Lumber     Co.     v.  12  Wallis  v.  Smith,  21  Ch.  D.  243; 

Fields.  —  Va.  — ;  45  S.  E.  797.     So  Gloek    v.    Colony   Co.,    123    Cal.    1; 

under  a  logging  contract.     Kerslake  69   Am.   St.   Rep.    17;    43   L.   R.   A. 

V.  Melnnis,  113  Wis.  659;  89  N.  W.  199;  55  Pac.  713;  Havens  v.  Patter- 

895.  son,  43  N.  Y.  218;  Reddish  v.  Smith, 

sGleason  v.  United  States,  33  Ct.  10  Wash.  178;  45  Am.  St.  Rep.  781; 

CI.  65;    Satterlee  v.  United   States,  38  Pac.  1003. 

30   Ct.   CI.   31 ;    Kennedy  v.   United  i^  in  re  Dagenham  Dock  Co.,  L.  R. 

States,  24  Ct.  CI.  122.  8  Ch.  1022. 

10  Cfpsar  V.  Rubinson.   174  N.  Y.  ^*  Contract  to  forfeit  payments  for 

492;  67  N.  E.  58.  realty  if  vendee   does   not  perform. 

iiWillson    V.    Baltimore,    83    Md.  Phelps     v.     Brown,     95     Cal.     572; 

203;  55  Am.  St.  Rep.   339;   34  Atl.  30   Pac.   774;    Cleary  v.   Folger,   84 

774;   Lindsey  v.   Rockwall   County,  Cal.  316;   18  Am.  St.  Rep.  187;  24 

10  Tex.   Civ.  App.   225;    30   S.   W.  Pac.  280;  Barnes  v.  Clement,  12  S. 

380.  p.  270;  81  N.  W.  301. 


PENALTIES   AND   LIQUIDATED   DAMAGES.  1809 

§1180.     Default  in  payment  of  money. —  Larger  sum  due. 

If  the  default  which  is  to  make  a  specified  sum  due  and  pay- 
able is  itself  the  non-payment  of  a  smaller  sum  of  money,  the 
question  whether  the  contract  is  for  a  penalty  or  for  liquidated 
damages  depends  on  which  sum  the  original  debt  was.  If  the 
original  debt  was  the  smaller  sum,  the  promise  to  pay  the 
larger  sum  in  case  of  default  is  a  penalty.^  The  outward  form 
of  the  contract  does  not  prevent  the  application  of  this  prin- 
ciple. The  parties  may  stipulate  that  the  larger  sum  is  the 
real  debt  due,  and  that  it  is  to  be  discharged  by  the  payment 
of  the  smaller  sum.  This,  however,  is  a  penalty  if  the  smaller 
sum  is  the  real  debt.^  Thus  an  agreement  to  pay  rent  for 
machines,  due  on  the  first  of  each  month,  payable  by  the  first 
of  the  next  month,  with  a  discount  of  fifty  per  cent  if  paid  by 
the  fifteenth  day  of  the  first  month,^  or  an  agreement  for  the 
sale  of  realty  which  in  legal  effect  is  a  sale  at  eight  hundred 
dollars,  with  a  provision  for  paying  ten  installments  of  a  hun- 
dred dollars  each  with  interest,  but  if  each  payment  is  made 
punctually  when  due,  "  eight  hundred  dollars  and  its  yearly 
interest  will  be  accepted  in  full  payment,"^  are  each  agreements 
for  a  penalty  for  delay.  If,  however,  the  larger  sum  is  the 
real  debt,  and  the  creditor  has  agreed  to  discharge  it  on  pay- 
ment of  the  smaller  sum  in  the  manner  stipulated  in  the  con- 
tract, the  agreement  that  in  case  of  default  the  larger  sum  shall 
be  due  and  payable,  is  not  a  stipulation  for  a  penalty.^  Thus 
A  had  a  life  interest  in  an  undivided  third  of  B's  property. 
The  parties  estimated  the  vah;e  of  this  at  eight  hundred  dollars, 
and  A  released  her  estate  in  consideration  of  B's  promise,  se- 

iGay  Mfg.  Co.  v.  Camp,  65  Fed.  Moore   v.   Hylton.    1    Dev.    Eq.    (N. 

794;    13    C.    C    A.    137;    Smith    v.  C.)    429;   Longworth   v.  Askren,   15 

Newell,    37    Fla.    147;    20   So.   249;  O.  S.  370. 

Goodyear,  etc.,  Co.  v.  Selz,   157  111.  3  Goodyear,  etc.,  Co.  v.  Selz,   157 

186;  41  X.  K  625;  Fisk  v.  Gray,  11  111.  186;  41  X.  E.  625. 

All.   (Mass.)   132;  Morrill  v.  Weeks,  4  Longworth  v.   Askren,   15  0.   S. 

70X.H.  178;  46  Atl.  32;  Cairnes  v.  370. 

Knight,   17  O.  S.  68;   Longworth  v.  5  United   States   Mortgage   Co.   v. 

Askren,  15  O.  S.  370;  Fitzpatrick  v.  Sperry,  138  U.  S.  313;  Waggoner  v. 

Cottingham,  14  Wis.  219.  Cox,  40  0.  S.  539. 

2  Chaffee  v.  Landers,  46  Ark.  3645 
114 


1810  PAGE    ON    CONTEACTS. 

cured  bj  mortgage,  to  pay  to  A  eight  hundred  dollars  on  a 
specified  date,  provided  if  B  paid  twenty  dollars  semi-annually 
to  A  on  specified  dates  "  it  shall  discharge  the  whole  debt." 
This  was  held  not  to  be  a  penalty.® 

§1181.     Increase  in  rate  of  interest. 

A  contract  that  if  default  is  made  in  paying  a  debt  when 
due  the  debt  shall  bear  a  higher  rate  of  interest  after  maturity 
than  it  did  before,  is  not  a  stipulation  for  a  penalty  if  the 
higher  rate  does  not  exceed  the  maximum  rate  fixed  by  statute.^ 
Even  if  the  rate  exacted  after  maturity  is  in  excess  of  the 
maximum  rate  allowed  by  law,  some  courts  hold  that  the  stipu- 
lation is  not  for  a  penalty."  In  other  states  a  provision  for 
unlawful  interest  after  maturity  is  treated  as  a  penalty.^ 
Whether  such  contracts  are  usurious  is  a  question  discussed 
elsewhere.*  It  may  here  be  remarked  that  the  theory  that 
such  a  stipulation  is  for  a  penalty  and  therefore  void  is  invoked 
in  some  cases  to  save  the  contract  from  the  consequence  of 
usury,^  and  in  other  cases  to  enable  the  court  to  give  relief  to 
a  debtor  who  has  not  brought  himself  within  the  protection 
of  the  courts  on  the  ground  of  usury,  as  by  omitting  to  tender 

6  Waggoner  v.  Cox,  40  0.  S.  539.  2  Walker  v.  Abt,  83  111.  226 ;  Bane 

For  a  ease  mucli  like  the  foregoing  v,    Gridley,    67    111.    388;    Smith   v. 

except    that   the    smaller    sum    was  Whitaker,  23  111.  367. 

treated    as    the    real    debt    and    the  s  First   National    Bank    v.    Davis, 

larger  one  therefore  as  the  penalty,  108  111.  633;  Wilson  v.  Dean,  10  la. 

see  Cairnes  v.  Knight,  17  0.  S.  68.  432;  Gower  v.  Carter,  3  la.  244;  66 

1  Linton  v.  Ins.  Co.,  104  Fed.  584;  Am.  Dec.  71;  Xewell  v.  Houlton,  22 

44  C.  C.  A.  54;  Dehass  v.  Dibert,  70  Minn.    19;    Richardson  v.   Campbell, 

Fed.  227;  30  L.  R.  A.  189;  17  C.  C  34  Xeb.  181;  33  Am.  St.  Rep.  633; 

A.    79;    Thompson    v.    Garner,    104  51  N.  W.  753;  Upton  v.  O'Donahue, 

Cal.   168;   43   Am.  St.  Jlep.  81;   37  32  Neb.  565;   49  N.  W.  267;   Wey- 

Pac.  900;  Eccles  v.  Herrick,  15  Colo.  rich  v.  Hobelman,   14  Neb.  432;    16 

App.  350;  62  Pac.  1040;  Dusenberry  N.   W.   436;    Brockway  v.   Clark,   6 

V.  Abbott,  1  Neb.  Unofficial  101;  95  Ohio    45;    Fisher   v.    Otis,    3    Pinn. 

N.  W.  466;  Omaha,  etc.,  Co.  v.  Han-  (Wis.)    78;  3  Chand.   (Wis.)   83. 

sen,  46  Neb.  870;   65  N.  W.   1058;  4  See  §  465. 

Havemyer  v.  Paul,  45  Neb.  373;  63  5  Fisher  v.  Otis.   3   Pinn.    (Wis.) 

N.  W.'932;  Close  v.  Riddle,  40  Or.  78;  3  Chand.   (Wis.)   83. 
592;  91  Am.  St.  Rep.  580;  67  Pac. 
932. 


PENALTIES   AND   LIQUIDATED   DAMAGES.  1811 

the  amount  lawfully  due.^  Agreements  that  in  case  of  default 
the  debt  shall  bear  a  higher  though  lawful  rate  of  interest  from 
the  date  at  which  it  was  contracted  have  been  held  in  some 
states  to  be  provisions  for  liquidated  damages;''  in  others  as 
penalties/ 

§1182.     Other  provisions. 

A  provision  that  default  in  payment  of  one  installment  of 
interest  will  make  the  whole  debt  due  and  payable  is  held  in 
some  jurisdictions  to  be  a  j)enalty/  though  by  the  great  weight 
of  authority  such  provisions  are  not  penalties,  and  are  valid. ^ 
So  a  provision  making  the  principal  due  in  case  of  failure  to 
pay  taxes  before  they  become  delinquent  is  valid.^  In  some 
states  a  provision  for  the  payment  of  attorney's  fees,  in  case 
the  debt  is  collected  by  litigation,  is  treated  as  a  penalty.*  Pro- 
visions of  the  classes  here  discussed  are  sometimes  attacked  as 
being  penalties ;  sometimes  as  being  disguised  forms  of  usury  ;^ 
and  sometimes  as  being  unconscionable,*'  so  as  to  be  an  element 
in  establishing  constructive  fraud  or  undue  influence.  If  such 
provision  is  held  valid,  it  means  of  course  that  none  of  these 
objections  is  well  taken.  The  converse  of  this  proposition  is 
not  always  true.  Such  provision  may  be  held  not  to  be  a 
penalty,  but  to  be  usurious ;  and  vice  versa.  Even  if  invalid,  the 
difference  in  the  results  that  would  follow  from  holding  it  a 
penalty,  or  usurious,  or  unconscionable,  may  be  so  great  as  to 
make  the  solution  of  this  question  a  matter  of  great  practical 
importance. 

GBrockway  v.  Clark,  6  Ohio  45.  Rep.  261;   2G  L.  R.  A.   765;   61  N. 

7  Alexander   v.    Troiitnian,    1    Ga.  W.    431;    First    National    Bank    v. 
469,  Bank,  —  Wyoni.  — ;  70  Pac.  726. 

8  Waller  v.  Long,  6  Munf.    (Va.)  3  phimmer  v.  Park,  62  Neb.  665; 
71.  87  N.  W.  534. 

1  Tiernan  v,  Hinman,  16  111.  400.  *  Exchange   Bank  v.   Lumber   Co., 

2  Parker  v.  Olliver,  106  Ala.  549;       128  N.  C.  193;  38  S.  E.  813. 
18   So.   40;    Moore   v.   Sargent,    112  5  See  §  488. 

Ind.  484;   14  N.  E.  466;  Swearingen  6  See  §  234. 

V.  Lahner,  93  la.  147;   57  Am.  St. 


1812  PAGE    ON    CONTEACTS." 

§1183.     Application  of  general  principles. —  Building  contracts. 

Provisions  in  a  building  contract,  that  the  contractor  shall 
pay  a  certain  sum  per  day  if  the  building  is  not  completed  by 
the  time  agreed  upon,  are  generally  held  to  be  for  liquidated 
damages  if  reasonable  in  amount.^  Thus  in  the  case  of  a  con- 
tract for  the  erection  of  a  building,  a  provision  for  the  payment 
of  fifty  dollars  a  day,^  twenty  dollars  a  day,^  ten  dollars  a  day,* 
or  five  dollars  a  day,^  have  each  been  held  to  be  valid  as  liqui- 
dated damages,  where  not  greatly  in  excess  of  the  actual  damage 
caused  by  the  delay.  A  provision  in  a  contract  for  installing 
an  electric  light  plant,  for  paying  five  pounds  a  day  for  delay 
after  the  time  fixed  by  the  contract,  has  been  held  to  be  valid 
as  a  provision  for  liquidated  damages.®  So  provisions  for  pay- 
ing one  hundred  dollars  a  day  for  delay  in  erecting  a  grand 
stand,'^  or  fifty  dollars  a  day  for  delay  in  erecting  a  church,^ 
have  been  held  to  be  covenants  for  liquidated  damages.  So  a 
provision  for  paying  a  reasonable  amount  per  day  for  delay  in 
building  a  sewer,^  or  sewage  works,^*'  is  a  provision  for  liqui- 
dated damages.  A  provision  that  if  a  street  railway  company 
does  not  complete  the  first  line  of  its  road  within  a  year  it  shall 
lose  its  right  of  way  and  privileges,  and  shall  pay  five  hundred 

1  Lincoln  v.  Granite  Co.,  56  Ark.  enbach  v.  Sage,  13  Wash.  364;  52 
405;  19  S.  W.  1056;  Emack  v.  Am.  St.  Rep.  51;  43  Pac.  354. 
Campbell,  14  App.  (D.  C.)  186;  s  Yonng  v.  Gaut,  69  Ark.  114; 
Kelly  V.  Fejervary,  111  la.  693;  83  61  S.  W.  372;  Brown  Iron  Co.  v. 
N.  W.  791;  De  Graff  v.  Wickliam,  Norwood  (Tex.  Civ.  App.),  69  S. 
89  la.  720;  52  N.  W.  503;  Lamson  W.  2.53. 

V.  Marshall,  —  Mich.  — ;  95  N.  W.  6  stegmann    v.    O'Connor    (1900), 

78;  Carter  v.  Kaufman,  —  S.  C.  — ;  A.  C;  81  L.  T.  N.  S.  627. 

45    S.    E.    1017;    Collier   v.    Better-  ^  Monmouth    Park   Association   v. 

ton,  87  Tex.  440;  29  S.  W.  467.  Iron   Works,    55   N.   J.   L.    132;    39 

2  Curtis  V.  Van  Bergh,  161  N.  Y.  Am.  St.  Rep.  626;  sub  nomine,  Wal- 
47;  55  N.  E.  398;  Bird  v.  Church,  lis  Iron  Works  v.  Park  Association, 
154  Ind.  138;   56  N.  E.  129.  19  L.  R.  A.  4.56;  26  Atl.  140. 

3  Davis  V.  Hospital  Association,  s  Bird  v.  Church,  154  Ind.  138; 
—  Wis.  — ;  99  N.  W.  351   (for  delay  56  N.  E.  129. 

in    completing    a    hospital    to    cost  9  Lamson    v.    Marshall,    —   Mich, 

twenty-four   thousand   dollars).  — ;  95  N.  W.  78;  Thorn,  etc.,  Co.  v. 

4  Kelly  V.  Fejervary.  Ill  la.  693;  Bank,  158  Mo.  272;  59  S.  W.  109. 
83  N.  W.  791;  Collier  v.  Betterton,  loLaw   v.   Redditch    Local    Board 
87  Tex.  440;  29  S.  W.  467;  lieich-  (1892),  1  Q.  B.  127. 


PENALTIES   AND   LIQUIDATED   DAMAGES.  1813 

dollars  is  a  provision  for  liquidated  damages/^  So  a  provi- 
sion that  Tiuless  a  certain  amount  of  water  is  diverted  into  a 
given  ditch  th.e  right  of  waj  thereof  will  be  given  up,  is  held 
to  be  a  provision  for  liquidated  damages/'  A  contractor  who 
is  working  under  a  contract  by  which  he  is  to  receive  one  hun- 
dred dollars  per  day  for  each  day  less  than  the  time  limit  fixed 
by  the  contract  in  which  he  performs  the  contract,  and  he  is  to 
pay  a  thousand  dollars  a  day  for  each  day  that  he  exceeds 
such  time  limit,  may  make  a  provision  with  a  subcontractor  for 
the  payment  of  one  hundred  and  fifty  dollars  a  day  for  each 
day  of  delay  on  the  part  of  such  subcontractor ;  and  such  last 
provision  will  be  treated  as  a  provision  for  liquidated  damages/^ 
If  delay  will,  cause  great  damage  to  the  adversary  party,  the 
provision  for  payment  can  not  be  said  to  be  necessarily  a  pen- 
alty, though  it  greatly  exceeds  the  rental  value  of  the  property, 
if  it  does  not  greatly  exceed  the  actual  damage  which  will  be 
caused  by  the  delay/*  A  provision  in  a  contract  for  excava- 
tion that  the  contractor  shall  be  liable  for  the  wages  of  a  super- 
intendent and  inspector  from  the  time  that  the  contract  should 
have  been  performed  to  the  time  when  the  work  is  completed, 
is  a  provision  for  liquidated  damages/^  Such  provisions  are 
upheld  even  if  the  building  is  one  which  would  ordinarily  not 
have  a  market  value  for  rental  purposes.  Thus  a  provision  for 
the  payment  of  a  certain  reasonable  amount  for  each  day's 
delay  in  constructing  a  court  house  is  a  provision  for  liquidated 
damages.^*'  The  courts  are  by  no  means  harmonious,  however, 
in  treating  such  provisions  as  covenants  for  liquidated  damages. 
Some  courts  treat  them  as  penalties.^^  A  provision  "  to  for- 
feit the  sum  of  $20  per  day  for  each  and  every  day's  delay  " 

11  Nilson    V.    Jonesboro,    57    Ark.  per  day;   stipulated  damages  $50.00 
168;   20  S.  W.  1093.  per  day.) 

12  Pogne  V.   Water   Co.,    138   Cal.  is  O'Brien  v.  Pipe  Works,  93  Ala. 
664;  72  Pac.  144.                                 2  582;  9  So.  415. 

13  Kimkel  v.  Wherry,   189  Pa.  St.  is  Heard    v.    Dooly    County,     101 
198;   69  Am.  St.  Rep.  802;   42  Atl.  Ga.  619;   28  S.  E.  086. 

112.  "Mundy  v.  United  States,  35  Ct. 

14  Curtis  V.  Van  Bergh,  161  N.  Y.      CI.   265;   The  Smith   Co.  v.  United 
47;    55   N.   E.   398.      (Rental    $5.75      States,  34  Ct.  CI.  472;   Brennan  v. 

Clark.  29  Neb.  385;  45  N.  W.  472. 


181-i  PAGE    ON    CONTKACTS. 

in  completing  a  lighthouse  has  been  held  to  be  a  penalty.*" 
It  has  been  held  that  such  provisions  are  to  be  treated  as  pen- 
alties if  the  rental  value  of  the  building  is  easy  to  be  deter- 
mined/'' This  view  is  very  generally  taken  if  the  amount 
stipulated  for  is  unreasonable.  Under  a  contract  to  erect  a 
building  of  the  value  of  eighteen  thousand  dollars,  a  provision 
for  paying  fifty  dollars  a  day  for  delay,  is  treated  as  a  penalty.^* 
Under  a  contract  to  erect  a  building  worth  three  thousand  four 
hundred  dollars,  a  provision  for  paying  three  dollars  a  day  for 
delay  has  been  held  to  be  a  penalty."^  So  an  agreement  to  pay 
ten  dollars  a  day  for  delay  in  completing  a  house  the  rental 
value  of  which  is  thirty  dollars  a  month,  is  a  penalty  in  the 
absence  of  a  showing  of  damage  other  than  I9SS  of  rents.^^ 
However,  if  the  amount  is  reasonable,  the  contract  will  gen- 
erally be  treated  even  in  these  jurisdictions  as  a  provision  for 
liquidated  damages,  as  where  the  rental  value  is  three  hun- 
dred dollars  a  month  and  the  contract  calls  for  the  payment 
of  ten  dollars  a  day  for  delay.^^  A  provision  for  liquidated 
damages,  which  amounts  to  half  the  contract  price,  the  amount 
of  which  is  incurred  after  the  contract  has  been  substantially 
performed,  has  been  held  to  be  so  excessive  as  to  be  treated  as 
a  penalty.^*  An  agreement  to  pay  a  lump  sum  for  delay  with- 
out reference  to  the  extent  thereof  or  the  amount  of  damage 
caused  has  been  held  to  be  a  penalty.  Thus  an  agreement  to 
pay  twenty  thousand  dollars  "  as  liquidated  damages  and  not 
as  a  penalty  "  for  delay  in  the  performance  of  a  contract  to 
tear  down  a  brick  building  and  remove  it,  is  a  stipulation  for  a 
penalty.^^  The  same  result  has  been  reached  under  a  bond  to 
pay  twenty-five  thousand  dollars  in  the  event  of  the  breach  of 


18  Smith  Co.  V.  United  States,  34  22  Wheedon  v.  Trust  Co.,   128  N. 
Ct.  CI.  472.  C.  69;  38  S.  E.  25.5. 

19  Connelly  v.  Priest,  72  Mo.  App.  23  Ramlose   v.   Dollman,    100    Mo. 
67.3.      (To   pay   $10    a    day   for    de-  App.  347;  73  S.  W.  917. 

lay.)  24  Edgar,    etc.,    Works    v.    United 

20  Cochran   v.   Ry.,   113   Mo.   3.59;  States.  34  Ct.  CI.  205. 

21  S.  W.  6.  25  Chicago     House- Wrecking     Co. 

21  Zimmerman  v.  Conrad,  —  Mo.  v.  United  States,   106  Fed.  385;  53 
App.  — ;  74  S.  W.  139.  L.  R.  A.  122. 


PENALTIES   AND   LIQUIDATED   DAMAGES.  1815 

a  contract  to  erect  a  sewage  plant.""  If  the  owner  insists  upon 
payment  of  liquidated  damages  for  delay,  be  must  allow  the 
contractor  the  contract  price  for  the  work  which  he  has  done.^^ 

§1184.     Sale  of  personalty. 

In  a  contract  for  the  sale  of  personal  property,  a  provision 
for  the  payment  of  a  reasonable  sum  in  case  of  breach,  has 
been  held  to  be  liquidated  damages.^  A  provision  for  paying 
a  reasonable  sum  per  day  for  delay  in  delivery  of  the  property 
sold,"  as  a  provision  for  a  certain  reasonable  amount  per  day 
for  failure  to  place  an  engine  and  boiler  in  a  barge,^  or  a  pro- 
vision for  paying  ten  dollars  a  day  for  delay  in  delivering 
church  pews,*  or  a  provision  for  paying  fifty  dollars  a  day  for 
delay  in  delivering  turbines,^  or  a  provision  for  deducting 
fifteen  cents  a  hundred  feet  for  delay  in  delivering  logs,  thereby 
exposing  them  to  the  weather  for  a  longer  time,''  have  each  been 
held  to  be  a  provision  for  liquidated  damages.  So  a  covenant 
to  pay  five  dollars  a  day  for  delay  in  delivering  an  engine  is 
held  to  be  a  provision  for  liquidated  damages.^  If  the  amount 
contracted  for  is  unreasonable,  it  will  be  treated  as  a  penalty.* 
Thus  a  contract  to  pay  fifty  dollars  a  day  for  delay  in  deliver- 
ing an  engine,  was  held  to  be  a  contract  for  a  penalty."  If  a 
gross  sum  is  to  be  paid  for  breach  of  the  contract,  the  provision 
is  more  likely  to  be  treated  as  a  penalty.  Thus  under  a  con- 
tract for  purchasing  a  crop  of  oranges  while  on  the  trees  for 

26  (City  of )  Madison  V.  Engineer-  *  Illinois   Central    Ry.   v.   Cabinet 

ing  Co.,    118    Wis.   480;    95   N.   W.  Co.,  104  Tenn.  568;  78  Am.  St.  Rep. 

1097.  933;  50  L.  R.  A.  729;  58  S.  W.  303. 

27Lennon    v.    Smith,    124    N.    Y.  s  Wood    v.    Paper    Co.,    121    Fed. 

578;  27  N.  E.  243.  818;  58  C.  C.  A.  256. 

1  Kilbouvne    v.    Lumber    Co.,    Ill  e  Kilbourne    v.    Lumber    Co.,    Ill 
Ky.   693;    64   S.  W.   631;    Lynde  v.  Ky.  693;  64  S.  W.  631. 
Thompson,  2  All.  (Mass.)  456.  7  Hardie,  etc.,  Co.  v.  Oil  Mill,  — 

2  Pressed  Steel  Car  Co.  v.  Ry.,  121  Miss.  — ;  36  So.  262. 

Fed.  609 ;   57  C.  C.  A.  635 ;   Ameri-  8  Glasscock  v.  Rosengrant,  55  Ark. 

can,  etc..  Works  v.  Malting  Co.,  30  376;   18  S.  W.  379. 

Wash.  178;  70  Pac.  236.  9  Iroquois    Furnace    Co.    v.    Mfg. 

3  Manistee    Iron    Works    Co.    v.  Co.,  181  111.  582;  54  N.  E.  987. 
Lumber  Co.,  92  Wis.  21;  65  N.  W. 

863. 


1816  PAGE    ON    CONTRACTS. 

a  lump  sum,  a  provision  that  the  purchaser  is  to  pay  the  vendor 
fifteen  hundred  dollars  as  part  payment,  and  that  if  the  pur- 
chaser fails  or  refuses  to  comply  with  the  provision  of  the  con- 
tract, such  payment  shall  be  forfeited,  was  held  to  be  a  penalty/'' 
A  provision  for  payment  by  the  vendee  of  twenty  per  cent  of 
the  invoice  price  in  case  of  his  countermanding  the  order,  has 
been  held  to  be  a  penalty/^ 

§1185.     Sale  of  good-will. —  Reasonable  restraint  of  trade. 

Contracts  for  the  sale  of  good  will,  which  contain  a  covenant 
in  reasonable  restraint  of  trade,  often  provide  for  the  amount 
of  damage  to  be  paid  in  case  of  the  breach  of  such  covenant. 
Such  damages  are  very  difficult  to  prove,  and  accordingly  such 
provisions  have  been  treated  as  liquidated  damages.^  So  a 
promise  to  pay  $5,000  as  liquidated  damages  in  case  of  a  breach 
of  a  clause  forbidding  the  buyer  to  advertise  the  sale  of  certain 
lines  of  goods  reserved  by  the  seller ;"  or  to  pay  a  certain  sum 
in  case  of  breach  of  an  agreement  not  to  disclose  a  trade-secret,* 
have  each  been  held  to  be  agreements  for  liquidated  damages. 
Even  in  such  jurisdictioiTS  a  clause  binding  the  promisor  "  in 
the  penal  sum  of  four  hundred  dollars,"  not  to  practice  medi- 
cine in  a  certain  locality,  is  held  to  be  prima  facie  a  contract 

10 Nichols  V.  Haines,  98  Fed.  692 ;  Eep.    716;    23    Atl.    323.      (Sale    or 

39  C.  C.  A.  235.  coiintry    store     and     good-will     for 

iiMansur,    etc.,    Implement    Co.  .$6,000,  to  pay  $1,000  for  breach  of 

V.  Hardware  Co.,   136  Ala.  597:    33  agreement  not  to   compete.)      Muse 

So.    818;    Mansur.    etc..    Implement  v.  Swayne,  2  Lea   (Tenn.)    251;   31 

Co.  V.  Willet,  10  Okla.  383;  61  Pac.  Am.  .Rep.  607;  Tobler  v.  Austin,  22 

1066.  Tex.   Civ.   App.   99;   53   S.  W.  706; 

1  Green  v.  Price,  13  M.  &  W.  695;  Borley  v.  McDonald,  69  Vt.  309;  38 

McCurry  v.  Gibson,   108  Ala.  451;  Atl.  60,      (Employee  to  pay  $500  if 

54  Am.   St.  Rep.   177;    18  So.  806.  he  competes  with  his  employer  for 

(Sale  of  practice   of  medicine  —  to  one     year     after     his     employment 

pay  $200  in  case  of  breach  of  eov-  ends.) 

enant  not  to   engage   in   practice.)  2 May  v.  Crawford,  142  Mo.  390; 

Potter  V.  Ahrens.   110  Cal.  674;   43  44  S.  W.  260. 

Pac.  388;   Augusta  Steam   Laundry  3  Xode  v.   Gross,   127   N.   Y,  480; 

Co.  V.  Debow,  98  Me.  496;   57  Atl.  24  Am.   St.  Rep.  475;   13  L.  R.  A. 

845;    Robinson   v.    Aid   Society.    68  652;  28  N.  E.  469;  Bagley  v.  Ped- 

N.  J.  L.  723;  54  Atl.  416;  Kelso  v.  die,  16  N.  Y.  469;  69  Am.  Dec.  713. 
Eeid,   145  Pa.  St.  606;   27  Am.  St. 


PENALTIES   AI^D   LIQUIDATED  DAMAGES.  1817 

±or  a  penalty.*  On  the  other  hand,  there  may  be  breaches  of  a 
■Bovenant  in  reasonable  restraint  of  trade  of  very  different  de- 
grees of  importance,  causing  very  different  amounts  of  damage. 
Some  courts  have  therefore  held  that  a  provision  for  the  pay- 
ment of  a  fixed  sum  in  case  of  any  breach  of  a  covenant  in 
restraint  of  trade,  is  a  provision  for  a  penalty.^ 

§1186.     Sale  of  realty. 

Under  a  contract  for  the  sale  of  realty,  a  provision  for  the 
payment  of  a  certain  sum  in  case  of  breach,  is  held  in  some 
jurisdictions  to  be  a  provision  for  liquidated  damages.^  Thus 
an  agreement  whereby  either  vendor,"  or  vendee,^  to  a  contract 
for  the  sale  of  realty  is  to  forfeit  a  deposit  if  he  does  not  per- 
form his  part  of  the  contract ;  or  a  covenant  that  if  the  vendor 
shall  not  in  a  specified  time  make  a  deed  to  vendee,  the  latter 
shall  have  a  right  to  occupy  the  realty  for  a  specified  time;* 
or  a  provision  that  the  vendor  shall  remove  an  incumbrance 
within  a  specified  time,  and  in  default  thereof  shall  pay  a  cer- 
tain sum,^  or,  where  lots  were  sold  for  $3,050,  a  provision  that 
the  price  should  be  $4,000  if  in  eighteen  months  the  purchaser 
did  not  erect  a  certain  building  thereon,^  have  been  held  valid 
as  stipulations  for  liquidated  damages.  In  other  jurisdictions 
such  a  provision  is  held  to  be  a  penalty.^  Thus  a  contract  to 
sell  realty  for  $45,000  and  to  pay  $5  an  acre  for  each  acre 
under  twenty  thousand,^  or  a  bond  for  six  hundred   dollars 

4  Wilkinson  v.  Colley.  164  Pa.  St.  4  Lorius  v.  Abbott,  49  Neb.  214; 

35;  26  L.  R.  A.  114;  30  Atl.  286.  68  N.  W.  486. 

sRadloff  V.  Haase.   106   111.   365;  5  Fasler   v.   Beard,    39   Minn.    32; 

63  N.  E.  729.      (Sale  of  bakery  to  38  N.  W.  755. 

pay  $2,000  in  case  of  competition. )  6  Everett  Land  Co.  v.  Maney,   16 

Heatwole  v.  Gorrell.  35  Kan.  692;  Wash.  552;  48  Pac.  243. 

12  Pac.  135;  Perkins  v.  Lyman,  11  7  0'Keefe  v.  Dyer,  20  Mont.  477; 

Mass.  76;  6  Am.  Dec.  158.  52  Pac.  196;  Monroe  v.  South  (Tex. 

iSee  §§  1174.  1179.  Civ.  App.).  64  S.  W.  1014. 

2  Sanders  v.  Carter,   91   Ga.   450;  (A  provision  to  forfeit  "as  a  pen- 
17  S.  E.  345.  alty  the  sum  of  three  hundred  dol- 

3  Womaek   v.    Coleman.   89  Minn,  lars.") 

17;  93  N.  W.  663;  Talkin  v.  Ander-  s  Gates  v.  Parmly,  93  Wis.   294; 

son   (Tex.),  19  S.  W.  852.  66  N.  W.  253;    affirmed  on  rehear- 

ing, 67  N.  W.  739. 


1818  PAGE    ON    CONTRACTS. 

conditioned  to  convey  realty  worth  three  hundred  dollars,'  have 
been  held  to  be  provisions  for  penalties.  The  two  lines  of  cases 
are  not  all  inconsistent;  since  where  such  provision  is  held  to 
be  a  penalty  the  amount  provided  for  is  generally  greatly  in 
excess  of  the  actual  damages. 

§1187.    Lease  of  realty  or  personalty. 

An  agreement  to  pay  a  certain  sum  of  money  in  case  of  the 
violation  of  a  covenant  of  a  lease  is  held  to  be  a  provision  for 
liquidated  damages  if  apportioned  to  the  separate  covenants, 
and  not  unreasonable,  especially  if  the  actual  damages  are 
difficult  to  estimate.  Thus  a  provision  in  a  lease  which  pro- 
vides for  an  annual  rental  of  seven  thousand  dollars,  that  in 
case  the  premises  are  retained  after  the  expiration  of  the  term, 
damages  shall  be  paid  for  such  detention  at  the  rate  of  thirty 
dollars  a  day,  is  liquidated  d&mages.^  So  a  covenant  that 
lessees  shall  pay  five  dollars  a  day  for  delay  in  removing  tracks 
and  ties  from  realty  has  been  held  to  be  a  provision  for  liqui- 
dated damages.^  A  provision  in  a  lease  for  paying  five  thou- 
sand dollars  in  case  of  breach  is  treated  as  a  covenant  for  a 
penalty  where  the  only  breach  is  delay  in  payment  of  rent.' 
So  under  a  lease,  a  provision  that  if  the  tenant  should  assign  or 
underlet,  or  remove  or  attempt  to  remove  any  of  his  goods  and 
chattels  his  term  should  cease  immediately  and  "  one  whole 
year's  rent  of  three  thousand  dollars  shall  immediately  thereon 
become  due  and  owing,"  is  rent,  and  not  a  penalty.*  An  agree- 
ment made  when  a  vessel  is  chartered,  to  pay  a  certain  sum 
therefor  if  the  vessel  is  lost,  or  irreparably  damaged  is  treated 
as  liquidated  damages.^  By  California  statute  in  such  cases, 
however,  as  such  provisions  are  void  by  statute,  only  the  actual 
damages  sustained  can  be  recovered."     So  an  agreement  to  pay 

9  Mcintosh    V.    Johnson,    8    Utah  3  Gay  Mfg.  Co.  v.  Camp,  65  Fed. 

359;  31  Pac.  450.  794;    13  C.  C.  A.  137. 

1  Poppers    V.    Meagher,    148    111.  *  Dermott  v.  Wallaeh,  1  Wall.  (U. 

192;  35  N.  E.  805;  affirming,  47  111.  S.)    61. 

App.  593.  5  Sun,  etc.,  Association  v.  Moore, 

2Townsend   v.   Ry.   Co.,    28   Ont.  183  U.  S.  642. 

195.  fi  Wilmington   Transportation   Co. 

V.  O'Niel,  98  Cal.  1 ;  32  Pac.  705. 


PENALTIES   AND   LIQUIDATED  DAMAGES.  •        1819 

for  the  use  of  a  button-sewing  machine  at  a  certain  sum  per 
thousand  buttons,  with  a  provision  that  if  the  lessee  does  not 
keep  account  of  the  number  of  buttons  sewed,  the  lessor  may, 
at  his  option,  charge  five  dollars  a  day  for  the  use  of  such  ma- 
chine is  not  a  penalty/ 

§1188.     Contracts  for  royalties. 

Provisions  fixing  the  amount  of  royalty  to  be  paid  for  the 
use  of  another's  mine,  patent,  and  the  like,  are  usually  held  not 
to  be  penalties.  A  provision  in  a  mining  contract  for  the  pay- 
ment of  a  minimum  royalty  is  not  a  penalty.^  So  a  provision 
in  an  oil  lease  that  the  lessee  shall  sink  one  well  during  the 
first  year,  and  in  default  thereof  will  pay  five  hundred  dollars 
a  year  for  delay,  is  not  a  penalty,^  even  if  a  subsequent  test  of 
adjoining  realty  shows  that  there  is  no  oil  or  gas  on  the  leased 
property.^  So  a  provision  in  a  contract  for  the  use  of  a  patent, 
to  pay  the  minimum  royalty,"*  or  to  pay  double  the  contract 
rate  if  the  patent  right  is  used  after  the  time  fixed  for  the 
expiration  of  the  license,^  are  not  penalties. 

7  Standard,  etc..  Co.  v.  Breed,  163  s  Gibson   v.   Oliver,    158    Pa,    St. 

Mass.  10;  39  N.  E.  346.  277;  27  Atl.  961. 

1  Martin  v.  Mining  Co.,  114  Fed.  4  Van  Tuyl  v.  Young,  23  Ohio  C. 
553 ;  Consolidated  Coal  Co.  v.  Peers,  C.  15. 

150  111.  344;  37  N.  E.  937.  5  Knox  Roek-Blasting  Co.  v.  Stone 

2  Gibson    V.    Oliver,    158    Pa.    St.       Co.,  64  O.  S.  361 ;  60  N.  E.  563;  re- 
277;  27  Atl.  961.  versing,  16  Ohio  C.  C.  21;  8  Ohio 

C.  D.  478. 


1820     •  PAGE   OH    CONTaAOTS. 


CHAPTER   LVI. 

THE  PAROL  EVIDENCE  RULE. 
I.     Scope  of  Rule. 

§1189.    Accurate  statement  of  rule. 

If  the  parties  to  a  contract  have  reduced  it  to  writing,  they 
must  intend  such  writing  to  be  the  repository  of  their  commoH 
intention.  It  merges  all  prior  and  contemporaneous  negotia- 
tions.^ Accordingly,  a  contract  in  writing  complete  on  its  face, 
cannot  he  contradicted  hy  extrinsic  evidence,'  nor  can  prior  or 
contemporaneous  parol  agreements  be  used  to  contradict  the 
written  contract,^  so  as  to  substitute  for  the  intention  therein 
expressed,  that  expressed  in  such  oral  agreements.*  To  violate 
this  rule  and  to  admit  extrinsic  evidence  of  the  intention  of 
the  parties  direct  for  the  purpose  of  displacing  their  intention 
as  shown  in  the  written  contract,  is  "to  substitute  the  inferior 
for  the  superior  degree  evidence  —  conjecture  for  fact  —  pre- 
sumption  for    the   highest   degree    of   legal    authority  —  loose 

iMcElveen  v.  Ry.,   109  Ga.  249;  ment    between    the    parties."     Gar- 

77  Am.  St.  Eep.  371;  34  S.  E.  281;  neau  v.  Cohn,  61  Neb.  500,  501;   85 

Gray  v.  Phillips,  88  Ga.  199;   14  S.  N.    W.    531     (citing    among    other 

E.  205;  Walters  v.  Ward,  153  Ind.  cases    Sylvester    v.    Paper    Co.,    55 

578;    55    N.    E.    735;    McCrary    v.  Neb.  621;  75  N.  W.  1092;  Commer- 

Bank,  97  Tenn.  469;  37  S.  W.  543.  cial  State  Bank  v.  Antelope  Coun- 

2  Pike    V.    Mcintosh,     167    Mass.  ty,    48    Neb.    496;    67    N.    W.   465; 

309;  45  N.  E.  749;  Doyle  v.  Dixon,  Qiiinn  v.  Moss,  45  Neb.  614;  63  N. 

12  All.   (Mass.)   576;  Hall's  Appeal,  W.  931;   Gerner  v.  Church,  43  Neb. 

60  Pa.  St.  458;   100  Am.  Dec.  584;  690;   62  N.  W.  51.) 
Gilbert   v.    Stockman,    76   Wis.   62;  4  Davis  v.   Robert,    89   Ala.   402; 

20  Am.  St.  Rep.  23;  44  N.  W,  845.  18  Am.   St.   Rep.    126;    8   So.    114; 

3" A  written  contract  cannot  be  Martin  v.  Ry.,  48  W.  Va.  542;   37 

varied   or    contradicted   by   a   prior  S.  E.  563. 
or     contemporaneous     parol     agree- 


THE    PAROL   EVIDENCE    RULE.  1821 

recollection  and  uncertainty  of  memory  for  the  most  sure  and 
faithful  memorials  which  human  ingenuity  can  devise  or  the 
law  adopt.^  In  an  early  Massachusetts  case,  the  court  after 
observing  that  it  was  "  remarkable  that  so  considerable  a  degree 
of  obscurity  should  remain  at  this  day  [1814]  upon  a  branch 
of  the  law  of  evidence  so  constant  in  its  recurrence  in  courts  of 
law,"  said,  "  When  parties  have  deliberately  put  their  engage- 
ments in  writing,  in  such  terms  as  impart  a  legal  obligation, 
without  any  uncertainty  as  to  the  object  or  extent  of  such 
obligation,  it  shall  be  presumed  that  the  whole  engagement  of 
the  parties,  and  the  extent  and  manner  of  their  undertaking, 
was  reduced  to  writing;  so  that  oral  testimony  of  a  previous 
colloquium  between  the  parties,  or  of  conversation  or  declara- 
tions at  the  time  when  it  was  completed  or  afterwards,  would 
tend  in  many  instances  to  substitute  a  new  and  different  con- 
tract for  the  one  which  was  really  agreed  upon,  to  the  prejudice, 
possibly,  of  one  of  the  parties."®  The  parol  evidence  rule 
applies  to  suits  on  contracts  in  equity,  as  well  as  to  actions  at 
law.^  This  rule  is  often  stated  inaccurately  in  some  such  form 
as  this :  extrinsic  evidence  is  inadmissible  to  contradict  or  vary 
the  terms  of  a  written  contract.^  As  we  shall  see  hereafter,^ 
extrinsic  evidence  is  often  admissible  to  vary  the  contract,  in 
the  sense  that  the  contract  in  connection  with  the  admissible 
evidence  has  a  different  meaning  from  that  which  it  would 
have  had  but  for  such  evidence.  The  evidence  forbidden  by 
the  rule  is  not  extrinsic  evidence  in  general,  but  extrinsic  evi- 
dence of  the  intention  direct  of  the  parties  to  the  contract, 

5  Baugh  V.  Ramsey,  4  T.  B.  Mon.  however,  will  be  found  a  vain  and 
(Ky.)    155,  157.  fruitless    escape."     Baugh    v.    Ram- 

6  Stackpole    v.    Arnold,    11    Mass.  sey,  4  T.  B.  Mon.   (Ky.)   155,157. 
27,  30.  8  Its    positive    terms,     being    ex- 

7 "  It  is  a  common  error  to  sup-  pressed  in  writing,  cannot  be  con- 
pose  that  these  are  rigid  principles  tradicted  or  varied  by  parol  evi- 
of  law,  the  severity  of  which  will  dence."  Walker  v.  Price,  62  Kan. 
be  mitigated  by  a  court  of  equity,  327,  333;  84  Am.  St.  Rep.  392;  62 
and  that  the  party  who  feels  their  Pac.  1001 ;  citing  Willard  v. 
operation  has  nothing  to  do  but  to  Ostrander,  46  Kan,  591 ;  26  Pac. 
change  his  ground  and  get  into  the  1017;  Rodgers  v.  Perrault,  41  Kan. 
climate  of  the  chancellor  to  meet  385;  21  Pac.  287. 
with     different     treatment.       This,  a  See  §  1216  et  seq. 


1822  PAGE    OK    CONTRACTS. 

introduced  to  displace  the  intention  set  forth  in  the  written 
contract. 

§1190.    Place  of  rule  in  law. 

The  question  of  the  application  of  the  rule  is  generally  raised 
by  objection  to  the  admission  of  oral  evidence  to  show  the 
intention  of  the  parties.  The  parol  evidence  rule  was  in  its 
origin  applied  to  sealed  contracts,  and  forbade  varying  them  by 
parol.^  It  has  therefore  come  to  be  known  as  the  parol  evi- 
dence rule,  but  its  true  place  is  not  in  the  law  of  evidence. 
Any  rule  of  substantive  law  can  be  stated  in  terms  of  the 
admissibility  of  evidence.  A  few  illustrations  will  suffice  to 
show  that  this  is  not  a  rule  of  evidence.  (1)  In  its  original 
form  the  rule  was  stated  as  a  rule  of  pleading,^  namely  that  the 
legal  effect  of  a  sealed  instrument  could  not  be  aided  on  behalf 
of  the  pleader  by  averment.  (2)  While  the  written  contract 
usually  acts  substantially  as  a  merger  of  prior  or  contem- 
poraneous oral  negotiations,^  it  also  operates  as  a  merger  of 
prior  written  negotiations,*  as  where  it  merges  prior  letters 
between  the  parties,^  or  a  prior  written  instrument  not  made 
part  of  the  subsequent  contract.®  Thus  a  term  of  an  accepted 
bid  which  is  not  carried  into  the  complete  written  contract 
subsequently  entered  into  between  the  parties  is  no  part  of 
their  contract.'^     The  real  objection  to  the  evidence  therefore 

1  Butcher  v.  Butcher,  1  Bos.  &  P.  v.   Atkins,    157   Ind.   331;   61   N.  E. 
N.  R.  113;  Blake  v.  Marnell,  2  Ball  726;  Gage  v.  Phillips,  21  Nev.  150 
&  B.  35 ;  affirmed,  4  Dow.  248 ;  Pal-  37  Am.   St.  Rep.  494 ;   26  Pac.   60 
mer  v,  Newell,  20  Beav.  32.  Hunter  v.  Hathaway,  108  Wis.  620 

2  Rutland's  Case,  5  Coke  25.  84  N.  W.  996. 

3  See  §§  1189,  1191.  e  Brown    v.    Markland,    16    Utah 

4  Graham  v.  Sadlier,  165  111.  95;  360;  67  Am.  St.  Rep.  629;  52  Pac. 
46  N.  E.  221.  Thus  a  deed  merges  597.  Still  less  can  the  meaning  of 
a  prior  written  contract.  Neal  v-  a  contract  between  A  and  B  be  af- 
Hopkins.  87  Md.  19;  39  Atl.  322.  fected  by  a  similar  clause  in  a  con- 


5  South  Boston  Iron  Works  v 
Ignited  States,  34  Ct.  CI.  174;  Gra 
ham  V.  Sadlier,  165  111.  95;  46  N 
E.  221;  Christopher,  etc.,  Co.  v 
Yeager.  202  111.  486;  67  N.  E.  166; 
affirming.  105  111.  App.  126;   Ralya 


tract  between  A  and  X.  Common- 
wealth Roofing  Co.  V.  Leather  Co., 
67  N.  J.  L.  566;   52  Atl.  389. 

7  McCrary  v.  Trust  Co.,  97  Tenn. 
469;  37  S.  W.  543. 


THE  PAROL  EVIDENCE  RULE.  1823 

is  lot  that  it  is  oral  as  distinguished  from  written,  but  that  it 
is  extrinsic  —  that  is,  that  it  tends  to  prove  wliat  is  not  a  term 
of  the  contract.  (3)  If  a  contract  is  made  and  to  be  performed 
in  one  jurisdiction  and  suit  is  brought  in  aTiother,  the  law  of 
the  former  jurisdiction  applies  in  determining  whether  oral 
agreements  are  merged  by  the  written  contract.^  If  the  rule 
were  really  one  of  evidence  the  law  of  the  forum  would  apply. 
Being  really  a  rule  of  substantive  law,  the  law  of  the  place  of 
performance  ordinarily  controls.  Accordingly,  there  is  a 
strong  tendency  at  Modern  Law  to  treat  the  parol  evidence  rule 
as  a  rule  of  substantive  law.^ 

In  South  Carolina,  however,  the  parol  evidence  rule  has  been 
treated  rather  as  a  rule  of  evidence.  It  was  held  that  a  demur- 
rer to  a  complaint,  based  on  a  note  signd  by  ''  A,  agent,"  who 
was  alleged  to  have  executed  the  instrument  as  the  agent  of  B, 
was  improperly  sustained,  even  though  no  evidence  in  support 
of  the  allegations  of  agency  could  have  been  introduced.^''  It 
was,  however,  suggested  that  the  evidence  might  show  that  the 
principal  was  doing  business  in  the  name  of  the  agent. 

§1191.    Written  contract  merges  prior  negotiations. 

In  an  action  on  a  written  contract,  complete  in  itself,  the 
validity  of  which  is  conceded,  the  parties  are  not  permitted  to 
show  that  their  prior  or  contemporaneous  oral  agreements  were 
not  all  reduced  to"  writing,  but  remain  as  oral  contracts  in  full 
force   and  effect  between   the  parties.^     This   rule   applies   as 

"  Bank  v.  Talbot,  154  Mass.  213;  i  Abrey  v.  Crux,  L.  R.  5  C.  P.  37 

13  L.  R.  A,  53;  28  N.  E,  163.  Woollam  v.  Hearn,  7  Ves.  Jr.  211 

9  Piteairn  v.  Philip  Hiss  Co.,  125  Onierod  v.  Hardman,  5  Ves.  Jr.  722 
Fed.  110.  Union,  etc.,   Ins.   Co.  v.  Mowry,   96 

10  Tarver  v.  Garlington,  27  S.  C.  U.  S.  549;  Sun,  etc.,  Association  v. 
107;  13  Am.  St.  Rep.  628;  2  S.  E.  Edwards,  113  Fed.  445;  51  C.  C.  A. 
84G.  "  Upon  the  face  of  the  paper,  279 ;  Hildreth  v.  Tramway  Co.,  73 
unexplained  by  parol  testimony  the  Conn.  631;  48  Atl.  963;  Quinn  v. 
jury  would  have  been  compelled  un-  Roath,  37  Conn.  16;  Rector  v.  De- 
der  the  cases  above  to  answer  (the  posit  Co..  190  111.  380;  60  N".  E. 
question  of  agency)  in  the  negative.  528;  affirming,  92  111.  App.  175; 
But  before  the  judge,  with  the  Tichenor  v.  Newman.  186  111.  264; 
agency  not  even  disputed,  it  seems  57  N.  E.  826;  Ehrsam  v.  Brown,  64 
to  us  error  to  hold  that  there  was 

no  cause  of  action." 


1824  PAGE    ON    CONTRACTS. 

well  where  the  intention  of  the  parties  is  completely  embodied 
in  two  written  contracts  instead  of  one."  If  the  parties  have 
voluntarily  omitted  terms  in  reducing  the  contract  to  writing,' 
as  where  they  voluntarily  omit  from  a  lease  a  clause  providing 
for  an  abatement  of  rent,*  they  cannot  enforce  such  terms  thus 
voluntarily  omitted.  Accordingly,  where  A  executes  a  written 
instrument  whereby  she  relinquishes  her  claim  to  certain  horses 
and  carriages  in  B's  possession  until  B's  claim  for  board  is  paid 
in  full,  A  cannot  show  a  contemporaneous  oral  agreement  that 
she  might  use  such  horses  in  the  ordinary  course  of  her  busi- 
ness.^ So  in  jurisdictions  w^here  there  is  no  priority  of  pay- 
ment between  notes  secured  by  one  mortgage  but  falling  due  at 
different  times,  extrinsic  evidence  is  inadmissible  to  show  that 
the  assignee  should  have  priority.^  So  an  indorser  of  one  of 
several  notes  secured  by  mortgage  cannot  show  an  oral  agree- 
ment that  the  proceeds  of  the  mortgage  were  to  be  applied  first 
to  the  note  last  maturing. '^  So  if  a  mortgage  is  given  to  secure 
four  notes,  extrinsic  evidence  is  inadmissible  to  show  that  such 
mortgage  was  to  be  released  when  two  of  such  notes  were  paid.^ 
So  if  a  contractor  has  agreed  in  writing  to  assume  the  contracts 

Kan.  466;  67  Pac.  867;  Wight  v.  R.  716;  Heist  v.  Hart,  73  Pa.  St.  286; 

R.,    16   B.   Mon.    (Ky.)    4;    63   Am.  Gilbert   v.    Stockman,    76    Wis.    62; 

Dec.    522;    Holmes   v.   Holmes,    129  20  Am.  St.  Rep.  23;  44  N.  W.  845. 

Mich.   412;    89   N.   W.  47;   McCray  Confra,  under  the  California  statute. 

Refrigerator  Co.   v.   Zent,   99   Mich.  Snyder  v.   Mfg.   Co.,   134   Cal.   324; 

269;    41   Am.   St.   Rep.   599;    58   N.  66  Pac.  311. 

W.    320;     Loth    v.    Friederick,    95  2  Harrison  v.  Tate,   100  Ga.  383; 

Mich.  598;  55  N.  W.  369;  Plumb  v.  28  S.  E.  227. 

Cooper,  121  Mo.  668;  26  S.  W.  678;  3  Eleventh   Street   Church  v.  Pen- 

Largey  v.  Leggatt,  —  Mont.  — ;  75  nington,  18  Ohio  C.  C.  408;  10  Ohio 

Pac.    950;    Montana   Mining   Co.   v.  CD.  74. 

Milling  Co.,  20  Mont.  394;  51  Pac.  4  Seitz  Brewing  Co.  v.  Ayres,  69 

824;   Crawford  v.  Improvement  Co.,  N.  J,  Eq.  190;  46  Atl.  535. 

15  Mont.  153;  38  Pac.  713;  Russell  5  Radigan  v.   Johnson,   174   Mass. 

V.  Russell,  63  N.  J.  Eq.'282;  49  Atl.  68;  54  N.  E.  358. 

1081;  affirming,  47  Atl.  37;  Thomas  e  Jennings    v.    Moore,     83    Mich. 

V.  Scutt,   127  N.  Y.   133;   27  N.  E.  231;  21  Am.  St.  Rep.  601;  47  N.  W. 

961 ;  Travelers'  Ins.  Co.  v.  Myers,  62  127. 

O.  S.  529;  57  N.  E.  4.58;  Union  Cen-  7  Schulty  v.  Bank,  141  111.  116;  33 

tral,  etc.,  Co.  v.  Hook,  62  O.  S.  256;  Am.  St.  Rep.  290;  30  N.  E.  346. 

56  N.  E.  906;  Philadelphia,  etc.,  Ry.  «  First  National  Bank  v.  Prior,  10 

V.  Conway,  177  Pa.  St.  364;  35  Atl.  N.  D.  146;  86  N.  W.  362. 


THE  PAROL  EVIDENCE  RULE.  1825 

for  materials  already  made,  he  cannot  show  a  contemporaneous 
oral  agreement  that  he  should  assume  only  a  certain  amount  of 
thse  contracts,  the  other  party  to  assume  the  excess  over  such 
amount.^  So  under  a  contract  for  payment  of  an  entire  in- 
debtedness, extrinsic  evidence  is  inadmissible  to  show  that  a 
part  only  of  such  indebtedness  was  to  be  paid/"  So  under 
a  contract  to  pay  "  all  of  the  outstanding  indebtedness  "  of  X, 
"  not  to  exceed  in  all  one  hundred  thirty  thousand  dollars," 
extrinsic  evidence  is  inadmissible  to  show  an  oral  contract  to 
pay  part  only  of  all  X's  debts/^  So  under  a  contract  to  supply 
X  the  material  which  he  needed,  evidence  is  inadmissible  to 
show  that  the  contract  was  for  a  limited  amount  only/^  So 
under  a  complete  written  contract  for  the  sale  of  machines,  ex- 
trinsic evidence  is  inadmissible  to  show  that  the  agent  was  to 
set  them  up/^  Under  written  permission  for  the  assignment 
of  a  lease,  it  is  inadmissible  to  show  that  the  lessee's  liability 
was  to  end  by  such  assignment/*  So  if  a  written  contract  for 
the  sale  of  land  provides  for  the  payment  of  taxes  and  assess- 
ments, extrinsic  evidence  is  inadmissible  to  show  an  agreement 
by  the  vendor  to  pay  taxes  upon  such  realty,^^  or  to  show  that 
certain  taxes  were  excepted  from  a  covenant  against  encum- 
brances/" So  if  the  parties  have  made  a  contract  whereby 
one  of  them  is  to  furnish  castings  and  sink  a  well  at  a  given 
price,  extrinsic  evidence  is  inadmissible  to  show  that  he  was 
to  furnish  the  tubing  and  pump  for  the  same  price/^  So  under 
a  contract  for  employing  an  insurance  agent,  which  by  its  terms 
could  be  ended  at  will  without  liability  except  for  commissions 
warned,  the  agent  cannot  show  a  contemporaneous  oral  contract 

sBandholz  v.  Judge,  62  N.  J.  L.  i4  Rector  v.  Deposit  Co.,  190  111. 

526;  41  Atl.  723.  380;  60  N.  E.  528. 

10  First    National    Bank    v.    JRy.  is  Gilbert   v.    Stockman.    76    Wis. 
(Tenn.  Ch.  App.),  46  S.  W.  312.  62;  20  Am.  St.  Rep.  23;  44  N.  W. 

11  Bell   V.    Mendenhall,    78   Minn.  845;  and  see  Garwood  v.  Wheaton, 
57;  80  N.  W.  843.  128  Cal.  399;  60  Pac.  961. 

12  Dean    v.    Mfg.    Co.,    177    Mass.  is  Stanisics  v.  McMurtry.  64  Neb. 
137;  58  N.  E.  162.  761 ;  90  N.  W.  884. 

13  Dowagiae    Mfg.    Co.    v.    Corbit,  i7  Meader  v.  Allen,   110  la.  588; 
127  Mich.  473,  478;  86  N.  W.  954;  81  N.  W.  799. 

rehearing  denied,  87  N.  W.  886. 
115 


il826 


PAGE    ON"    CONTEACTS. 


giving  him  commissions  on  future  renewals.^^  So  one  who 
ships  under  an  ordinary  bill  of  lading,  constituting  a  contract 
in  writing  between  himself  and  the  railroad  company,  cannot 
enforce  a  prior  oral  contract  to  give  him  as  low  a  rate  as  was 
given  to  any  shipper/^ 

§1192.    Evidence  inadmissible  to  contradict  written  contract. 

Extrinsic  evidense  is  inadmissible  to  contradict  the  intention 
of  the  parties  as  expressed  in  a  written  contract  by  showing 
a  prior  or  contemporaneous  oral  agreement  contrary  to  the 
written  agreement.^  Thus  extrinsic  evidence  is  inadmissible 
to  show  that  a  deed  was  not  intended  to  convey  the  land  therein 
described,"  or  that  it  was  meant  only  as  a  power  of  attorney,^ 
or  that  a  bill  of  sale/  or  chattel  mortgage,^  of  personal  property, 
was  not  intended  to  include  all  property  therein  described,  or 
that  under  a  written  contract  of  sale,  title  was  really  reserved 


isStowell  V.   Ins.   Co.,   163  N.   Y. 
298;  57  N.  E.  480. 

19  Hopkins  v.  Ry.,  29  Kan.  544. 

1  Hoiisekeeper    Publishing    Co.    v. 
Swift,  97  Fed.  290;  38  C.  C.  A.  187 
Smith  V.  Bank,  89  Fed.  832;   32  C 
C.  A.  368;  Bomar  v.  Rosser,  131  Ala 
215;  31  So.  430;  Adams  v.  Turner 
73      Conn.      38;      46      Atl.      247 
American  Harrow  Company  v.  Dol 
vin,    119    Ga.    186;    45    S.    E.   983 
Carter  v.  Williamson,  106  Ga,  280 
31   S.  E.   651;   Maxwell  v.  Willing, 
ham,  101  Ga.  55 ;  28  S.  E.  672 ;  Beck 
er  V.  Dalby    (la.),  86  X.   W.  314 
Crane  v.  Williamson,  111  Ky.  271 
63   S.  W.  610,  975;   White  v.  Wil 
liams,  105  Ky.  802;  49  S.  W.  808 
St.  Landry   State   Bank  v.   Meyers 
52  La.  Ann.  1769;  28  So.  136;  Bay 
lor  V,  Butterfass,  82  Minn.  21;    84 
N.  W.  640 ;  Ming  v.  Pratt.  22  Mont. 
262;  56  Pae.  279;  Aultman  v.  Hawk 
(Neb.),  95  N.  W.  695;   Hoflfman  v. 
Accident  Co.,  127  N.  C.  337;  37  S. 


E.  466;  First  National  Bank  v. 
Chandelier  Co.,  17  Ohio  C.  C.  443; 
Harley  v.  Weber,  1  Ohio  C.  D.  360; 
Kaufmann  v.  Friday.  201  Pa.  St. 
178;  50  Atl.  942;  Ivery  v.  Phillips, 
196  Pa.  St.  1;  46  Atl.  133;  Burwell 
&  Dunn  Co.  v.  Chapman,  59  S.  C. 
581;  38  S.  E.  222;  Martin  v.  Ry., 
48  W.  Va.  542;  37  S.  E.  563;  Coman 
V.  Wunderlich,  —  Wis.  — ;  99  N.  W. 
612;  Newell  v.  Canning  Co.,  119 
Wis.  635;  97  N.  W.  487. 

2  Oliver  v.  Brown,  102  Ga.  157; 
29  S.  E.  159;  Jacob  Tome  Institu- 
tion V.  Davisj  87  Md.  591;  41  Atl. 
166. 

3  Anderson  v.  Ins.  Co.,  112  Ga. 
532;  37  S.  E.  766. 

4Hodson  V.  Varney,  122  Cal.  619; 
55  Pac.  413. 

5  Drum-Flato  Commission  Co.  v. 
Barnard.  66  Kan.  568;  72  Pac.  257; 
Lawrence  v.  Comstock,  124  Mich. 
120;  82  N.  W.  808. 


THE    PAROL    EVIDENCE    RULE.  1827 

bj  the  vendor,**  or  that  written  contracts  for  work  were  not  in- 
tended to  include  work  specified  therein.'  So  a  deed  deposited 
in  escrow  under  a  written  contract  for  delivery  on  specified  con- 
ditions cannot  be  shown  to  be  intended  as  a  gift.*  An  oral 
contemporaneous  agreement  that  a  written  release  of  mutual 
rights  should  have  no  validity  cannot  be  enforced.''  A  written 
contract  whereby  a  lessor  whose  title  is  in  dispute  agrees  to 
indemnify  his  lessee  against  any  loss  that  might  be  incurred 
from  paying  rent,  in  case  his  title  is  adjudged  defective  cannot 
be  contradicted  by  a  contemporaneous  oral  contract  providing 
that  the  rent  should  not  be  paid  until  the  title  was  settled.^" 
So  where  a  railroad  ticket  is  a  complete  contract,  extrinsic  evi- 
dence is  inadmissible  to  contradict  its  terms,  as  to  show  that  a 
limited  ticket  was  by  oral  agreement  to  operate  as  an  un- 
limited ticket.^^  Extrinsic  evidence  is  inadmissible  to  show 
that  a  different  amount  from  that  specified  in  a  written  con- 
tract for  the  payment  of  money  was  to  be  paid.^"  Thus  under 
a  contract  for  the  sale  of  milk,  evidence  is  inadmissible  to  show 
that  there  was  to  be  a  discount  of  four  cents  a  can  to  be  applied 
on  a  note  for  a  milk  route.^^  So  a  contract  to  pay  royalties 
&t  a  certain  rate  cannot  be  contradicted  by  showing  an  oral  con- 
tract for  a  certain  minimum  amount  to  be  paid.^^  So,  where 
a  written  contract  shows  that  it  was  "  agreed  and  stipulated  " 
that  a  criminal  case  should  be  discontinued,  evidence  is  inad- 
missible to  show  that  it  was  discontinued  by  the  prosecuting 
witness,  and  that  the  defendant  merely  acquiesced  therein.^^ 
So  under  a  contract  between  two  railroad  companies,  whereby 
all  the  trains  belonging  to  one  company  are  to  have  a  priority 

eFinnigan    v.    Shaw,     184    Mass.  84  Am.  St.  Rep.  392;  62  Pac.  1001. 

112;  68  N.  E.  35.  isMcLeod  v.  Hunt,  128  Mich.  124; 

7  Norwood  V.  Lathrop,   178  Mass.  87    N.    W.    101;    O'Neal   v.   McLeod 

208;   59  N,  E.   650;   Daly  v.  King-  (Miss.),  28  So.  23. 

ston,  177  Mass.  312;  58  N.  E.  1109.  is  Kelley  v.  Thompson,  175  Mass. 

^Hilgar  v.  Miller,  42  Or.  552;  72  427;  56  N.  E.  713. 

Pac.  319.  ^*  Standard    Fireproofing    Co.    v. 

9  Loth    V.    Friederick,    95    Mich.  Fireproofing  Co.,  177  Mo.  559;  76  S. 

598;  55  N.  W.  369.  W.  1008. 

loprouty  V.  Adams,  141  Cal.  304;  i5  Rvissell  v.  Morgan,  24  R,  I.  134; 

74  Pac.  845.  52  Atl.  809. 

"Walker  v.  Price,  62  Kan.  327; 


1828  PAGE    ON    CONTRACTS. 

of  crossings,  extrinsic  evidence  is  inadmissible  to  show  that 
this  priority  was  to  apply  only  to  certain  classes  of  trains.^" 
So  a  contract  to  "  purchase  "  land  can  not  be  shown  to  be  a 
contract  for  a  right  of  way.^^  A  contract  which  on  its  face  is 
to  be  performed  in  the  alternative,  cannot  be  shown  to  be  re- 
stricted by  oral  agreement  to  the  performance  of  one  of  the 
alternatives.  Thus  where  a  bill  of  lading  is  a  contract  whereby 
the  carrier  agrees  to  deliver  to  a  connecting  railroad,  or  to  a 
steamer,  extrinsic  evidence  is  inadmissible  to  show  that  the 
contract  was  to  deliver  to  the  connecting  railroad,  and  not  to 
the  steamer.^^  So  under  a  contract  to  ship  property  to  ISTew 
York,  not  specifying  by  which  route,  extrinsic  evidence  is  in- 
admissible to  show  that  the  parties  had  agreed  upon  one  specific 
route.^®  However,  where  the  bill  of  lading  did  not  show  the 
route  it  was  held  proper  to  show  an  oral  agTeement  specifying 
to  what  connecting  carrier  the  initial  carrier  was  to  deliver  the 
goods.""  Wliere  a  contract  for  a  policy  provides  it  shall  not  go 
into  effect  until  the  application  is  accepted,  and  the  policy  is 
issued  and  delivered,  extrinsic  evidence  is  inadmissible  to  show 
that  the  policy  is  to  go  into  effect  at  once."^  Extrinsic  evidence 
is  inadmissible  to  show  that  a  policy  which  on  its  face  covers 
only  the  husband's  interest,  was  intended  to  cover  the  wife's 
interest  too.  Accordingly,  a  clause  providing  that  the  policy 
shall  become  inoperative  if  the  insured  conveys  his  interest, 
operates  where  the  husband  conveys  to  the  wife,  an  oral  pro- 
vision to  the  contrary  notwithstanding.""  So  where  a  clause 
provides  that  the  policy  shall  become  inoperative  if  the  building 
is  enlarged  without  the  consent  of  the  insurance  company,  ex- 
trinsic evidence  is  inadmissible  to  show  that  the  enlargement 
was  agreed  upon  before  the  policy  issued,  where  the  building  is 
described  as  it  existed  when  the  policy  issued.^^     So,  where 

16  Appeal  of  Cornwall,  etc.,  R.  Pi.,  20  Louisville,  etc.,  Ry.  v.  Duncan, 
125   Pa.   St.   232;    11   Am.   St.  Rep.       137  Ala.  446;  34  So.  988. 

889;  17  Atl.  427.  21  Chamberlain    v.    Ins.    Co.,    109 

17  Camden,  etc..  Ry.  v.  Adams,  62      Wis.  4;  83  Am.  St.  Rep.  851;  85  N. 
X.  J.  Eq.  6.56;  51  Atl.  24.  W.  128. 

isilcElveen  v.  Ry..  109  Ga.  249;  22  Walton  v.   Ins.   Co..   116  N.  Y. 

77  Am.  St.  Rep.  371;  34  S.  E.  281.      317;  5  L.  R.  A.  677;  22  N.  E.  443. 
19  Webster  v.  Paul,  10  0.  S.  531.  23  Frost's,  etc.,  Works  v.  Ins.  Co., 


THE  PAROL  EVIDENCE  RULE.  1829 

a  policy  is  made  payable  directly  to  a  granddaughter,  extrinsic 
evidence  is  inadmissible  to  show  that  it  was  issued  to  the  grand- 
father on  his  own  life,  and  at  his  request  made  payable  to  the 
granddaughter."*  So  extrinsic  evidence  is  inadmissible  to  show 
that  a  policy  payable  on  its  face  to  the  insured  was  really  pay- 
able to  his  sister.^^  So  extrinsic  evidence  is  inadmissible  to 
eliminate  a  warranty. ^°  So  extrinsic  evidence  is  inadmissible 
to  contradict  the  effect  of  a  covenant  against  incumbrances.^'^ 
The  maker  of  a  note  cannot  show  an  oral  agreement  between 
himself  and  the  payee,  that  the  note  should  have  no  validity."^ 
Thus  extrinsic  evidence  is  inadmissible  to  show  that  a  note  and 
mortgage  were  given  to  the  bank  in  order  that  the  bank  might 
use  them  as  apparent  collateral  security,^^  or  might  show  them 
to  the  bank  examiner  as  apparent  assets.^"  In  some  jurisdic- 
tions, however,  an  extension  of  the  principle  that  conditions 
precedent  to  a  written  instrument's  taking  effect  may  be  shown,^^ 
has  induced  the  courts  to  hold  that  extrinsic  evidence  is  admis- 
sible to  show  that  a  written  contract  delivered  between  the 
parties  was  delivered  as  a  mere  form  and  was  never  intended 
to  take  effect.  Thus  where  A  had  signed  a  contract  agreeing 
to  take  a  certain  amount  of  street-car  advertising  from  B  at 
certain  rates,  and  had  delivered  it  to  B's  agent,  A  could  show 
in  an  action  on  the  contract  that  the  real  contract  was  an  oral 
agreement  for  a  less  amount  at  a  lower  rate,  and  that  A  signed 


37  Minn.  300;   5  Am.  St.  Rep.  846;  v.  Bates,  2  Ohio  C.  D.  54.     This  rule, 

34  N.  W.  35.  of  course,  assumes  that  the  note  is 

24  Burton  v.  Ins.  Co.,  119  Ind.  in  other  respects  valid.  If  there  is 
207;  12  Am.  St.  Rep.  405;  21  N.  E.  in  fact  no  consideration  for  the  note, 
746.  this  may,  of  course,  be  shown.     See 

25  Union  Central  Life  Ins.   Co.  v.  §§  273,  279. 

Phillips,   102   Fed.   19;   41   C.  C.  A,  29  Dominion     National     Bank     v. 

263;  reversing,  101  Fed.  33.  Manning,  60  Kan.  729;  57  Pac.  949. 

26  Arguimbau  v.  Ins.  Co..  106  La.  (Questioning  and  distinguishing 
139;  30  So.  148.  Higgins  v.  Ridgway,  153  N.  Y.  130; 

27  Smith  V.  Bank,  171  Mass.  178;  47  N.  E.  32;  Breneman  v.  Furniss, 
50  N.  E.  545.  90  Pa.  186;  35  Am.  Rep.  651.) 

28  Leonard  v.  Miner.  120  Cal.  403;  so  Mills  County  National  Bank  v. 
52  Pac.  655 ;  Henry  Wood's  Sons  Co.  Perry,  72  la.  15;  2  Am.  St.  Rep. 
V.  Schaefer,  173  Mass.  443;  73  Am.  228;  33  N.  W.  341, 

St.  Rep.   305;    53  N.  E.  881;   Lillie  3i  See  §  1209. 


1830  PAGE    ON    CONTRACTS. 

the  written  contract  merely  to  enable  B  to  show  A's  order  to 
other  prospective  customers,  and  yet  conceal  the  fact  that  B  had 
been  given  an  especially  low  rate.^^  If  this  case  were  carried 
to  its  logical  conclusion,  xt  would  be  difficult  to  imagine  a  case 
to  which  parol  evidence  rule  would  apply.  Where  a  payee«^ 
in  assigning  a  note  signs  it  on  the  face  under  the  name 
of  the  maker,  he  cannot  use  extrinsic  evidence  to  show  that  he 
was  merely  an  indorser.^^  So  a  surety  may  not  show  an  agree- 
ment with  the  payee  whereby  he  was  not  to  be  held  liable  on 
the  note.^*  So  a  note,  negotiable  in  form,  cannot  be  shown  to 
be  intended  to  be  non-negotiable.^^  So  the  maker  of  a  check 
in  payment  of  a  subscription  to  a  soldiers'  monument  cannot 
show  an  agreement  with  the  payee  that  the  check  should  be  sur- 
rendered and  the  maker's  bond  payable  at  a  later  time,  or  be 
taken  in  place  thereof,^^  and  where  a  written  subscription  is 
given,  extrinsic  evidence  is  inadmissible  to  show  that  it  was 
given  solely  to  secure  the  necessary  certificate  of  the  state  engi- 
neer, and  that  the  town  was  to  raise  funds  to  pay  the  amount  of 
the  subscription.^^  If  a  son  receives  property  from  his  father, 
and  gives  his  father  his  note  in  return  therefor,  extrinsic  evi- 
dence is  inadmissible  to  show  that  the  property  was  given  as  an 
advancement,  and  that  the  note  was  intended  merely  as  a  re- 
ceipt therefor.^^  A  different  view  has  been  expressed  in  some 
authorities,  holding  that  extrinsic  evidence  of  such  agreement 
is  admissible.  This  can  be  reconciled  with  the  general  rule 
only  on  the  theory  that  under  the  facts  of  the  transaction  there 
was  no  consideration  for  the  note.^®  So  extrinsic  evidence  that 
an  obligor  signed  a  bond  under  an  agreement  with  the  obligee 


32  Southern,  etc.,  Co.  v.  Mfg.  Co.,  36  La   Fayette   County   Monument 
91  Md,  61;  46  Atl.  513.  Corporation  v.  Magoon,  73  Wis.  627; 

33  Cook  V.  Brown,  62  Mich.  473;  3  L.  R.  A.  761;  42  N.  W.  17. 

4  Am.  St.  Rep.  870;   29  N.  W.  46.  st  Grand   Isle   v.   Kinney,    70   Vt. 

(No    mistake    in    execution    being  381;  41  Atl.  130. 

shown.)  38  Russell  v.  Smith,   115  la.  261; 

34Kulenkamp  v.  Groff,   71  Mich.  88  N.  W.  361. 
675;   15  Am.  St.  Rep.  283;   1  L.  R.  39  Marsh  v.   Chown,   104  la.  556; 

A.  594;  40  N.  W.  57.  73  N.  W.   1046;   Brook  v.  Latimer, 

35Mallory  v.  Fitzgerald's  Estate,  44  Kan.  431;  21  Am.  St.  Rep.  292j 

—  Neb.  — ;  95  N.  W.  601.  11  L.  I?.  A.  805;  24  Pac.  946. 


THE  PAROL  EVIDENCE  EULE.  1831 

that  lie  sliould  not  be  liable  thereon,  is  inadmissible/"  So  a 
written  receipt  for  wheat,  with  the  promise  to  pay  therefor, 
cannot  be  contradicted  by  showing  that  the  person  receiving  the 
wheat  did  so  merely  as  a  bailee.*^  So  a  written  contract  for 
the  sale  of  a  machine  cannot  be  contradicted  by  showing  that 
it  was  merely  a  rental  on  commission.*"  A  written  promise 
to  pay  money  cannot  be  contradicted  by  showing  that  it  was  to 
be  paid  in  work,*^  or  in  property,**  as  in  building  material,*^ 
or  in  corporate  stock,*^  or  in  lots  and  in  corporate  stock,*^  or 
in  accounts  against  third  person.*^  So  in  an  action  on  a  lease 
to  recover  rent,  evidence  is  inadmissible  to  show  that  part  of 
the  rent  was  to  be  paid  to  the  lessor  by  the  lessee's  furnishing 
him  with  table-board.*^  So  in  an  action  on  a  note  evidence 
is  inadmissible  to  show  that  such  note  was  to  be  paid  by  the 
maker's  collecting  certain  claims  for  the  payee  at  a  certain  com- 
mission, which  commission  would  amount  to  the  face  of  the 
note.^**  Such  a  contract  may,  however,  be  the  basis  of  a  counter- 
claim if  broken.  So  a  contract  that  a  note  is  to  be  paid  in 
part  by 'having  damages  due  the  maker  arising  out  of  another 
transaction  credited  on  the  note  is  unenforceable.^^  If  a  note 
is  payable  in  money,  an  oral  contract  that  it  is  payable  in  cer- 
tain bank  notes  not  legal  tender  is  unenforceable,^"  though  a 
contract  to  redeem  in  gold  the  bank-bills  for  which  the  note 

^0  Wallace  v.  Langston,   52   S.   C.  47  Mosher  v.  Rogers,  117  111.  446; 

IbjJ;  29  S.  E.  552.  5  N.  E.  583. 

41  Horn  V.  Hansen,  56  Minn.  43 ;  48  Bender  v.  Montgomery,  8  Lea 
22  L.  E.  A.  617;  57  N.  W.  315.  (Tenn.)   586. 

42  Price  V.  Marthen,  122  Mich.  49  Stull  v.  Thompson,  154  Pa.  St. 
655;  81  N.  W.  551.  43;  25  Atl.  890. 

43  Stein  V.  Forgarty,  4  Ida.  702;  so  Singer  Mfg.  Co.  v.  Potter,  59 
43  Pae.  681;  Merrigan  v.  Hall,  175  Minn.  240;  61  N.  W.  23.  But  see 
Mass.  508;  56  N.  E.  605;  Vraden-  Johnston  v.  McCart,  24  Wash.  19; 
hurg  V.  Johnson,  —  Neb.  — ;  91  N.  63  Pac.  1121,  where  such  a  contract 
W.  496.  was  enforced. 

44  Clement  v.  Houck,  113  la.  504;  si  Phelps  v.  Abbott,  114  Mich.  88; 
85  N.  W.  765.  72  N.  W.  3. 

45  Kimball  V.  Bryan,  56  la.  632 ;  52  Baugh  v.  Ramsey,  4  T.  B.  Men. 
10  N.  W.  218.  (Ky-)    155;  Racine  County  Bank  v. 

46  Perry    v.    Bigelow,    128    Mass.  Keep,  13  Wis.  209. 
129. 


1832  PAGE    ON    CONTEACTS. 

was  given  is  enforceable.^^  An  excej)tion  to  this  rule  was  recog- 
nized in  contracts  made  during  tlie  Civil  War  in  Southern 
states,  in  which  the  weight  of  authority  recogTiizes  the  right 
of  the  parties  to  the  contract  to  show  that  they  intended  pay- 
ment in  money  of  the  United  States,^*  or  in  money  of  the  Con- 
federate States.^^  Whether  this  is  an  illustration  of  evidence 
showing  the  intention  of  the  parties  direct,  or  whether  it  is 
merely  an  illustration  of  the  admissibility  of  evidence  showing 
the  surrounding  facts  and  circumstances,  to  enable  the  court  to 
place  itself  in  the  position  of  the  parties  to  the  contract,  and 
thus  to  determine  what  medium  of  payment  they  contemplated 
is  a  qiiestion  not  always  easy  to  determine  from  an  examination 
of  the  opinions  of  the  courts.  So  a  written  contract  to  pay 
money,  which  by  its  terms  imports  a  general  personal  liability 
cannot  be  shown  to  be  a  contract  to  pay  out  of  a  particular 
fund,'^*^  as  out  of  the  profits  of  the  transaction  in  connection 
with  which  the  written  promise  was  made,^^  or  out  of  dividends 
on  the  stock  for  which  the  note  was  given.^®  So  if  a  note  is 
payable  to  the  firm  of  A  and  B  it  cannot  be  shown  that  A  was 
intended  as  the  real  payee.^* 

§1193.    Evidence  of  intention  direct  inadmissible. 

Extrinsic  evidence  is  inadmissible  in  an  action  on  a  written 
contract,  to  show  the  understanding  of  the  meaning  and  effect 
of  such  contract  entertained  by  one  or  both  the  parties  thereto 
when  the  contract  was  entered  into.  If  the  intention  of  one 
party  alone  is  shown,  and  the  evidence  does  not  show  that  the 

53  Racine  County  Bank  v.  Keep,  v.  Hale,  8  All,  (Mass.)  47;  Harrison 
13  Wis.  209,  V.  Morrison,  39  Minn.  319;  40  N,  W. 

54  Bryan  v.  Harrison,  76  K  C  66;  Wilson  v.  Wilson,  26  Or.  251; 
360;  Stearns  v.  Mason,  24  Gratt.  38  Pac.  185;  Ellis  v.  Hamilton,  4 
(Va.)  484,  Sneed  (Tenn.)   512. 

55  Confederate  Note  Case,  19  Wall.  57  Lake  Side  Land  Co.  v.  Drom- 
(U.  S.)    548;   Carmichael  v.  White,  goole,  89  Ala.  505. 

11   Heisk.    (Tenn.)    262;   Donley  v,  ss  Fuller  v.  Law,  207  Pa.  St.  101 ; 

Tindall,  32  Tex.  43;  5  Am.  Rep.  234.  56  Atl.  333. 

56  Conner  v.  Clark,  12  Cal.  168;  59  McMicken  v.  Webb,  6  How,  (U. 
73  Am.  Dee.  529;  Murchie  v.  Peck,  S.)   292. 

160  111.  175;  43  N.  E.  356;  Currier 


THE  PAROL  EVIDENCE  RULE. 


183? 


other  parties  acquiesced  therein,  no  contract  of  any  sort  is 
shown  to  exist/  If  extrinsic  evidence  is  introduced  to  show 
the  common  understanding  and  intention  of  both  the  parties 
to  the  contract,  such  evidence  violates  the  parol  evidence  rule.^ 
Thus  where  the  contract  is  conceded  to  be  valid,  extrinsic  evi- 
dence of  representations  of  an  agent,  made  at  the  time  the 
contract  was  entered  into,  is  inadmissible  to  show  the  intention 
of  the  parties.^  So  a  written  contract  for  employment  cannot 
be  varied  by  extrinsic  evidence  of  a  contract  to  pay  extra  com- 
pensation for  work  overtime.*     So  if  the  time  of  performance 


1  Terrell  v.  Hufif,  108  Ga.  655;  34 
S.  E.  345;  Brown  v.  Langner,  25 
Ind.  App.  538;    58  N.  E.   743;   Mc- 

•Leod  V.  Johnson,  96  Me.  271;  52 
Atl.  760;  Gulledge  v.  Woolen  Mills, 
75  Miss.  297;  22  So.  952;  Arming- 
ton  V.  Stelle.  27  Mont.  13;  94  Am. 
St.  Rep.  811;  69  Pae.  115;  Liver- 
pool, etc.,  Co.  V.  Lumber  Co.,  11 
Okla.  579,  585;  69  Pae.  936,  938. 

2  Davis  V.  Robert,  89  Ala.  402 ;  18 
Am.  St.  Rep.  126;  8  So.  114;  Hart 
ford,  etc..  Association  v.  Goldreyer 
71  Conn.  95;  41  Atl.  659;  Bass  Dry 
Goods  Co.  V.  Mfg.  Co.,  113  Ga.  1142 
39  S.  E.  471;  Commercial,  etc.,  Co 
V.  Bates,  176  111.  194;  52  N.  E.  49 
Cravens  v.  Cotton  Mills,  120  Ind.  6 
16  Am.  St.  Rep.  298;  21  N.  E.  981 
Buckeye  Mfg.  Co.  v.  Machine  Works 
26    Ind.    App.    7;    58    N.    E.    1069 
Clement  v.  Drybread,   108  la.   701 
78  N.  W.  235;  Pratt  v.  Prouty,  104 
la.  419;  65  Am.  St.  Hep.  472;  73  N. 
W.  1035;  Neal  v.  Hopkins,  87  Md. 
19;    39  Atl.  322;   Morton  v.   Clark, 
181     Mass.     134;     63    N.    E.     409; 
Haynes  v.  Hobbs,  —  Mich.  — ;    98 
N.   W.   978;    Crane  v.   Bayley,    126 
Mich.  323;  85  N.  W.  874;  Sheley  v. 
Brooks,  114  Mich.  11;  72  N.  W.  37; 
Chicago,   etc.,   Co.   v.   Higginbotham 
(Miss.),    29     So.    79;     Garneau    v. 
Cohn,  61  Neb.  500;   85  N.  W.  531; 
Faulkner   v.   Gilbert,   61    Neb.   602; 


85  N.  W.  843;  Latenser  v.  Misner, 
56  Neb.  340;  76  N.  W.  897;  Sad- 
dlery Hardware  Co.  v.  Hillsborough 
Mills,  68  N.  H.  216;  73  Am.  St.  Rep. 
569;  44  Atl.  300;  Price  v.  Weed,  9 
N.  M.  397;  54  Pae.  231;  McKenzie 
V.  Houston,  130  N.  C.  566;  41  S.  E. 
780;  Dougherty  v.  Norwood,  196  Pa. 
St.  92;  46  Atl.  384;  Melcher  v. 
Hill,  194  Pa.  St.  440;  45  Atl.  488; 
Sloan  V.  King  (Tex.  Civ.  App.),  69 
S.  W.  541 ;  Gibson  v.  Rourke  Co.,  22 
Wash.  449;  61  Pae.  162;  Michels  v. 
Ptustemeyer,  20  Wash.  597;  56  Pae. 
380;  Providence  Washington  Ins. 
Co.  V.  Board  of  Edvication,  49  W. 
Va.  360;  38  S.  E.  679;  Crislip  v. 
Cain,  19  W,  Va.  438;  Johnson  v. 
Pugh,  110  Wis.  167;  85  N.  W.  641; 
Wussow  V,  Hase,  108  Wis.  382;  84 
N.  W.  433. 

sMcMaster  v.  Ins.  Co.,  99  Fed. 
856;  40  C.  C.  A.  119;  affirming,  90 
Fed.  40;  Barrie  v.  Smith,  105  Ga, 
34;  31  S.  E.  121;  Burgher  v.  Ry., 
105  la.  335;  75  N.  W.  192;  Scott  v. 
Ry.,  93  Md.  475 ;  49  Atl.  327 ;  Union 
Central  Life  Ins.  Co.  v.  Hook,  62  O. 
S.  256;  56  N.  E.  906;  Meyer-Bruns 
v.  Ins.  Co.,  189  Pa.  St.  579 ;  42  Atl. 
297;  Milwaukee  Carnival  Associa- 
tion V.  King,  etc.,  Co.,  112  Wis.  647; 
88  N.  W.  598. 

4  The  Lakme,  93  Fed.  230. 


1834:  PAGE    ON    CONTRACTS. 

is  fixed  in  tlie  written  contract  a  contemporaneous  oral  agi-ee- 
ment  changing  such  time,  either  lengthening  it/  or  shortening 
it,''  is  inadmissible.  So  a  contemporaneous  agreement  cannot 
change  the  place  of  performance  from  that  fixed  by  the  written 
contract.^ 

§1194.     Evidence  of  intention  direct  inadmissible  to  vary  written 
contract. 

Extrinsic  evidence  of  prior  or  contemporaneous  oral  agree- 
ments between  parties  is  inadmissible  to  vary  the  terms  of  the 
written  contract  which  they  have  entered  into  ;^  and  this  is  true 
of  prior  written  negotiations.^  Thus,  in  a  land  contract,  ex- 
trinsic evidence  changing  a  corner^  or  a  boundary,*  of  the  land 
contracted  for,  is  inadmissible.  So  under  a  written  lease  ex- 
trinsic evidence  of  an  oral  covenant  not  to  assign  is  inadmissi- 
ble.^ So  under  a  written  contract  for  subscription  to  corporate 
stock  of  a  railroad  company  a  prior  oral  contract  that  a  rail- 
road station  will  be  located  next  to  the  property  of  the  sub- 
scriber cannot  be  enforced.*'  So  under  a  written  contract  to 
make  and  sell  a  machine  an  oral  representation  that  such  ma- 
chine could  be  put  on  the  market  at  a  certain  price  cannot  be 
regarded  as  a  term  of  the  contract.^ 

5  Gordon  v.  Niemann,    118   N.   Y.  Pac.  936,   938;    Streator  v.  Paxton, 

152;  23  N.  E.  454.  201  Pa.  St.  135;  50  Atl.  926;  Hask- 

eCleckley  v.  Fidelity  Co.,  117  Ga.  ins   v.   Dern,   19   Utah   89;    56   Pac. 

466;  43  S.  E.  725.  953;  Maupin  v.  Ins.  Co.,  53  W.  Va. 

7  Samuel  M.  Lawder  &  Sons  Co.  v.  557 ;  45  S.  E.  1003. 
Grocer  Co.,  97  Md.  1 ;  54  Atl.  634.  2  Rough    v.    Breitung,    117    Mich. 

1  Anderson  v.  Wainwright,  67  Ark.  48;  75  N.  W.  147. 
62;  53  S.  W.  566;  Bullard  v.  Brew-  3  Town   of  Kane  v.   Farrelly,   192 

er,  118  Ga.  918;  45  S.  E.  711;  Pose  111.  521;  61  N.  E.  648. 
V.    Zinc   Co.,  —   Kan.   — ;    74   Pac.  *  Weaver  v.  Stoner,   114  Ga.  165; 

625;   Rough  v,  Breitung,   117  Mich.  39  S.  E.  874. 

48;  75  N,  W,  147;  Coates  v.  Bacon,  5  Rickard  v.  Dana,  74  Vt.  74;   52 

77  Miss.  320;   27   So.  621;   Norfolk  Atl.  113. 

Beet   Sugar   Co.   v.   Berger,    1    Neb.  e  Philadelphia,    etc.,    Co.    v.    Con- 

UnofRcial  Rep.   151;   95  N.  W.  336;  way,  177  Pa.  St.  364;  35  Atl.  716. 
Te  Poel  V.  Shutt,  57   Neb.   592;   78  7  Macklem    v.    Fales,    130    Mich. 

N.  W.  288;  Liverpool,  etc.,  Ins.  Co.  06;  89  N.  W.  581. 
V.  Lumber  Co.,  11  Okla.  579,  585;  69 


THE    PAKOL   EVIDENCE   RULE.  1835 

§1195.     Legal  effect  of  contract  cannot  be  contradicted. 

The  rule  that  prior  or  contemporaneous  negotiations  can  not 
be  used  to  contradict,  add  to,  or  otherwise  vary,  a  written  con- 
tract applies  not  merely  to  the  letter  of  the  written  contract, 
but  also  to  its  legal  effect.^  Thus  where  no  time  is  fixed  for 
performance,  and  the  implication  therefrom  would, be  that  a 
reasonable  time  was  allowed,  evidence  that  a  specific  time  had 
been  agreed  upon  is  inadmissible."  It  has  been  held,  however, 
that  among  other  circumstances  evidence  of  conversations  be- 
tween the  parties  to  the  contract  may  be  considered  to  show 
what  they  considered  to  be  a  reasonable  time.^  If  the  contract 
in  legal  effect  calls  for  prompt  performance,  an  oral  contract 
delaying  performance  until  some  specified  time  in  the  future 
is  unenforceable.  Thus  where  a  bill  of  exchange  has  been 
drawn  an  oral  contract  that  it  should  not  be  presented  for  pay- 
ment until  another  draft  had  been  paid  was  unenforceable.* 
It  has  been  held,  however,  that  an  oral  contract,  made  when  a 
check  was  delivered  that  it  should  not  be  presented  until  a 
certain  date  in  the  future  was  valid.^  So  under  a  contract  of 
sale,  with  delivery  in  installments  at  a  gross  price,  the  legal 
effect  of  which  was  to  make  the  price  payable  when  the  entire 
quantity  was  delivered,  an  oral  contract  that  at  the  delivery 
of  each  installment  the  price  therefor  should  be  paid  was  un- 
enforceable.*' So  a  guaranty  for  a  specified  amount  to  be  ad- 
vanced by  the  maker,  payable  on  demand  after  thirty  days,  can 


iFisk  V.  Casey,  119  Cal.  643;  51  Stange    v,    Wilson,    17    Mich.    342; 

Pac.    1077;    Nelson   v.    Godfrey.    74  Liljengren,    etc., .  Co.    v.    Mead,    42 

Vt.  470;   52  Atl.   1037;   Stickney  v.  Minn..  420;  44  N.  W.  306;   Irish  v. 

Hughes,  —  Wyom.  — ;  75  Pac.  945.  Dean,  39  Wis.  562. 

2  Central  H.  R.  v.  Hasselkus,  91  3  Cocker  v.  Mfg.  Co.,  3  Sumn.  (U. 

Ga.  382;  44  Am.  St.  Rep.  37;   17  S.  S.)    530;  Coates  v.  Sangston,  5  Md. 

E.  838;  Loeb  v.  Stern,  198  111.  371;  121. 

64  N.  E.  1043;  Barney  v.  Ry.,  157  4  Brown  v.  Wiley,  20  How.  (U.  S.) 

Ind.   228;    61   N.   E.    194;    Tripp  v.  442. 

Smith,  180  Mass.  122;  61  N.  E.  804;  5  Gray  v.  Anderson.  99  la.  342;  61 

Harrow  Spring  Co.  v.  Harrow  Co.,  Am.  St.  Rep.  243;  68  N.  W.  790. 

90  Mich.  147;  30  Am.  St.  Rep.  421;  6  Brandon  Mfg.  Co.  v.  Morse,  48 

51   N.   W.    197;    Sloman   v.   Express  Vt.  322. 
Co.,   —  Mich.   — ;    95   N.   W.    999; 


1836  PAGE    ON    CONTRACTS. 

not  be  modified  bj  showing  that  the  guaranty  was  to  last  for 
thirty  days  only.'  If  the  written  contract  is  so  drawn  that 
time  is  not  of  its  essence,  the  parties  cannot  show  a  contempo- 
raneous oral  agreement  that  time  should  be  of  the  essence.^ 
So  under  a  contract  appointing  an  agent  "  in  the  immediate 
vicinity  of  "  a  certain  town,  extrinsic  evidence  is  inadmissible 
to  show  that  he  was  to  have  the  exclusive  agency.''  Where  a 
check  was  given,  payable  on  the  date  thereof,  the  drawer  could 
not  show  an  oral  agreement  that  the  check  was  not  to  bear 
interest.^"  So  where  two  persons  have  signed  a  contract  in 
such  a  way  that  they  are  jointly  liable  thereon,  an  oral  agree- 
ment that  each  shall  be  severally  liable  for  one-half  of  the  lia- 
bility cannot  be  used  to  modify  the  contract.^^  So  where  A, 
a  member  of  a  firm,  made  and  signed  a  w^'itten  entry  of  part 
13ayment  on  a  partnership  note  barred  by  the  statute  of  limita- 
tions the  legal  effect  of  which  was  to  make  A  liable  for  the 
entire  amount  of  the  note,  A  cannot  show  that  he  sigTied  under 
an  oral  contract  that  he  should  be  liable  for  only  one  half  the 
amount  of  the  note.^'  So  in  a  contract  by  one  person  to  sup- 
port another,  where  no  place  of  support  is  fixed,  and  therefore 
the  party  to  be  supported  may  fix  any  reasonable  place  for  re- 
ceiving support,  extrinsic  evidence  is  inadmissible  to  show  that 
the  parties  had  agreed  that  such  a  support  was  to  be  furnished  at 
a  fixed  place/^  It  has,  however,  been  held  under  a  contract 
of  employment  that  where  no  specific  place  of  performance  is 
fixed,  oral  evidence  of  the  intention  of  the  parties  direct  is 
admissible  to  show  on  what  locality  they  had  agreed/*  So 
where  no  rate  is  fixed  in  a  bill  of  lading,  and  accordingly  a 

7  West-Winfree     Tobacco     Co.     v.  613;   70  X.  W.  827.     So  of  a  joint 
Waller,  66  Ark.  445;  51  S.  W.  320.  chattel    mortgage.     Williams    Bros. 

8  Ferguson   v.   Arthur,    128   Mich,  Co.  v.  Hanmer,  —  Mich.  — ;   94  N. 
297;  87  K  W.  259;  Tufts  v.  Morris,  W.  176. 

87  Mo.  App.  98.  12  Powell  v.   Fraley,   98   Ga.   370; 

9  Roberts  v.  Machine  Co..  8  S.  D.      25  S.  E.  450. 

579;  59  Am.  St.  Rep.  777;  67  X.  W.  is  Tuttle  v.  Burgett,  53  O.  S.  498; 

607.  53   Am.   St.  Rep.  649;   30  L.  R.  A. 

loHaynes  v.  Wesley,  112  Ga.  668;  214;  42  X.  E.  427. 

81  Am.  St.  Rep.  72;  37  S.  E.  990.  "Cook  v.  Todd   (Ky.),  72  S.  W. 

11  Hanson  v.  Gunderson,  95  Wis.  779. 


THE  PAROL  EVIDENCE  RULE.  1837 

reasonable  rate  is  implied^  an  oral  agreement  between  the  par- 
ties fixing  the  rate  cannot  be  enforced/^  A  written  contract 
of  hire  cannot  be  contradicted  by  showing  that  the  employer 
could  terminate  the  contract  at  will/**  A  contract  to  convey 
land  "  for  all  legitimate  railroad  purposes  "  cannot  be  modified 
by  showing  an  oral  agreement  not  to  erect  an  eating  house  or 
hotel  thereon  f'^  nor  can  a  lease  for  "  business  purposes  "  be 
modified  by  a  contemporaneous  oral  agreement  not  to  use  the 
premises  as  a  saloon.^^  A  contract  for  the  sale  of  land  which 
states  the  area  as  an  estimate,  and  provides  for  a  survey  to  as- 
certain the  exact  amount,  cannot  be  varied  by  contemporaneous 
oral  agreement  that  this  estimate  was  to  be  taken  as  correct  for 
purposes  of  tendering  the  price  of  the  property.^^  So  a  deed 
of  land  in  which  the  description  is  such  as  to  carry  future 
accretions  on  the  side  bounded  by  a  river  cannot  be  modified 
by  a  prior  oral  contract  that  accretions  should  not  pass  to  the 
grantee.^'*  A  written  contract  of  employment  cannot  be  added 
to  by  showing  an  oral  agreement  that  the  employees  should  give 
bond."^  So  under  a  written  contract  to  confess  judgment  and 
take  a  stay  of  execution,  which  in  law  required  giving  a  surety 
on  the  stay-bond  cannot  be  modified  by  an  oral  contract  that  no 
surety  should  be  required.^^  So  a  contract  "  to  deliver  to  the 
order  of  A  $800  (less  20  per  cent  discount)  in  wall  paper  at 
wholesale  price,"  means  wholesale  price  at  the  time  of  demand, 
and  an  oral  provision  that  the  wholesale  price  fixed  by  a  price 
card  given  to  the  vendee  when  the  contract  was  made,  contain- 
ing the  prices  intended,  was  unenforceable."^  Under  a  writ- 
ten lease  conveying  a  dining-room  situated  in  a  hotel,  the  lessee 

15  Louisville,  etc.,  I?.  E.  V.  Wilson,  20  Gorton  v.  Rice,   153   Mo.   676; 

119  Ind.  352;  4  L.  R.  A.  244;  21  N.  55  S.  W.  241. 

E.  341.  21  Kerr  v.  Sanders,  122  N.  C.  635; 

leDrennen  v.  Satterfield,  119  Ala.  29  S.  E.  943. 

84;  24  So.  723.  22  Mayse     v.      Briggs,      3     Head. 

"Abraham   v.    Ry.,    37    Or.    495;  (Tenn.)  36. 

82  Am.  St.  Rep.  779;  60  Pac.  899.  23  Fawkner  v.  Wall  Paper  Co.,  88 

18  Harrison    v.    Howe,    109    Mich.  la.  169;  45  Am.  St.  Rep.  230;  55  N. 
476;  67  N.  W.  527.  W.  200. 

19  Starin  v.  Kraft,  174  111.  120;  50 
N.  E.  1059. 


1838  PAGE    ON    CONTBACTS. 

agreed  to  furnisk  "  board  or  meals,  sucli  as  are  served  to  the 
guests  of  the  hotel,  for  three  persons."  This  provision  in  legal 
effect  meant  any  three  suitable  persons  whom  the  lessor  might 
designate;  and  the  lessee  could  not  show  by  oral  contempora- 
neous agreement  between  himself  and  the  lessor  that  it  meant 
the  housekeeper,  the  chambermaid  and  the  jwrter.^*  Under  a 
written  contract  in  escrow,  by  the  terms  of  which  A's  note  was 
to  be  delivered  to  B,  when  B  delivered  to  A  a  certain  track- 
laying  machine  then  in  the  custody  of  X,  who  was  asserting  a 
lien  thereon,  A's  expenses  in  getting  such  machine  to  be  cred- 
ited upon  the  note,  B  could  not  show  an  oral  contract  whereby 
A  promised  to  take  certain  steps  to  obtain  this  machine  from 
X.^^  So  a  contract  giving  the  right  to  construct  a  telephone 
over  A's  land  generally  cannot  be  shown  by  oral  agreement  to 
be  limited  to  a  particular  part  of  the  land."*^ 

II.     Cases  Outside  the  Terms  of  the  Ritle. 

§1196.     Limitations  of  the  rule. 

From  tlie  statement  of  the  parol  evidence  rule,  it  evidently 
can  apply  only  under  a  combination  of  different  facts.  The 
rule  applies,  (1)  where  there  is  a  complete  written  contract;  (2) 
in  an  action  between  the  parties  to  the  contract  or  their  repre- 
Bentatives;  (3)  where  the  validity  of  the  contract  itself  is  not 
in  issue;  and  (4)  where  an  attempt  is  made  to  show  prior  or 
contemporaneous  oral  terms  of  such  contract.  If  any  one  of 
these  facts  is  lacking,  the  parol  evidence  rule  has  no  applica- 
tion. Accordingly  it  is  necessary  to  consider  a  group  of  cases 
where  the  rule  may  seem  applicable  at  first  glance,  but  which 
are  on  analysis  seen  to  be  completely  without  the  very  terms 
of  the  rule  itself. 

24  Rector  v.  Bernasehina,  64  Ark.  obtain  the  machine,  but  to  give  B 
650;  44  S.  W.  222.  the   option   to   furnish   the   machine 

25  Pacific  National  Bank  v.  Bridge  and  get  the  note,  or  to  give  up  the 
Co.,    23    Wash.    425;    63    Pac.    207.  note.) 

(The  legal  effect  of  the  written  con-  26  Southern,   etc.,    Co.    v.    Harris, 

tract  was  not  to  bind  either  party  to       117  Ga,  1001 ;  44  S.  E.  885. 


THE  PAROL  EVIDENCE  RULE.  1839 

^1197.    Incomplete  contracts. 

The  parol  evidence  riile  has  but  a  limited  application  to  con- 
tracts and  memoranda  which  are  incomplete  on  their  face. 
Extrinsic  evidence  is  admissible  to  show  the  other  terms  of 
«uch  a  contract  as  far  as  consistent  with  the  terms  in  writing/ 
As  far  as  such  a  contract  is  incomplete  on  its  face,  it  is  not 
within  the  meaning  of  the  parol  evidence  rule."  So  where  a 
written  contract  was  made  by  a  widow  to  take  $10,000,  and  the 
amount  given  her  by  will,  in  lieu  of  the  distributive  share  of 
her  husband's  estate,  and  the  contract  was  not  complete  on  its 
face,  it  was  permissible  to  show  additional  terms  of  the  con- 
tract, and  to  show  what  parties  had  assented  thereto.^  So 
where  a  written  assignment  of  a  chose  in  action  is  incomplete, 
the  oral  contract  under  which  it  was  given  may  be  shown.* 
So  extrinsic  evidence  is  admissible  to  show  the  conditions  of 
an  escrow  f  that  the  vendee  knew  of  the  possession  by  a  squat- 
ter of  the  realty  sold  f  that  the  amount  of  notes  given  included 
not  only  the  purchase  price  of  the  realty  conveyed,  but  also 
other  claims,^  whether  a   stock   option   includes   dividends   or 

1  Chamberlain   v.   Lesley,   39   Fla.  v.    Russell,    8    Baxt.    (Tenn.)     159; 

452;   22  So.  736;   Forsyth  Mfg.  Co.  Howell  v.  Denton   (Tex.  Civ.  App.), 

V.  Castlen,  112  Ga.  199;  81  Am.  St.  68  S.  W.  1002;  Steed  v.  Harvey,  18 

Eep.   28;    37   S.   E.  485;    Louisville,  Utah  367;  72  Am.  St.  Rep.  789;  54 

etc.,  Ey.  V.  Reynolds,  118  Ind.  170;  Pac.    1011;    Knowles   v.   Rogers,   27 

20  N.  E.  711;  Dietrich  v.  Stebbins,  Wash.  211;   67  Pac.  572;   Seeger  v. 

100  la.  426;   69  N.  W.  564;  Peneix  Boiler   Co.,   —  Wis.  — ;    97   N.   W. 

V.   Rodgers    (Ky.),   49    S.    W.   447;  485;  Naumann  v.  Ullman,  102  Wis. 

Gould  v.  Eceelsior  Co.,  91  Me.  214;  92;  78  N.  W.  159. 

64  Am.  St.  Rep.  221;   39  Atl.  554 1  2  Sloan  v.  Courtenay,  54  S.  C.  314; 

Courtney  v.  Mfg.  Co.,  97  Md.  499;  32  S.  E.  431. 

55  AtL  614;    Stahelin  v.  Sowle,   87  3  Baldwin  v.  Hill,  97  la.  586;   66 

Mich.    124;    49   N.   W.    529;    Beyer-  N.  W.  889. 

stedt  v.   Mill   Co.,   49   Minn.    1 ;    51  4  Randall  v.  Turner,  17  O.  S.  262, 

N.   W.  619;    State  v.  Cunningham,  and  see  S1199. 

154  Mo.  161;  55  S.  W.  282;  Bell  v.  5  Fred   v.    Fred    (N.   J.    Eq.),    50 

Wiltson     (Neb.),    98    N.    W.    1049;  Atl.  776. 

Jamestown   Business   Association   v.  ^  Leonard   v.    Woodruff,   23   Utah 

Allen,   172  N.   Y.   291;    92   Am.   St.  494;  65  Pac.  199. 

Rep.   740;    64  N.  E.  952;   Virginia-  7  Brader  v.  Brader,  110  Wis.  423; 

Carolina  Chemical  Co.  v.  Moore,  61  85  N.  W.  681. 
S.  C.  166;  39  S.  E.  346;  Waterbury 


1840  PAGE    ON    CONTRACTS. 

not,^  and  "whether  in  a  memorandum  for  the  sale  of  a  quarry 
"  with  all  the  improvements  thereon  "  the  parties  had  agreed 
upon  the  sale  of  any  of  the  personal  property  used  in  connec- 
tion therewith.''  If  the  contract  is  not  required  to  be  in  writ- 
ing or  to  be  proved  by  writing,  and  it  consists  of  several  writ- 
ings, no  one  of  which  is  complete  in  itself,  they  may  be  con- 
nected by  oral  evidence.^**  Extrinsic  evidence  is  not  admissible 
to  show  oral  terms  inconsistent  with  those  reduced  to  writing.^^ 
Analagous  to  the  rule  that  an  oral  provision  consistent  with  an 
incomplete  written  memorandum  may  be  proved  and  enforced 
is  the  rule  that  if  the  written  contract  is  ambiguous,  the  parol 
evidence  rule  does  not  prevent  the  parties  from  relying  on  the 
real  contract,  though  oral,  as  long  as  it  does  not  contradict 
terms  of  the  written  contract  which  are  plain  and  unequivocal.^* 
So  if  the  provisions  of  the  written  contract  admit,  a  similar 
result  is  reached  by  holding  that  the  written  contract  will  be 
construed  as  having  the  same  scope  as  the  oral  contract  in  pur- 
suance of  which  it  is  entered  into.^^ 

§1198.    What  contracts  are  incomplete. 

In  order  that  a  written  contract  may  be  treated  as  incom- 
plete so  as  to  make  extrinsic  evidence  of  other  terms  admis- 
sible, it  must  show  upon  its  face  that  it  is  incomplete.^     A 

8  Rivers  v.  Sugar  Co.,  52  La.  Ann.  1007;  State  v.  Cass  County,  60  Keb. 
762;  27  So.  118.  566;    83   N.   W.    733;    Doubleday  v. 

9  Crown    Slate    Co.    v.    Allen,    199  Coal   Co.,   122  N.  C.  675;   30  S.   E. 
Pa.  St.  239;  48  Atl.  968.  21;    F.   A,   Thomas  Machine   Co.   v. 

10  Nelson  v.  Willey,  97  Md.  373;  Voelker,  23  H.  I.  441;  50  Atl.  838. 
55  Atl.  527.  13  Greenfield  v.  Oilman,  140  N.  Y. 

11  Forsyth  Mfg.  Co.  v.  Castlen,  168;  35  N.  E.  435;  Bruce  v.  Moon, 
112  Ga.   199;    81   Am.   St.  Rep.  28;  57  S.  C.  60;  35  S.  E.  415. 

37  S.  E.  48.'5 ;  Railroad  v.  Morey,  47  i  Telluride     Power     Transmission 

O.  S.  207;  7  L.  R.  A.  701;  24  N.  E.  Co.  v.  Crane,  208  111.  218;  70  N.  E. 

269.  319;    affirming,    103   111.   App.   647 

12  Merrill  v.  Sypert,  65  Ark.  51;  Brantingham  v.  Huff,  174  N.  Y.  53 
44  S.  W.  462;  Barrie  v.  Miller,  104  95  Am.  St.  Rep.  545;  66  N.  E.  620 
Ga.  312;  30  S.  E.  840;  Chapman  v.  Dady  v.  O'Rourke,  172  N.  Y.  447 
Clements  (Ky.),  56  S.  W.  646;  G^r-  65  N.  E.  273;  Stowell  v.  Ins.  Co., 
main  v.  Lumber  Co.,  116  Mich.  245;  163  N.  Y.  298;  57  N.  E.  480;  Case 
74  N.  W.  644;  same  case,  78  N.  W.  v.  Bridge  Co.,  134  N.  Y.  78;  31  N. 


THE  PAROL  EVIDENCE  RULE. 


1841 


written  contract  is  assumed  to  be  complete.*  A  form  of  attack 
on  the  parol  evidence  rule,  often  so  disguised  as  to  be  difficult 
of  detection,  consists  in  claiming  that  a  written  contract,  com- 
plete on  its  face,  is  incomplete,  and  in  offering  to  establish  this 
by  extrinsic  evidence  of  terms  not  reduced  to  writing.  This 
evidence  is  sought  to  be  used  both  to  show  that  the  written 
contract  is  incomplete  and  to  establish  the  terms  of  the  contract 
not  reduced  to  writing.  This  cannot  be  done.  The  use  of 
such  evidence  violates  the  spirit  and  purpose  of  the  parol  evi- 
dence rule.^  So  under  a  complete  written  contract  of  sale 
extrinsic  evidence  is  inadmissible  to  show  sale  by  sample.* 
So  under  a  complete  written  contract  for  the  sale  of  a  boiler  of 
certain  specified  dimensions  for  a  tug  extrinsic  evidence  is  in- 
admissible to  show  that  the  seller  was  to  examine  the  tug  and 
furnish  the  size  of  boiler  necessary.^  The  question  of  whether 
a  written  contract  upon  which  suit  is  brought  is  complete  or 
not  is  for  the  court.®  A  contract  may  show  on  its  face  that 
it  is  incomplete  by  express  reference  to  an  oral  agreement  as 


E.  254;  Thomas  v.  Scutt,  127  N.  Y. 
133;  27  N.  E.  961;  John  O'Brien 
Lumber  Co.  v.  Wilkinson,  117  Wis. 
468;  94  N.  W.  337. 

2Mackey  v.  Magnon,  28  Colo.  100; 

62  Pac.  945;  affirming,  54  Pac.  907; 
McKegney  v.  Widekind,  6  Bush. 
(Ky.)   107. 

3  The  Bertha,  91  Fed.  272;  33  C. 
C  A.  509;  Harrison  v.  McCormiek, 
89  Cal.  327;  23  Am.  St.  Eep.  469; 
26  Pac.  830;  Forsyth  Mfg.  Co.  v. 
Castlen,  112  Ga.  199;  81  Am.  St. 
Eep.  28;  37  S.  E.  485;  McEnery  v. 
McEnery,  110  la.  718;  80  N.  W. 
1071;  Church  of  Holy  Communion  v. 
Paterson,  63  N.  J.  L.  470;  55  L.  R. 
A.  81;  43  Atl.  696;  Naumberg  v. 
Young,  44  N.  J.  L.  331 ;  43  Am.  Rep. 
380;  Slaughter  v.  Smither,  97  Va. 
202;  33  S.  E.  544;  Pacific  National 
Bank  v.  Bridge  Co.,  23  Wash.  425; 

63  Pac.  207.  "  If  we  may  go  out- 
side of  the  instrument  to  prove  that 

116 


there  was  a  stipulation  not  con- 
tained in  it,  and  so  that  only  part  of 
the  contract  was  put  in  writing,  and 
then,  because  of  that  fact,  enforce 
the  oral  stipulation,  there  will  be 
little  value  left  in  the  rule  itself." 
Eighmie  v.  Taylor,  98  N.  Y.  288, 
294;  quoted  in  Pacific  National 
Bank  v.  Bridge  Co.,  23  Wash.  425, 
430;  63  Pac.  207. 

4  Harrison  v.  McCormiek,  89  Cal. 
327;  23  Am.  St.  Rep.  469;  26  Pac. 
830. 

5  The  Bertha,  91  Fed.  272;  33  C. 
C.  A.  509. 

6  Harrison  v.  McCormiek,  89  Cal. 
327;  23  Am.  St.  Rep.  469;  26  Pac. 
830;  Hirsch  v.  Mills  Co.,  40  Or. 
601;  67  Pac.  949;  68  Pac.  733.  Ap- 
parently contra,  Hines  v.  Willcox, 
96  Tenn.  148;  54  Am.  St.  Rep.  823; 
34  L.  R.  A.  824;  33  S.  W.  914;  Steed 
V.  Harvey.  18  Utah  367;  72  Am.  St. 
Rep.  789;  54  Pac.  1011. 


1842  PAGE    ON    CONTRACTS. 

part  thereof  without  specifying  what  such  oral  agreement  is.'^ 
Thus  "  as  per  conversation,"^  or  "  as  per  our  conversation  of 
jesterdaj,"®  or  as  hereafter  agreed,""  shows  that  the  contract 
is  incomplete.  So  a  contract  for  advertisements  which  refers 
to  "  our  contract  price  for  glass  other  than  we  have  estimated 
on,  or  contracted  for  prior  to  the  date  hereof,"  and  does  not 
otherwise  specify  what  that  contract  price  is,  is  on  its  face 
incomplete  by  reason  of  the  reference  to  such  other  contract, 
and  such  other  contract  may  be  enforced,  though  oral.^^  A 
note  given  in  performance  of  a  contract  is  not  a  complete  memo- 
randum of  the  terms  of  the  contract.  Accordingly  evidence  is 
admissible  to  show  an  agreement  to  pay  the  debt  for  which  the 
note  was  given  out  of  the  proceeds  of  an  insurance  policy, 
thereby  waiving  exemptions  as  to  such  policy,^"  or  to  show  an 
oral  warranty,  by  the  payee,  of  the  article  sold,^^  even  if  the 
note  reserves  title  to  the  horse  until  payment.^*  So  a  writing 
intended  only  to  secure  a  lien^^  or  to  make  a  charge  of  the 
price^*^  neither  of  them  prevent  evidence  of  an  oral  warranty. 
So  if  a  written  order  for  shipping  soap  is  made  out  by  the 
vendor's  agent,  the  vendee  writing  on  it  "  accepted  "  and  sign- 
ing his  name,  the  vendee  may  show  that  the  contract  was  that 
all  the  soap  was  to  be  shipped  to  him,  but  that  he  was  to  take 
and  pay  for  only  one  half  of  it,  the  other  half  to  be  delivered 
by  him  to  another  druggist.^^  A  sheriff's  return  of  a  sale  is  so 
far  incomplete  that  it  may  be  shown  that  the  purchaser  bought 
for  another  lien-holder,  and  that  conveyance  was  made  under 

7  Wolff  V.  Wells  Fargo  &  Co.,  115  "  Hille  v.  Adair   (Ky.),  58  S.  W. 

Fed.  32;  52  C.  C.  A.  626.  697. 

sSelig    V.    Rehfuss,    195    Pa.    St.  i*  Nauman   v.    Ullman,    102    Wis. 

200;  45  Atl.  919.  92;  78  N.  W.  159. 

9  Anderson  v.  Surety  Co.,  196  Pa,  is  Potter  v.  Easton,  82  Minn.  247; 
St.  288;  46  Atl.  306.  84  N.  W.  1011. 

10  Morrison    v.    Dickey,    119    Ga.  le « Terms  cash.     Mr.  E.  P.  Pufc- 
698;  46  S.  E.  863.                                       nam  to  T.  F.  McDonald,  dr.,  one  bi- 
ll Hand    V.    Drug    Co.,    63    Minn,      cycle  $47.50.     Paid  July  27,  1896." 

539;  65  N.  W.  1081.  Putnam  v.  McDonald,  72  Vt.  4;  47 

i2Murdy  v.  Skyles,  101  la.  549;      Atl.  159. 
63  Am.  St.  Rep.  411;  70  N.  W.  714.  i^  Colgate  v.  Latta,  115  X.  C.  127; 

26  L.  R.  A.  321;  20  S.  E.  388. 


THE    PAEOL   EVIDENCE   RULE. 


184:3 


such  arrangement.^^  A  memorandum  may  appear  incomplete 
on  its  face  by  showing  that  a  time  of  payment  was  fixed,  but 
not  showing  what  the  time  was,"  or  where  the  memorandum 
shows  only  the  purchase  price  and  the  time  of  payment.^*  The 
use  of  "  etc."  does  not  of  itself  show  that  the  contract  is  in- 
complete.^^ 


§1199.    Purpose  of  instrument. 

If  the  instrument  does  not  show  on  its  face  what  its  purpose 
was,  extrinsic  evidence  is  admissible  to  show  what  that  purpose 
was,  if  such  evidence  does  not  contradict  the  terms  of  the  con- 
tract.^ Thus  an  instrument  conveying  title  which  on  its  face 
is  absolute  may  be  shown  by  extrinsic  evidence  to  be  given  as  a 
mortgage  to  secure  certain  liabilities."  The  purpose  of  any  con- 
tract which  purports  only  to  transfer  legal  title  may  thus  be 
shown.^     So  the  grantee  may  show  that  a  deed  was  given  to 


18  Emery  v.  Hanna  (Neb.),  94  N, 
W.  973. 

isAultman  v.  CliflFord,  55  Minn. 
159;  43  Am.  St.  Rep.  478;  56  N.  W. 
593.  (Evidence  allowed  to  show  a 
contract  as  to  quality  of  the  article 
sold.) 

20  Perkins  v.  Brown,  115  Mich.  41; 
72  N.  W.  1095.  (Evidence  ad- 
mitted to  show  that  vendor  was  to 
set  out  the  trees  and  care  for 
them.) 

-1  Harrison  v.  McCormiek,  89 
Cal.  327;  23  Am.  St.  Rep.  469;  26 
Pac.  830. 

iRuiz  V.  Dow,  113  Cal.  490;  45 
Pac.  867;  Lamkin  v.  Mfg.  Co.,  72^ 
Conn.  57;  44  L.  R.  A.  786;  43  Atl. 
593;  Bever  v.  Bever,  144  Ind.  157; 
41  N.  E.  944;  Hathaway  v.  Rogers, 
112  la.  638;  84  N.  W.  674;  Raphael 
v.  Mullen,  171  Mass.  Ill;  50  N.  E. 
515;  Buhl  v.  Bank,  123  Mich.  591; 
82  N.  W.  282 ;  Hillman  v.  Allen,  145 
Mo.  638;  47  S.  W.  509;  Downes  v. 
Congregational  Society,  63  N.  H. 
151;    Weiseham  v.   Hocker,   7   Okla. 


250;  54  Pac.' 464;  Sheaflfer  v.  Sen- 
senig,  182  Pa.  St.  634;  38  Atl.  473; 
Meyer  v.  Elevator  Co.,  12  S.  D.  172; 
80  N.  W.  189;  Bedell  v.  Wilder,  65 
Vt.  406;  36  Am.  St.  Rep.  871;  26 
Atl.  589;  Schierl  v.  Newburg,  102 
Wis.  552;   78  N.  W.  761. 

2  Morgan  v.  Shinn,  15  Wall.  (U. 
S.)  105;  Florida,  etc.,  J^y.  v.  Usina, 
111  Ga.  697;  36  S.  E.  928;  Zuber  v. 
Johnson,  108  la.  273;  79  N.  W.  76; 
Buhl  V.  Bank,  123  Mich.  591;  82 
N.  W.  282;  Hillman  v.  Allen,  145 
Mo.  638;  47  S.  W.  509;  Watkins 
v.  Williams,  123  N.  C.  170;  31  S.  E. 
388;  Weiseham  v.  Hocker,  7  Okla. 
250;  54  Pac.  464;  Myerstown  Bank 
v.  Roessler,  186  Pa.  St.  431;  40 
Atl.  963;  Masterson  v.  Burnett,  27 
Tex.  Civ.  App.  370;  66  S.  W.  90; 
Schierl  v.  Newburg,  102  Wis.  552; 
78  N.  W.  761.  Contra,  Munford  v. 
Green,  103  Ky.  140;  44  S.  W.  419. 

3  Lease.  Meyer  v.  Elevator  Co., 
12  S.  D.  172;  80  N.  W.  189.  Bill 
of  sale.  Raphael  v.  Mullen,  171 
Mass.  Ill;  50  N.  E.  515;  Martin  v. 


1844 


PAGE    ON"    CONTEACTS. 


secure  certain  notes  and  not  in  payment  of  them.*  So  a  mort- 
gage which  recites  that  it  is  to  secure  a  certain  no1«  may  be  shown 
to  be  an  indemnity  mortgage.^  So  a  mortgage  to  A  may  be  shown 
to  be  in  part  for  A's  benefit  and  in  part  in  trust  for  X.®  So  a 
bill  of  sale  given  by  a  debtor  may  be  shown  to  have  been  given 
with  the  consent  of  creditors  and  for  their  benefit/  An  assign- 
ment of  an  interest  under  a  contract  may  be  shown  by  extrinsic 
evidence  to  be  as  security.^  Thus  an  assignment  of  a  contract 
t©  purchase  realty,**  a  building  contract,"  an  insurance  policy/^ 
assignment  by  orders  drawn  on  a  debtor,^"  or  an  assignment  of 
accounts^^  may  in  each  case  be  showm  to  have  been  made,  not 
absolutely,  but  merely  as  security.  Extrinsic  evidence  is  ad- 
missible to  show  such  facts  as  create  an  implied  trust  of  realty.^* 
Thus  the  recital  in  a  deed  that  the  consideration  was  paid  by  A 
does  not  prevent  evidence  that  it  was  paid  by  B.^^     Xeither  the 


Martin,  43  Or.  119;  72  Pac.  639. 
Assignment  of  bill  of  lading.  Wal- 
ker V.  Bank,  43  Or.  102;  72  Pac. 
635.  Assignment  of  note.  Clark  v. 
Ducheneau,  26  Utah  97;  72  Pac. 
331.  Power  of  attorney.  Cold  wa- 
ter National  Bank  v.  Buggie,  117 
Mich.  416;   75  N.  W.  1057. 

4  Loud  V.  Hamilton  (Tenn.  Ch. 
App.),  45  L.  R.  A.  400;  51  S.  W. 
140. 

sHonaker  v.  Vesey,  57  Neb.  413; 
77  N.  W.  1100. 

6  Tapia  v.  Demartini,  77  Cal.  383; 
11  Am.  St.  .Eep.  288;  19  Pac.  641. 

7  Xeresheimer  v.  Smyth,  167  X.  Y. 
202;   60  N.  E.  449. 

8  Dale  V,  Gear,  38  Conn.  15;  9 
Am.  Rep.  353;  Jones  v.  Albee,  70 
111.  34;  Lovejoy  v.  Bank,  23  Kan. 
331 ;  Kendall  v.  Assurance  Society, 
171  Mass.  568;  51  N.  E.  464;  Ittner 
V.  Hughes,  154  Mo.  55;  55  S.  W. 
267;  Hudson  v.  Wolcott.  39  0.  S. 
618;  Westbury  v.  Simmons,  57  S. 
C.  467;   35  S.  E.  764. 

9  Hieronymus  v.  Glass,  120  Ala. 
46;  23  So.  674   (disapproving  Mose- 


ley  V.  Moselej^  86  Ala.  289;  5  So. 
732)  ;  Gettleman  v.  Assurance  Co., 
97  Wis.  237;  72  N.  W.  627. 

10  Davis  V.  W^ater  Works  Co.,  57 
Minn.  402;  47  Am.  St.  Rep.  622;  59 
N.  W.  482. 

11  Kendall  v.  Assurance  Society, 
171  Mass.  568;  51  N.  E.  464;  West- 
bury  v.  Simmons,  57  S.  C.  467;  35 
S.  E.  764. 

12  Ittner  v.  Hughes,  154  Mo.  55; 
55  S.  W.  267. 

13  Matthews  v.  Forslund,  112 
Mich.  591;   70  N.  W.  1105. 

iiChamplin  v.  Champlin.  136  111. 
309;  29  Am.  St.  Rep.  323;  26  N. 
E.  526;  Burden  v.  Sheridan,  36  la. 
125;  14  Am.  Rep.  505;  Blodgett  v. 
Hildreth,  103  Mass.  484;  Livermore 
V.  Aldrich,  5  Cush.  (Mass.)  431; 
Depeyster  v.  Gould,  3  N.  J.  Eq.  474 ; 
29  Am.  Dec.  723;  Smith  v.  Eckford 
(Tex.),  18  S.  W.  210;  Xeill  v. 
Keese,  5  Tex.  23;  51  Am.  Dec.  746; 
Deck  v.  Tabler,  41  W.  Va.  332;  56 
Am.  St.  Rep.  837;  23  S.  E.  721. 

15  Chicago,  etc.,  Ry.  v.  Bank,  58 
Xeb.  548;   78  N.  W.  1064. 


THE  PAKOL  EVIDENCE  RULE.  1845 

parol  evidence  rule  nor  the  statute  of  frauds  prevent  this.  Un- 
less such  evidence  were  admissible,  no  available  remedy  would 
be  given  for  much  of  the  fraud  that  is  thus  met.  Extrinsic 
evidence  is  admissible  to  prove  trusts  concerning  personal  prop- 
erty.^'' Thus  if  A  gives  a  note  to  B,  extrinsic  evidence  is  ad- 
missible to  show  that  it  is  charged  with  a  trust  in  favor  of  C.^^ 
If  the  instrument  shows  its  purpose  on  its  face,  the  rule  admit- 
ting evidence  of  the  intention  of  the  parties  to  show  the  pur- 
pose of  the  instrument  does  not  apply,  since  such  intention 
would  be  used  in  such  case  to  contradict  the  intention  as  ex- 
pressed in  the  writing.^*  Thus  extrinsic  evidence  cannot  be 
received  to  show  that  C  is  the  beneficiary  intended  in  a  deed 
of  trust  which  names  B  as  beneficiary.^®  So  under  a  convey- 
ance which  reserves  a  life  estate  to  the  grantor  such  reserva- 
tion cannot  be  shown  to  be  intended  only  as  security  for  the 
performance  by  the  grantee  of  his  contract  to  support  the 
grantor.^'* 

.§1200.     Written  evidence. 

Since  the  parol  evidence  rule  applies  solely  to  written  con- 
tracts, in  actions  brought  to  enforce  them,  it  does  not  forbid  the 
use  of  extrinsic  evidence  to  contradict  written  evidence  as  long 
as  the  written  evidence  is  not  the  written  contract  on  which 
the  action  is  based.^     Thus   if  letters  written  by  one  of  the 

16  Northrop  v.  Hale,  72  Me.  275;  Harlan,  89  Md.  675;  43  Atl.  756. 
Chace  v.  Chapin,  130  Mass.  128;  See  to  the  same  effect  Holtheide  v. 
Gerrish  v.  New  Bedford  Institution,       Smith   (Ky.),  74  S.  W.  689. 

128   Mass.    159;    35   Am.   Rep.   365;  20  Hall  v.  Small,  178  Mo.  629;  77 

Barnes  v.  Trafton.  80  Va.  524.  S.  W.  733. 

17  Thompson  V.  Caruthers,  92  Tex.  1  Wise  v.  Collins,  121  Cal.  147; 
530;   50  S.  W.  331.  53  Pac.  640;  Smith  v.  Mayfield,  163 

isBurnes  v.  Scott,  117  U.  S.  582;  m.   447.    45   n.   E.    157;    Parno   v. 

Dickson  V.  Harris,  60  la.  727 ;  13  N.  jns.    Co.,    114    la.    132;    86    N.    W. 

W.  335;  Crane  v.  Bayley,  126  Mich.  2IO;    Dean   v.   Shepard   Co.,   95    la. 

323;  85  N.  W.  874;  Adair  v.  Adair,  89;  63  N.  W.  582;  Gully  v.  Grubbs, 

5  Mich.  204;  71  Am.  Dec.  779;  Gil-  1   J.  J.   Mar.    (Ky.)    387;    German 

bert    V.    Thompson,    14    Minn.    544;  Ins.  Co.  v.  Frederick,  57  Neb.  538; 

Ming   V.    Pratt,    22    Mont.    262;    56  77  N.  W.  1106;   Kister  v.  Ins.  Co., 

Pac.  279.  128   Pa.   St.   .553;    15   Am.   St.   Rep. 

19  American     National     Bank     v.  696;  5  L.  R.  A.  646;   18  Atl.  447. 


1846  PAGE    ON    CONTRACTS. 

parties  are  not  a  part  of  a  written  contract,  oral  evidence  is 
admissible  to  contradict  the  statements  made  therein.^  So  ex- 
trinsic oral  evidence  is  admissible  to  rebut  evidence  tending  to 
shov7  fraud,  even  if  the  latter  evidence  is  in  writing.  Thus 
where  false  statements  are  contained  in  an  application  for  in- 
surance, extrinsic  evidence  is  admissible  to  show  that  the  appli- 
cant stated  the  facts  correctly  to  the  agent  of  the  insurance 
company,  and  that  the  latter  wrote  the  application.^  In  Michi- 
gan such  evidence  is  admissible  if  the  application  is  signed 
before  the  agent  writes  the  answers.*  A  memorandum  in  lead- 
pencil,  made  by  one  party  and  not  intended  by  both  parties  as 
the  written  contract  may  be  contradicted.^  So  a  written  ac- 
knowledgment of  a  contract®  or  a  chattel  mortgage,  prepared 
by  plaintiffs  to  be  executed  by  defendant,  but  not  in  fact  exe- 
cuted by  him,'  may  be  contradicted,  since  neither  is  a  written 
contract  within  the  meaning  of  this  rule.  On  the  same  princi- 
ple, recitals  of  fact  and  receipts  may  be  contradicted  even  if  in 
writing,  and  even  if  in  an  instrument  a  part  of  which  is  a 
contract.^  So  A  loaned  B  $280  and  by  mistake  B  gave  his  note 
for  $250.  B  repaid  $280  and  then  sued  to  recover  $30  as  paid 
by  mistake.  It  was  held  that  A  could  show  the  real  transaction 
as  the  action  was  not  on  the  note.^  The  test  which  determines 
the  admissibility  of  extrinsic  evidence  in  such  cases  is  this: 
Is  the  written  provision  a  contractual  term  ?  In  such  case  the 
parol  evidence  rule  applies.  Or  is  it  merely  the  written  recital 
of  a  fact?     In  such  case  the  parol  evidence  rule  has  no  appli- 

2  Alexander      v.      Thompson,      42  etc.,  Ins.  Co.  v.  Goode,  95  Va.  762; 

Minn.    498;    44   N.   W.    534;    Abra-  30  S.  E.  370. 

hams  V.   Swan,   18  W.  Va.  274;   41  *  Brown  v.  Ins.  Co.,  65  Mich.  306; 

Am.  St.  692.  8    Am.    St.    Rep.    894;    32    N.    W. 

sParno  v.  Ins.  Co.,  114  la.   132;  610. 
86  N.  W.  210;   Mutual,   etc.,   Asso-  5  Pecos    Valley    Bank    v.    Evans- 

ciation  v.  Ogletree,  77  Miss.   7;    25  Snider-Buel   Co.,    107   Fed.   654;    46 

So.   869;   German  Ins.  Co.  v.  Fred-  C.  C.  A.  534. 


erick,  57  Neb.  538;  77  N.  W.  1106 

Kister  v.  Ins.  Co.,  128  Pa.  St.  553 

15  Am.  St.  Eep.  696;  5  L.  R.  A.  646 

18  Atl.  447;  Bennett  v.  Ins.  Co.,  107      53  Pac.  640. 

Tenn.  371;  64  S.  W.  758;  Virginia,  «  See  §   1201  et  seq 


eBurkhart  v.   Hart,   36   Or.   586; 
60  Pac.  205. 

7  Wise  V.   Collins,    121   Cal.    147; 


9  Foster  v.  Kirby,  31  Mo.  496. 


THE    PAEOL   EVIDENCE   RULE. 


1847 


cation.     Illustrations  of  this  distinction  will  be  found  in  tiie 

following  sections. 

§1201.    Recital  of  facts, —  Receipts. 

A  receipt,  if  free  from  contractual  tenns,  is  a  mere  recital 
of  the  fact  of  the  payment  of  money  or  delivery  of  property. 
The  parol  evidence  rule  does  not  apply  to  such  receipts,  and 
they  may  be  contradicted  by  extrinsic  evidence  like  other  re- 
citals of  fact.^  Thus  a  receipt  for  an  insurance  premium,^ 
the  receipt  of  property  by  a  common  carrier  shown  in  the  bill 
of  lading,^  either  as  to  the  fact  of  the  receipt  of  goods  at  all* 
or  as  to  the  quantity  of  goods  received,^  a  receipt  of  property 
shown  by  a  load-check,*'  a  check  given  by  a  sleeping-car  con- 
ductor to  a  passenger  on  the  surrender  of  the  passenger's  ticket 


1  Rarden  v.  Cunningham,  136  Ala. 
263;  34  So.  26;  Gravlee  v.  Lamkin, 
120  Ala.  210;  24  So.  756;  Jenne  v. 
Burger,  120  Cal.  444;  52  Pac.  706; 
Colorado,  etc.,  Co.  v.  Ponick,  — 
Colo.  App.  — ;  66  Pac.  458;  Stark- 
weather V.  Maginnis,  196  111.  274; 
63  ]SI.  E.  692;  McDonald  v.  Danahy, 
,96  ill.  133;  63  N.  E.  648;  Mer- 
v^iants'  Dispatch  Transportation  Co. 
V.  Furthmann,  149  111.  66;  41  Am. 
St.  Rep.  265;  36  N.  E.  624;  Henry 
V.  Henry,  11  Ind.  236;  71  Am.  Dec. 
354;  Missouri  Pacific  Ry.  v.  Love- 
lace, 57  Kan.  195;  45  Pac.  590; 
Wilkinson  v.  Scott,  17  Mass.  249; 
Hennessy  v.  Furniture  Co.,  —  Mont. 
— ;  76  Pac.  291;  Morse  v.  Rice,  36 
Neb.  212;  54  N.  W.  308;  Eenny  v. 
Kane,  50  N.  J.  L.  562 ;  14  Atl.  597 ; 
Smith  V.  Holland,  61  N.  Y.  635; 
Kirkpatrick  v.  Smith,  10  Humph. 
(Tenn.)  188;  Cushwa  v.  Building 
Association,  45  W.  Va.  490;  32  S.  E. 
259;  Twohy  Mercantile  Co.  v.  Mc- 
Donald's Estate,  108  Wis.  21;  83  N. 
W^  1107. 

2Robison  v.  Wolf.  27  Ind.  App. 
683;   62  N.  E.   74;   Sargent  v.   Ins. 


Co.,   189   Pa.   St.   341;   41   Atl.   351. 

3  The  Lady  Franklin,  8  Wall.  (U. 
S.)  325;  Planters'  Fertilizer  Mfg. 
Co.  V.  Elder,  101  Fed.  1001;  42  C.  C. 
A.  130;  Pereira  v.  Ry.,  66  Cal.  92; 
4  Pac.  988;  Lake  Shore,  etc.,  Ry. 
V.  Bank,  178  111.  506;  53  N.  E. 
326;  Merchants'  Dispatch  Co.  v. 
Furthmann,  149  111.  66;  41  Am.  St. 
Rep.  265;  36  N.  E.  624;  Chapin  v. 
Ry.,  79  la.  582;  44  N.  W.  820; 
Blanchard  v.  Page,  8  Gray  (Mass.) 
281;  Strong  v.  Hy.,  15  Mich.  206; 
93  Am.  Dec.  184;  Meyer  v.  Peck,  28 
N.  Y.  590;  Ellis  v.  Willard,  9  N.  Y. 
529;  Dean  v.  King,  22  O.  S.  118; 
May  V.  Babcock,  4  Ohio  334. 

4  Grant  v.  Norway,  10  C.  B.  665; 
The  Lady  Franklin,  8  Wall.  (U.  S.) 
325;  National  Bank  v.  Ry.,  44  Minn. 
224;  20  Am.  St.  Rep.  566;  9  L.  R. 
A.  263 ;  46  N.  W.  342,  560. 

5  Hall  V.  Mayo,  7  All.  (Mass.) 
454;  Meyer  v.  Peek,  28  N.  Y.  590; 
Dean  v.  King,  22  O.  S.  118. 

6  Anderson  v.  Flouring  Mills  Co., 
37  Or.  483;  82  Am.  St.  Rep.  711;  59 
L.  R.  A.  235;  60  Pac.  839. 


1848  PAGE    ON    CONTRACTS. 

to  the  conductor,'^  an  entry  by  a  bank  in  a  pass-book,  showing 
money  received  by  the  bank  to  the  credit  of  the  depositor,^  and 
a  recital  in  a  non-negotiable  note  that  a  part  of  its  consideration 
is  for  services  heretofore  rendered,"  are  each  mere  receipts,  and 
may  be  contradicted  by  extrinsic  evidence.  Accordingly  the 
party  giving  the  receipt  may  show  that  the  party  paying  money 
to  him  did  so  as  agent  for  another  person."  So  a  receipt  does 
not  prevent  the  parties  thereto  from  showing  by  whom  the 
purchase  was  really  made." 

§1202.    Receipts  and  releases  containing  contractual  terms. 

An  instrument  which  is  in  part  a  receipt  may  also  contain 
contractual  terms.  In  such  case,  while  the  part  of  it  whidi 
is  a  receipt  may  be  contradicted  by  extrinsic  evidence,  the 
contractual  terms  are  within  the  operation  of  the  parol  evidence 
rule.^  A  bill  of  lading,^  a  storage  receipt,^  or  a  warehouse 
receipt,*  often  contained  contractual  terms  which  come  within 
the  operation  of  the  parol  evidence  rule.  Thuf?  a  shipper  can- 
not introduce  evidence  of  an  oral  contract  to  show  that  the 
clause  in  the  written  bill  of  lading,  limiting  the  carrier's  liabil- 

7  Mann-Boudoir  Sleeping  Car  Co.  40  Or.  239;  66  Pac.  914;  Kammer- 
V.  Dupre,  54  Fed.  646;  21  L.  R.  A.  mayer  v.  Hilz,  107  Wis.  101;  82 
289 ;  4  C.  C.  A.  540.  N.   W.  689. 

8  Anderson  v.  Leverich,  70  la.  2  jyicElveen  v.  Ry.,  10^  Ga.  249; 
741;  Union  Bank  v.  Knapp,  3  Pick.  77  Am.  St..  Hep.  371;  '?4  S.  E. 
(Mass.)  96;  15  Am.  Dec.  182;  Tal-  281;  Louisville  R.  R.  v.  Wii'son,  119 
cott  V.  Bank,  53  Kan.  480;  24  L.  R.  Ind.  352;  4  L.  R.  A.  244;  21  N.  E. 
A.  737;  36  Pac.  1066;  Davis  v.  341;  Sonia  Cotton-Oil  Co.  v.  The 
Bank,  53  Mich.  163;  18  N.  W.  629;  Red  River,  106  La.  42;  87  Am.  St. 
Quattrochi  v.  Bank,  89  Mo.  App.  Rep.  294;  30  So.  303;  Bank  v.  R.  R, 
500.  44  Minn.  224;  20  Am.  St.  Rep.  566; 

9  Mulligan  v.  Smith,  13  Colo.  App.  9  L.  R.  A.  263;  46  N.  W.  342,  560; 
231;  57  Pac.  731.  Van    Etten   v.   Newton,    134   N.   Y. 

10  Rand  v.  Scofield,  43  111.  167;  143;  30  Am.  St.  Rep.  630;  31  N.  E. 
McKinney  v.  Harvie,  38  Minn.   18;      334. 

8  Am.  St.  Rep.  640;  35  N.  W.  668.  3  Thompson  v.  Thompson,  78  Minn. 

11  French  v.  Newberry,  124  Mich.  379,  384;  81  N.  W.  204;  81  N.  W. 
147 ;  82  N.  W.  840.  543. 

1  Coon  V.  Knap,  8  N.  Y.  402 ;   59  *  Union  Storage  Co.  v.  Speck,  194 

Am.  Dec.  502;  Milos  v.  Covacevich,      Pa.  St.  126;  45  Atl.  48. 


THE  PAROL  EVIDENCE  RULE.  1849 

itj,  was  not  to  be  operative/  or  to  show  that  the  contract  was 
made  with  the  consignee  and  not  with  the  consignor.^  So  where 
a  bill  of  lading  recited  the  delivery  of  5-i,000  bushels  of  wheat, 
and  provided  "  all  the  deficiency  in  cargo  to  be  paid  by  the 
carrier  and  deducted  from  the  freight,  and  any  excess  in  the 
cargo  to  be  paid  for  to  the  carrier  by  the  consignee,"  the  state- 
ment as  to  the  amount  of  wheat  received  was  thereby  made  a 
contractual  term,  and  not  a  mere  receipt ;  and  accordingly,  the 
carrier  was  liable  for  any  deficiency,  though  he  did  not  receive 
the  amount  stipulated.^  A  certificate  of  deposit  is  a  contract 
and  not  merely  a  receipt.^  Accordingly  if  signed  "  A,  man- 
ager," and  A  was  manager  of  a  private  bank,  an  oral  agreement 
that  the  deposit  was  with  another  bank  of  which  A  was  presi- 
dent cannot  be  enforced.^  An  instrument  which  purports  to  be 
a  release  of  claims  of  a  receipt  in  full  is  contractual  in  its  nature 
as  far  as  it  discharges  one  party  thereto  from  liability.^*'  Ac- 
cordingly, where  a  receipt  in  full  is  given  in  the  settlement 
of  all  the  claims  of  a  certain  class,  extrinsic  evidence  cannot 
be  introduced  to  show  that  the  parties  had,  when  such  receipt 
was  given,  agreed  that  some  specified  claim  should  not  be  af- 
fected by  the  receipt."  Thus  an  instrument  acknowledging  the 
receipt  of  a  certain  sum  of  money  in  consideration  of  which  one 
party  releases  all  interest  in  a  given  estate  is  a  written  contract, 
and  the  party  thus  releasing  her  interest  cannot  show  an  oral 
agreement  that  she  should  receive  a  greater  sum  than  that  men- 
tioned in  the  receipt,  in  case  another  party  interested  in  the 

5  Davis  V.  R.  R.,  66  Vt.  290;  44  455;  Squires  v.  Amherst,  145  Mass. 
Am.  St.  Rep.  852;  29  Atl.  313.  192;    13  N.  E.  609;   Morris  v.  Ry., 

6  Van  Etten  v.  Newton,  134  N.  Y.  21  Minn.  91;  Church  v.  Ry.,  63  N.  J. 
143;  30  Am.  St.  Rep.  630;  31  N.  E.  L.  470;  43  Atl.  696;  Jackson  v.  Ely, 
334.  57  O.  S.  450;  49  N.  E.  792;  Conant 

7  Rhodes  v.  Xewhall,  126  N.  Y.  v.  Kimball,  95  Wis.  550;  70  N.  W. 
574;  22  Am.  St.  Rep.  859;  27  N.  E.  74;  Vaughan  v.  Mason,  23  R.  I. 
947.  348;    50   Atl.   390      Contra,    French 

sBickley  v.  Bank,  39  S.  C.  281;  39  v.  Arnett,  15  Ind:  App.  674;  44  N. 

Am.  St.  Rep.  721.  E.   551;   Mounce   v.   Kurtz,    101   la. 

sBickley  v.  Bank.  39  S.  C.  2S1;  192;    70  N.  W.   119;   Allen  v.  Mill 

39  Am.  St.  Rep.  721.  Co.,  18  Wash.  216;  51  Pae.  372. 

10 Green  v.  Ry.,  92  led.   873;   35  n  Seeman  v.  Mining  Co.,  22  Ohio 

C.  C.  A.  68;  Bull  v.  Bull,  4S  Conn-  C.  C.  311;   12  Ohio  C.  D.  206. 


1850  PAGE   ON    CONTKACTS. 

estate  received  a  greater  sum/^  So  an  instrument  as  follows: 
"$15.5.  Wooster,  Ohio,  May  13,  1890.  This  is  to  certify 
that  I  have  this  day  settled  with  John  Ely  and  he  has  paid  me 
all  he  owed  me,  up  to  this  date,  and  I  have  no  claims  or  de- 
mands against  him  of  any  kind  whatsoever.  Mrs.  Wm.  Jack- 
sou,"  is  not  merely  a  receipt  but  also  a  contract;  and  extrinsic 
evidence  cannot  be  used  to  show  that  outstanding  items  of  in- 
debtedness were  omitted.'"  So  if  an  action  for  personal  in- 
juries is  settled  by  the  parties,  and  a  written  instrument  is 
executed  which  purports  to  be  a  full  settlement  and  discharge  of 
all  damages  in  consideration  of  a  certain  sum  of  money,  extrin- 
sic evidence  is  inadmissible  to  show  a  promise  by  the  party 
liable  for  damages  to  pay  a  further  sum  in  settlement  of  such 
action.'*  So  where  a  creditor  gives  a  release  of  a  joint  debtor, 
and  surrenders  a  note  executed  by  the  joint  debtors,  extrinsic 
evidence  is  inadmissible  to  show  an  oral  agreement  that  the 
other  debtor  should  not  be  released.'^  However,  a  receipt  given 
"  in  full  settlement  of  all  claims  and  demands  for  all  logs  con- 
tained "  in  a  specified  raft  of  logs  has  been  held  to  be  a  mere 
receipt,  and  not  a  contract,  and  hence  not  within  the  parol 
evidence  rule,'® 

§1203.     Consideration  recited  as  fact. 

If  the  consideration  is  not  recited  in  the  written  contract,  or 
if  recited  appears  only  as  a  recital  of  fact  and  not  as  a  con- 
tractual term,  extrinsic  evidence  is  admissible  to  show  what  the 
real  consideration  is.'     "  The  language  with  reference  to  the 

i2Cassilly   v.    Cassilly,    57    0.    S.  i  Stone  v.  Minter,  111  Ga.  45;  50 

582;  49  N.  E.  795.  L.   R.  A.  3,56;    36  S.   E.  321;    Bros- 

13  Jackson  v.  Ely,  57  O.  S.  450;  49  seau  v.  Loiiy,  209  III.  405;  70  N,  E. 

N.  E.  792.  901;    affirming    110    111.    App.    16; 

i4Milich  V.  Packing  Co.,  60  Kan.  Ryan  v.  Hamilton,  205  111.  191;   68 

229;   56  Pac.   1;   Jackowski  v.  Steel  N.  E.  781;   reversing  103   111.  App. 

Co.,  103  Wis.  448;  79  N.  W.  757.  212;    Lake    Erie,    etc.,    Ry.    v.   Hol- 

15  Clark  V.  Mallory,  185  111.  227;  land,  —  Ind.  — ;  69  N.  E.  138; 
56  N.  E.  1099;  affirming  83  111.  App.  Stewart  v.  R.  R.,  141  Ind.  55;  40 
488.  N.    E.    67;    Pickett    v.    Green,    120 

16  Allen  ".Alill  Co.,  18  Wash.  216;  Ind.  584;  22  N.  E.  737;  Citizens' 
51  Pac.  37^  Street  Ry.  v.  Heath,  29  Ind.  App. 


THE  PAKOL  EVIDENCE  RULE. 


1851 


consideration  is  not  contractual;  it  is  merely  by  way  of  recital 
of  a  fact,  viz.,  the  amount  of  such  consideration,  and  not  an 
agreement  to  pay  it,  and  hence  such  recitals  may  be  contra- 
dicted."^ Thus  the  real  consideration  can  be  shown  under 
ordinary  forms  of  deeds^  and  notes.*  Under  such  a  written  con- 
tract it  may  be  shown  that  the  real  consideration  was  the  as- 
sumption of  the  debt  of  another  person,^  as  where  in  a  deed  the 
grantee  assumes  as  a  part  of  the  consideration  the  payment  of 
the  debts  of  the  grantor,  which  have  become  liens  upon  the 
property,**  or  is  to  pay  the  vendor  one  half  the  proceeds  of  the 


395;  62  N.  E.  107;  Moore  v.  Harri- 
son, 26  Ind.  App.  408;  59  N.  E. 
1077;  Farmers'  Savings  Bank  v. 
Hansmann,  114  la.  49;  86  N.  W. 
31;  Poor's  Executor  v.  Scott  (Ky.), 
68  S.  W.  397;  Price  v.  Price,  111 
Ky.  771;  64  S.  W.  746;  66  S.  W. 
529;  Jensen  v.  Crosby,  80  Minn. 
158;  83  N.  W.  43;  Aldrich  v.  Whit- 
aker,  70  N.  H.  627;  47  Atl.  591; 
Medical  College  Laboratory  v.  Uni- 
versity, 178  N.  Y.  153;  70  N.  E. 
467;  Keuka  College  v.  Ray,  167  N. 
Y.  96;  60  N.  E.  325;  Forester  v. 
Van  Auken,  —  N.  D.  — ;  96  X.  W. 
301;  Miller  v.  Livingston,  22  Utah 
174;  61  Pac.  569;  Williams  v.  Blu- 
menthal,  27  Wash.  24;  67  Pac.  393; 
Butt  v.  Smith,  —  Wis.  — ;  99  N. 
W.  328;  Cuddy  v.  Foreman,  107 
Wis.  519;  83  N.  W.  1103;  Perkins 
v.  McAuIiffe,  105  Wis.  582;  81  N. 
W.   645. 

2  Pickett  V.  Green,  120  Ind.  584, 
588;   22  N.  E.  737. 

3  Harraway  v.  Harraway,  136  Ala. 
499;  34  So.  836;  Hamaker  v.  Coons, 
117  Ala.  603;  23  So.  655;  Anthony 
v.  Chapman,  65  Cal.  73;  2  Pac. 
889;  Martin  v.  White.  115  Ga.  866; 
42  S.  E.  279;  Harkless  v.  Smith, 
115  Ga.  350;  41  S.  E.  634;  Leggett 
V.  Patterson,  114  Ga.  714;  40  S.  E. 
736;  Stewart  v.  R.  R.,  141  Ind.  55; 
40  N.  E.  67;   Coleman  v.  Gammon 


(la.),  83  N.  W.  898;  Ford  v.  Sav- 
age, 111  Mich.  144;  69  N.  W.  240; 
Le  May  v.  Brett,  81  Minn.  506;  84 
N.  W.  339;  Langan  v.  Iverson,  78 
Minn.  299;  80  N.  W.  1051;  Colum- 
bia National  Bank  v.  Baldwin,  64 
Neb.  732;  90  N.  W.  890;  Baird  v. 
Baird,  145  N.  Y.  659;  28  L.  R.  A. 
375;  40  N.  E.  222;  Carter  v.  Day, 
59  O.  S.  96;  69  Am.  St.  Rep.  757; 
51  N.  E.  967;  Lenhardt  v.  Ponder, 
64  S.  C.  354;  42  S.  E.  160;  Alexan- 
der V.  McDaniel,  56  S.  C.  252 ;  34  S. 
E.  405;  Halvorsen  v.  Halvorsen,  — 
Wis.  — ;  97  N.  W.  494.  Such  evi- 
dence cannot  be  used  to  contradict 
the  effect  and  oi^eration  of  such 
deed. 

4Folmar  v.  Siler,  132  Ala.  297; 
31  So.  719;  Booth  v.  Fire-Engine 
Co.,  118  Ala.  369;  24  So.  405; 
Burke  v,  Napier,  106  Ga.  327;  32 
S.  E.  134;  Gifford  v.  Fox  (Neb.), 
95  N.  W.  1066. 

5  Main  v.  Aukam,  12  App.  D.  C. 
375;  Harts  v.  Emery,  184  111.  560; 
56  N.  E.  865;  affirming  84  111.  App. 
317. 

6  Carter  v.  Griffin,  114  Ga.  321 ;  40 
S.  E.  290;  Lowery  v.  Downey,  150 
Ind.  364;  50  N.  E.  79;  McDill  v. 
Gunn,  43  Ind.  315;  Logan  v.  Miller, 
106  la.  511;  76  N.  W.  1005;  Lamb 
V.  Tucker,  42  la.  118;  Hopper  v, 
Calhoun,  52  Kan.  703;   39  Am.  St. 


1852  PAGE    ON    CONTRACTS. 

minerals  on  the  realty  conveyed.^  So  where  a  deed  is  given  an 
oral  contract  whereby  the  grantor  agrees  to  pay  certain  street 
assessments  may  be  enforced.^  So  it  may  be  shown  even  where 
a  covenant  against  encumbrances  is  inserted  in  a  deed  that  the 
grantee  retained  the  purchase  f)rice  to  pay  the  encumbrances, 
and  subsequently  settled  with  the  grantor,  the  latter  relying 
on  the  statement  of  the  grantee  that  the  encumbrances  were 
paid.^  The  agreement  by  the  grantee  to  assume  a  mortgage 
may  be  shown  even  if  the  deed  contains  a  covenant  against  en- 
cumbrances/*^ If  the  deed  excepts  a  prior  mortgage  from  a 
covenant  of  warranty,  oral  evidence  is  admissible  to  show  that 
the  grantee  was  to  assume  the  principal  of  the  mortgage,  but  not 
the  interest  thereon/^  So  under  a  deed  which  recites  a  certain 
sum  of  money  as  a  consideration,  it  may  be  shown  that  the  trans- 
fer of  title  to  certain  horses  was  also  a  part  of  the  considera- 
tion/^ However,  if  the  deed  shows  that  the  consideration  was 
love  and  affection,  neither  of  the  parties  can  show  that  it  was 
a  valuable  consideration/^  As  between  an  execution  creditor 
of  grantor  and  the  grantee,  evidence  of  the  real  character  of 
the  consideration  may  be  received/*  An  oral  contract  of  em- 
ployment may  be  shown  to  be  a  part  of  the  consideration  for  a 
release  of  damages/^     So  it  may  be  shown  that  a  settlement 

Rep.    363;    35    Pac.    816;    Clark   v.  52  L.  R.  A.  162.     Contra,  where  the 

Lowe,  113  Mich.  352;  71  N.  W.  638;  oral   agreement   to   assume   a  mort- 

Ford  V.  Savage,   111  Mich.  144;   69  gage  would  contradict  a  covenant  of 

N.    W.   240;    Bensiek   v.   Cook,    110  general  warranty.     Rooney  v.   Koe- 

Mo.  173;   33  Am.  St.  Rep.  422;    19  nig,  80  Minn.  483;  83  N.  W.  399. 

S.  W.  642;   Ketcham  v.  Brooks,  27  n  Ford  v.  Savage,  111  Mich.  144; 

N.   J.   Eq.    347;    Society   v.   Haines,  69  N.  W.  240. 

47  O.  S.  423;  25  N.  E.  119;  Merri-  12  Lathrop  v.  Humble,  —  Wis.  — ; 

man  v.  Moore,  90  Pa.  §t.  78 ;  Miller  97  N.  W.  905. 

V.  Kennedy,  12  S.  D.  478;  81  N.  W.  is  Latimer  v.   Latimer,    53    S.    C. 

906;    Johnson    v.    Elmen,    94    Tex.  483;  31  S.  E.  304. 

168;  86  Am.  St.  Rep.  845;  52  L.  R.  i*  Thompson    v.    Cody,     100     Ga. 

A.   162;   59  S.  W.  253.  771;   28   S.  E.  669. 

7  Michael  v.  Foil,  100  N.  C.  178;  is  Galvin  v.  Ry.,   180  Mass.  587; 
6  Am.  St.  Rep.  577;  6  S.  E.  264.  62  N.  E.  961.     Contra,  on  the  theory 

8  Post  v.  Gilbert,  44  Conn.  9.  that    this    is    a    contractual    term, 
fl  Becker  v.  Knudson,  86  Wis.  14;      Atchison,  etc.,  Ry.  v.  Vanordstrand, 

56  N.  W.  192.  67  Kan.  386;  73  Pac.  113. 

10  Johnson  v.  Elmer.  94  Tex.  168; 


THE    PAEOL   EVIDENCE   RULE.  1853 

of  suit  for  money  loaned  in  a  criminal  action  included  also  a 
settlement  of  suit  for  a  breach  of  promise. ^*^  A  note  which, 
on  its  face  recites  that  it  is  for  services  rendered  by  a  payee 
as  attorney  may  be  shown  to  be  supported  by  a  promise  of  the 
payee  to  attend  to  the  interests  of  the  maker  of  a  note  in  a 
specified  estate.^^  So  the  consideration  of  a  note  may  be  shown 
to  be  a  renewal  of  a  j)rior  note/*  The  consideration  for  a  con- 
veyance may  be  shown  to  be  the  permission  by  the  grantee  to 
the  grantor  to  gi'ow  wheat  on  a  part  of  the  land  conveyed.^^ 
So  the  real  consideration  may  be  shown  to  be  the  release  of  a 
guarantor^"  or  of  an  obligor  upon  a  note.^^  Where  A  conveyed 
realty  to  B  in  payment  of  a  debt,  but  A,  in  order  to  prevent 
trouble  with  his  relatives,  inserted  a  money  consideration  of 
$2,800,  and  induced  B  to  advance  him  that  amount  by  a 
promise  to  refund  it  later,  B  may  show  the  real  transaction.^^ 
If  an  instrument  purports  to  be  "  for  value  received  "  the  actual 
consideration  may  be  shown.  Thus  a  written  guaranty  of  a 
note,  purporting  to  be  "  for  value  received  "  may  be  shown  to 
be  in  consideration  of  an  agi'eement  to  forbear  suit.^^  If  a 
nominal  valuable  consideration  is  shown  in  the  instrument,  the 
real  consideration  may  be  shown,  as  where  the  consideration  is 
one  dollar,"*  or  one  dollar  and  other  considerations,"^  or  five  dol- 
lars and  love  and  affection.^*'  So  if  a  written  contract  shows  on 
its  face  that  it  is  divisible,  it  may  be  shown  that  the  actual 
consideration  was  for  one  of  the  promises  only.^^     This  rule 

16  Schubkagel    v.    Dierstein,     131  21  Timmier  v.  Liles,  58  S.  C.  284; 
Pa.  St.  46;  6  L.  H.  A.  481;   18  Atl.      36  S.  E.  652. 

1059.  22  Stone   v.   Minter,    111    Ga.   45; 

17  Jones  V.  Rhea,   122  N.  C.  721;       50  L.  R.  A.  356;  36  S.  E.  321. 

30  S.  E.  346.  23  Citizens',    etc.,    Co.   v.    Babbitt, 

18  Merchants'    National    Bank    v.  71  Vt.  182;  44  Atl.  71. 
Vandiver,    104    Ga.    165;    30    S.    E.  24  wdf  v.  Haslach,  65  Neb.   303; 
650.  91  N.  W.  283. 

19  Breitenwischer    v.    Clough,    111  25  Wright    v.    Stewart,    19    Wash. 
Mich.  6;    66  Am.   St.  Rep.  372;   69  179;    52  Pac.   1020. 

N.  W.  88.  26  Barnes   v.    Black,    193    Pa.    St. 

20 Martin    v.    Grocery    Co.     (Tex.      447;   74  Am.  St.  Rep.  694;   44  Atl. 
Civ.   Ap.),   66    S.   W.   212;    writ   of      550. 

error  denied  (Tex.),  67  S.  W.  883.  27  piatt  v.  Scribner,  18  Ohio  C.  C. 

452. 


1854  PAGE    ON    CONTKACTS. 

has  been  extended  to  a  case  where  an  aggregate  sum  as  consid- 
eration for  several  covenants  may  be  shown  to  be  made  up  of 
a  separate  amount  for  each,  and  thus  failure  of  consideration 
for  a  note  given  may  be  shown.^* 

§1204.     Oral  contract  as  inducement. 

The  principle  that  the  consideration  may  be  shown  has  been 
extended  to  cases  where  an  oral  contract  has  been  proved  as  a 
consideration  for  the  written  contract,  or  as  the  courts  some- 
times put  it,  as  an  inducement  for  the  written  contract/  On 
this  theory  an  oral  contract  to  advance  money  may  be  shown 
as  an  inducement  for  a  written  contract  to  gather,  cure  and 
deliver  a  crop  of  raisins  at  a  certain  price;  and  breach  of  the 
oral  contract  may  discharge  the  written  contract.^  In  an  action 
on  a  note  an  oral  contract  to  enforce  payment  by  exhausting 
security  in  the  form  of  a  conveyance  of  realty  in  trust  before 
proceeding  against  the  maker  of  the  note  may  be  shown.^  The 
holding  in  this  case  rests  on  the  theory  that  it  is  fraud  to 
obtain  a  note  under  such  an  agreement  and  then  enforce  it 
literally.  The  parol  evidence  rule  has  a  peculiar  meaning  in 
Pennsylvania,  however,*  being  at  law  substantially  the  same  as 
in  suits  in  equity  for  reformation.^  So  an  oral  contract  to  give 
certain  logs  as  security  may  be  shown  as  inducement  for  a  writ- 
ten contract  of  sale  of  such  logs.®  So  an  oral  contract  by  an 
owner  of  realty  to  put  in  a  side  track  may  be  shown  as  an 
inducement  for  a  written  contract  to  build. ^     So,  in  Pennsyl- 

28  Field  V.  Austin,   131   Cal.   379;  580;   68  Am,  St.  Hep.   70;   55   Pac. 

63  Pac.  692.  406. 

1  Langley  v.  Rodriguez,  122  Cal.  3  Clinch  Valley,  etc.,  Co.  v.  Will- 
580;  68  Am.  St.  Rep.  70;  55  Pac.  ing,  180  Pa.  St.  165;  57  Am.  St. 
406;   In  re  Sutch's  Estate,  201   Pa.  Rep.  626;  36  Atl.  737. 

St.  305 ;  50  Atl.  943 ;  Clinch  Valley,  *  See  eases  cited  in  notes  5-8  this 

etc.,  Co.  V.  Willing,  180  Pa.  vSt.  165;  section. 

57  Am.  St.  Rep.  626;   36  Atl.  737;  5  Thomas    v.    Loose,    114    Pa.    St. 

Huckestein   v.   Kelly,   etc.,   Co.,    152  35;  6  Atl.  626. 

Pa.  St.  631;  25  Atl.  747;  Ferguson  6  Ferguson    v.    Rafferty,    128    Pa. 

V.  Rafferty,   128  Pa.   St.   337;    6  L.  St.  337;  6  L.  R.  A.  33;   18  Atl.  484. 

R.  A.  33;  18  Atl.  484.  7  Huckestein    v.    Kelly,    etc.,    Co., 

2  Langley  v.  Rodriguez,    122   Cal.  152  Pa.  St.  631;  25  Atl.  747. 


THE    PAEOL    EVIDENCE   RULE.  1855 

vania,  an  oral  contract  giving  vendee  the  right  to  counter- 
mand a  written  order  may  be  shown.*  So  if  A  becomes  surety 
for  B  to  C  an  oral  contract  of  agency  may  be  shown  as  consid- 
eration for  the  written  bond,  no  consideration  being  expressed.® 

So  where  a  contract  for  judgment  and  stay  of  execution  until 
the  next  term  of  court  was  entered  into,  an  oral  agreement  that 
all  matters  in  litigation  up  to  the  date  of  the  contract  were 
included  and  that  a  rent  for  the  future  was  agreed  upon  may 
be  shown.^"  So  under  a  deed  an  oral  contract  that  the  grantor 
should  have  the  right  to  sow  a  crop  of  grain  on  the  land  con- 
veyed may  be  shown."  So  an  oral  contract  to  bequeath  a  cer- 
tain amount  may  be  shown  as  consideration  for  a  written 
release.^^  So  under  a  written  contract  to  donate  rent  of  a 
building  to  be  used  by  a  corporation  to  be  formed,  an  oral  con- 
tract that  rent  in  arrears  should  be  paid  before  the  corporation 
was  formed  may  be  shown. ^^  Evidence  of  an  oral  contract  by 
way  of  inducement  must  be  clear. ^* 

Many  of  the  cases  which  rest  on  this  principle  may  be  ex- 
plained on  other  theories.  In  some  the  written  memorandum 
is  incomplete.  In  others  the  consideration  is  recited  as  a  fact. 
After  eliminating  these  cases,  however,  there  are  a  number  left 
which  really  support  the  principle  laid  down.  If  these  cases 
are  correctly  decided  there  is  little  left  of  the  parol  evidence 
rule.  It  does  not  apply  to  recitals  of  fact.  If,  further,  it  is 
held  not  to  apply  to  contractual  terms  which  form  part  of  the 
consideration,  it  is  hard  to  imagine  any  term  of  an  oral  con- 
tract to  which  it  would  apply.  The  principle  seems  contrary 
to  that  which  forbids  oral  evidence  of  the  consideration  to  vary 
contractual  terms,^^  or  to  add  to  a  complete  contract.^^ 

8  Thomas  v.  Loose,  114  Pa.  St.  tion  of  a  crop  already  growing;  and 
35 ;  6  Atl.  626.  hence  inconsistent  with  the  deed ) . 

9  Singer  Mfg.  Co.  v.  Forsyth,  108  12  Andrews  v.  Brewster,  124  N.  Y. 
Ind.  334;  9  N.  E.  372.                                433;  26  N.  E.  1024. 

10  Bonney  v.  Morrill,  57  Me.  368.  is  Chase  v.  Creamery  Co.,  12  S.  D, 

11  Breitenwischer    v.    Clough,    111      529;  81  Pac.  951. 

Mich.  6;    66  Am.   St.  Rep.   372;    69  ^*  In   re   Sutch's   Estate,   201    Pa. 

N.  W.  88  (distinguishing  Addams  V.  St.  305;   50  Atl.  943. 

Watkins,   103  Mich.  431 ;   61  N.  W.  ^^  See  §  1205. 

774,  as  a  contract  for  the  reserva-  10  See  §  1189. 


1856  PAGE    ON    CONTRACTS. 

§1205.     Consideration  as  contractual  term. 

If  the  consideration  appears  in  the  written  contract  as  ft 
contractual  term  thereof,  an  oral  agreement  whereby  an  addi- 
tional or  other  consideration  is  provided  for  violates  the  parol 
evidence  rule  and  is  unenforceable.^  Thus  in  a  contract  for  the 
sale  of  land,  if  it  specifies  the  amount  which  the  vendee  agrees 
to  pay,  an  oral  contract  Avhereby  he  agrees  to  pay  more  is  un- 
enforceable.^ So  in  other  contracts  of  sale,  where  the  amount 
to  be  paid  is  agreed  upon  as  a  contractual  term,  oral  contracts 
for  the  assumption  of  the  vendor's  debts  in  addition  to  the 
amounts  specified  in  the  contract,  are  unenforceable.^  So 
where  A  agreed  to  sell  B  quinine  at  fifty-nine  cents  an  ounce, 
an  oral  agreement  whereby  A  agreed  to  advance  the  price  to 
sixty-one  cents  per  ounce,  and  to  send  out  trade  circulars  an- 
nouncing such  advance  is  unenforceable.*  Where  an  injured 
employee  signs  a  release  of  damages  in  consideration  of  pay- 
ment to  him  of  twenty-five  dollars,  and  all  the  expenses  of  phys- 
icians and  hospital,  an  oral  agreement  that  the  twenty-five  dol- 
lars was  a  mere  gratuity,  and  that  accordingly  the  only  consid- 
eration was  the  payment  of  the  expenses  for  physicians  and 
hospital  is  unenforceable.^  So  in  an  agreement  for  the  sale  of 
stock  at  a  certain  price  per  share  an  oral  agreement  that  the 
vendee  should  pay  only  one  fourth  of  the  amount  set  forth  in 
the  written  contract  is  unenforceable.**  So  where  a  bill  of  sale 
sets  forth  the  price  to  be  paid  for  stock  an  oral  contract  to  fur- 
nish such  certificates  and  proofs  of  pedigree  of  such  stock  as 

1  Schneider  v.  Turner,  130  111.  28 ;  3  Thompson  v.  Bryant,  75  Miss. 
6  L.  R.  A.  164;  Indianapolis  Union  12;  21  So.  655;  Walter  v.  Bearing 
Ry.  V.  Houlihan,    157   Ind.  494;   60       (Tex.  Civ.  App.),  65  S.  W.  380. 

N.  E.  943  ;  City  of  Paris  v.  Lilleston  4  Engelhorn  v.  Reitlinger,   122  N. 

(Ky.),    60   S.   W.    919;    Cassard   v.  Y.   76;    9   L.   R.   A.   548;    25   N.   E. 

McGlannan,    88    Md.    168;    40    Atl.  297. 

711;    Grier   v.   Ins.    Co.,    132   N.   C.  s  Indianapolis     Union     R.     R.    v. 

542;    44   S.   E.   28;    Kahn  v.   Kahn,  Houlihan,  157  Ind.  494;  54  L.  JR.  A. 

94  Tex.  114;  58  S.  W.  825;  Buena  787;  60  N.  E.  943. 

Vista    Co.   V.   Billmyer,   48   W.   Va.  6  Libby  v.  Spring  &  Land  Co.,  6T 

382;    37  S.  E.  583.  N.  H.  587;  32  Atl.  772. 

2  Trice  V.  Yeoman,  60  Kan.  742; 
57  Pac.  955. 


THE    PAEOL   EVIDENCE   RULE.  1857 

would  enable  the  vendee  to  have  them  registered  is  unenforce- 
able/ So  where  a  written  contract  shows  that  the  considera- 
tion was  to  be  determined  in  the  future  according  to  the  amount 
of  work  done,  but  was  "  not  to  exceed  five  hundred  dollars  per 
week,"  an  oral  contract  fixing  the  amount  of  compensation  is 
unenforceable.^  So  where  a  contract  and  conveyance  of  a  right 
of  way  shows  the  consideration,  an  oral  contract  for  an  under- 
crossing,  as  an  additional  consideration,  is  unenforceable.^  And 
so  where  A  sold  certain  patents  to  B,  and  guaranteed  their 
validity,  and  B  was  to  pay  A  certain  royalties  thereon,  a  subse- 
quent written  contract  whereby,  in  lieu  of  such  royalties,  A 
is  to  receive  a  lump  sum  cannot  be  shown  to  rest  in  part  upon 
an  oral  contract  whereby  B  releases  A  fror"  hi^  ^ont^e^^  guar- 
anteeing the  validity  of  such  patents.**  So  oi-a!  evidence  cannot 
be  considered  to  show  a  lower  rent  than  that  specified  in  a 
lease." 

§1206.     Rule  does  not  apply  to  strangers  to  contract. 

The  parol  evidence  rule  applies  only  between  the  parties  to 
the  contract  and  those  claiming  under  them,  and  is  limited  to 
actions  upon  the  contract.^     A  stranger  to  the  instrument  may 

7McFarland    v.    McGill,    16    Tex.  County,  83  Ala.  826;  3  Am.  St.  Rep. 

Civ.  App.  298;  41  S.  W.  402   (citing  746;   3  So.  755;  Dunn  v.  Price,  112 

Pickett  V.  Green,  120  Ind.  584;  Penn-  Cal.    46;    44    Pac.    354;    Dickey    v. 

sylvania  Co.  v.  Dolan,   6  Ind.  App.  Grice,   110  Ga.  315;    35   S.  E.   291; 

109).  Central   Coal  &  Coke  Co.  v.   Good, 

8  United  Press  v.  Press  Co.,  164  —  Ind.  Ter.  — ;  64  S.  W,  677;  Ham- 
N.  Y.  406;  53  L.  R.  A.  288;  58  N.  lin  v.  Simpson,  105  la.  125;  44  L. 
E.  527.  R.  A.   397;   74  N.  W.  906;   Living- 

9  Schrimper  v.  Ry.  (la.),  82  N.  ston  v.  Stevens,  122  la.  62;  94  N.  W. 
W.  916.  925;  Livingston  v.  Heck,  122  la.  74; 

loSandage  v.  Mfg.  Co.,   142  Ind.  94  N.  W.  1098;  Provident,  etc.,  So- 

148;  51  Am.  St.  Rep.  165;  34  L.  R.  ciety  v.  Johnson,  —  Ky.  — ;   72  S. 

A.  363;  41  N.  K  380.  W.    754;    Edwards    v.    Ballard,    14 

11  Merchants'  State  Bank  v.  Ruet-  B.  Mon.  (Ky.)  289;  Baker  v.  Briggs, 

tell,  —  N.  D.  — ;  97  N.  W.  853.  8  Pick.    (Mass.)    122;    19  Am.  Dec. 

1  Central,   etc.,   Co.   v.   Good,    120  311;   Wilson  v.  Mulloney,  —Mass. 

Fed.  793;  57  C.  C.  A.  161;  British,  — ;    70  N.   E.   448;   Witzel  v.  Zuel, 

etc.,  Co.  V.  Cody,   135  Ala.  662;   33  90  Minn.  340;  96  N.  W.  1124;  Pfei- 

So.  832;   Walker  v.  State.   117  Ala.  fer   v.   Ins.   Co.,   62   Minn.   536;    64 

42;  23  So.  149;  Coleman  v.  Pike  N.  W.  1018;  First  National  Bank 
117 


1858  PAGE    ON    CONTRACTS. 

introduce  extrinsic  evidence  to  contradict  it,  or  to  show  the 
real  intention  of  the  parties;^  and  so  may  a  party  to  the  con- 
tract in  an  action  between  himself  and  a  stranger  thereto.^ 
So  a  stranger  to  the  instrument  cannot  invoke  the  rule  to  pre- 
vent the  other  party  to  the  action  from  introducing  extrinsic 
evidence  to  contradict  the  written  contract*  Thus  a  third 
person  suing  for  personal  injuries  due  to  negligence  may  show 
by  extrinsic  evidence  that  the  relation  between  the  parties  to  a 
written  contract  is  that  of  master  and  servant,  though  on  the 
face  of  the  written  contract  the  latter  is  an  independent  con- 
tractor.^ Thus,  as  between  a  bank  and  an  attaching  sheriff,  the 
bank  may  show  an  oral  agreement  with  the  depositor,  whose 
funds  are  sought  to  be  attached,  that  such  deposits  should  be 
applied  to  the  payment  of  a  note  of  the  depositor's  not  yet  due.® 
So  A  gave  a  check  on  a  bank  in  which  he  had  no  funds  subject 
to  check.  The  holder  of  the  check  neglected  to  present  it  for 
payment,  and  the  bank  failed  soon  after.  In  an  action  between 
the  holder  of  the  check  and  A,  A  was  allowed  to  show  that  he 
had  made  a  special  deposit  for  which  he  had  received  a  certifi- 
cate of  deposit,  and  that  by  oral  agreement  between  himself 
and  the  bank  checks  drawn  by  him  were  to  be  paid  out  of  such 
special  deposit,  though  not  ordinarily  subject  to  check.'^'     So 

V,  Tolerton    (Neb.),  97  N.  W.  248;  207;    31   C.   C.  A.  477;   Coleman  v. 

Crockett  v.  Miller   (Neb.),  96  N.  W.  Pike  County,  83  Ala.  326;  3  Am.  St. 

491;  Roberts  v.  Bank,  8  N.  D.  474;  .Rep.  746;  3  So.  755;  Tyson  v.  Post, 

79   N.   W.   993;    Clapp   v.    Banking  108    N.    Y.    217;    2    Am.    St.    Rep. 

Co.,   50  0.   S.   528;    35   N.   E.   308;  409;    15   N.    E.   316;    Imperial   Ins. 

Schuler  v.  Bank,   13  S.  D.   188;    82  Co.  v.  Dunham,  117  Pa.  St.  460;   2 

N.   W.   389;    Myers   v.   Taylor,    107  Am.   St.   Rep.   686. 

Tenn.  364;   64  S.  W.  719;  Kahle  v.  « Roberts  v.   Bank,   8   N.  D.  474; 

Stone,  95  Tex.  106;   65  S.  W.  623;  79  N.  W.  993. 

Oriental  Investment  Co.  v.  Barclay,  s  Powell   v.    Construction   Co.,   88 

25   Tex.    Civ.   App.    543;    64   S.   W.  Tenn.  692;  17  Am.  St.  Rep.  925;  13 

80;   Olmstead  v.   Ry.,  —  Utah  — ;  S.   W.   691. 

76   Pac.    557;    Elliott  v.   S.   S.   Co.,  e  Schuler  v.  Bank,   13  S.  D.   188; 

22  Wash.  220;   60  Pac.  410.  82  N.  W.  389. 

aSigua    Iron    Co.    v.    Greene,    88  7  Hamlin  v.  Simpson,  105  la.  125; 

Fed.  207;    31   C.  C.   A.  477;    Bruce  44   L.    R.    A.    397;    74    N.    W.    906. 

v.  Lumber  Co.,  87  Va.  381 ;  24  Am.  Contra,  Baer's  Appeal.   127  Pa.  St. 

St.  Rep.  657;  13  S.  E.  153.  360;   4  L.  R.  A.  609,  where  an  ad- 

3  Sigua  Iron  Co.  v.  Greene,  88  Fed.  ministrator      who      had      deposited 


THE  PAROL  EVIDENCE  RULE.  1859 

in  an  action  between  an  agent  of  one  of  the  parties  to  a  written 
contract  and  bis  principal,^  or  the  adversary  party  to  tbe  con- 
tract/ or  a  tbird  person/''  extrinsic  evidence  may  be  admitted 
to  sbow  tbe  real  understanding.  So  if  an  agent  is  a  defendant 
in  a  criminal  action  in  wbicb  be  is  cbarged  witb  embezzlement, 
be  may  introduce  extrinsic  evidence  to  sbow  tbe  real  contract 
between  bimself  and  bis  principal,  and  tbus  sbow  tbat  tbe 
money  appropriated  by  bim  was  not  taken  witb  criminal  intent, 
tbougb  in  an  action  between  bimself  and  his  principal,  upon  the 
contract  of  employment,  such  evidence  would  have  been  inad- 
missible/^ A  subsequent  holder  or  assignee  of  a  written  con- 
tract is  of  course  as  much  bound  by  tbe  parol  evidence  rule  as 
tbe  original  party  thereto,  under  whom  be  claims.^"  So  if  a 
tbird  person  bases  bis  claim  upon  a  contract,  and  is  seeking  to 
enforce  it,^^  as  where  be  is  seeking  to  sbow  that  the  written 
contract  was  made  between  the  parties  thereto  for  bis  benefit,^* 
the  parol  evidence  rule  applies.  If  a  release  has  been  given 
to  one  of  two  joint  wrongdoers,  tbe  other  wrongdoer  is  a  stranger 
thereto,  within  tbe  meaning  of  the  parol  evidence  rule,  though 
the  effect  of  such  release  may  be  to  discbarge  him.^^ 

§1207.     Parol  evidence  rule  does  not  apply  where  existence  or 
validity  of  contract  is  in  issue. 

Tbe  parol  evidence  rule  presupposes  an  action  based  on  a 
valid  contract,  and  between  the  parties  thereto  or  those  claim- 
money  of  the  estate  in  a  bank,  tak-  n  Walker  v.  State,   117  Ala.  42; 

ing  a  certificate  of  deposit,  was  not  23   So.   149. 

allowed  to  show  a  contract  between  12  Andrus    v.    Blazzard,    23    Utah 

himself    and    the    bank    permitting  233;  54  L.  R.  A.  354;  63  Pac.  888. 
him  to  withdraw  the  money  at  any  is  Sayre  v.  Burdick,  47  Minn.  367; 

time  to  relieve  himsielf  from  liabil-  50  N.  W.  245;  Schneider  v.  Kirkpat- 

ity  after  the  bank  had  failed.  rick,  80  Mo.  App.  145. 

sFolinsbee  v.   Smvyer,   157   N.  Y.  i*  Sehultz  v.   Bank,   141   111.   116; 

196;  51  N.  E.  994,  33    Am.    St.    Rep.    290;    30    N.    E. 

9  Harvey  v.   Hpnry,    108   la.    168;  346;     Traders'     National     Bank     v. 
78  N.  W.  850.  Water-Power  Co.,  22  Wash.  467;  61 

10  Elliott  V.  S.   S.  Co.,   22   Wash.      Pac.  152. 

220;  60  Pac,  *10.  is  O'Shea    v.    Ry..    105    Fed.    559; 

44  C.  C.  A.  001. 


1860  PAGE    ON    CONTRACTS. 

ing  under  them.  If  the  issue  is  as  to  the  existence  or  validity 
of  the  contract;  the  rule  by  its  very  terms  has  no  application 
and  extrinsic  evidence  is  necessarily  admitted  to  determine  such 
issue,  whether  such  evidence  tends  to  establish  the  validity^  or 
the  invalidity^  of  the  contract  in  question.  Specific  instances  of 
the  application  of  this  principle  will  be  given  in  the  following 
sections. 

§1208.    Facts  of  execution. 

The  so-called  parol  evidence  rule  has  no  application  where 
the  issue  is  whether  or  not  the  contract  sued  upon  was  entered 
into,  and  the  evidence  offered  was  for  the  purpose  of  showing 
that  no  contract  was  in  fact  made.  Extrinsic  evidence  is  ad- 
missible to  show  what  took  place  at  the  execution  of  the  instru- 
ment as  affecting  its  validity.^  Indeed,  without  such  evidence 
a  written  contract  could  never  be  shown  to  be  valid.  Thus 
where  A  denies  that  he  ever  assented  to  the  written  contract 
alleged  by  B,  A  may  show  the  oral  contract  which,  as  he  claims, 
was  the  only  contract  entered  into."  Evidence  is  admissible 
to  show  that  one  who  is  alleged  to  have  signed  an  assignment 
of  an  insurance  policy  by  mark  did  not  sign  it,  was  unable  to 
read  and  did  not  know  the  contents  of  the  assignment.^  So 
where  a  written  contract  is  in  form  an  offer  by  A,  accepted  by 
B  in  writing,  it  may  be  shown  that  B  accepted  it  in  writing 
before  A  agreed  to  it  or  signed  it,  and  hence  that  it  was  really 

iVerzon    v.    McGregor,    23    Cal.  Am.  St.  Rep.   568;   46  N.  W.  724 

339;  Black  v.  Ry.,  Ill  111.  351;  53  Johnson  v.  Smith,  165  Pa.  St.  IQ'S 

Am.    Rep.    628;    Uhl    v.    Moorhous,  30  Atl.  675;  McCartney  v.  McCart 

137   Ind.   445;    37   N.   E.   366;    Saf-  ney,   93    Tex.   359;    55   S.   W.    310 

ranski  v.  Ry.,  72  Minn.  185;   75  X.  reversing  53   S.  W.   388;   Hindle  v 

W.  17.  Hoi  comb,  —  Wash.  — ;  75  Pac.  873 

2  Brennecke  v.  Heald,  107  la.  376;  Flowers  v.  Fletcher,  40  W.  Va.  103 

77  iSr.  W.  1063;  Church  v.  Case,  110  20  S.  E.  870;  Curry  v.  Colburn,  99 

Mich,   621;    68  IST.  W.  424;   Reiner  Wis.  319;  67  Am.  St.  Rep.  860;  74 

V.  Crawford,  23  Wash.  669;  83  Am.  N.  W.  778. 
St.  Rep.  848;  03  Pac.  516.  2  Brennecke  v.  Heald,  107  la.  376; 

1  Jordan  v.   Davis,    108   HI.   336;  77  N.  W.  1063. 
Williams  v.  Hall.  2  Dana  (Ky.)  97;  3  wienecke  v.  Arbin,  88  Md.  182-; 

Wilbur  V.  Stoepel,  82  Mich.  344;  21  44  L.  R.  A.  142;  40  Atl.  709. 


THE    PAROL    EVIDENCE   EULE.  1861 

B's  offer.*  So  if  a  clause  in  a  written  contract  executed  by  an 
agent  makes  it  subject  to  the  approval  of  the  principal,  it  may 
be  shown  that  the  principal  assented  to  such  contract  in  ad- 
vance.^ It  has  been  held  that  it  may  be  shown  that  a  written 
contract  was  a  mere  formality,  and  never  was  to  take  effect." 
Thus  evidence  is  admissible  to  show  whether  a  person  whose 
name  appears  upon  an  instrument  in  a  place  customary  for  a 
witness  signs  as  a  witness  or  as  a  maker  ;^  to  show  whether  one 
signing  a  negotiable  note  on  the  bank  did  so  before  or  after 
delivery,  where,  if  the  note  were  signed  before  delivery  he 
would  be  liable  as  a  co-maker  f  to  show  whether  a  person  writ- 
ing his  initials  upon  a  contract  does  so  merely  to  witness  an 
interlineation,  or  whether  he  intends  his  initials  to  be  incorpo- 
rated in  the  instrument  as  a  part  of  the  interlineation  f  to  show 
that  one  who  had  signed  a  promissory  note  on  the  back  thereof 
had,  before  delivery,  ordered  that  his  endorsement  be  erased, 
and  that  the  transferee  knew  of  such  order  ;^°  to  show  that  a 
contract  which  on  its  face  was  signed  by  A  on  behalf  of  B,  was 
in  fact  signed  by  A  on  behalf  of  B  and  in  B's  presence,  thus 
satisfying  the  statute  of  frauds,  which  in  that  jurisdiction,  re- 
quires the  authority  of  an  agent,  who  signs  a  memorandum 
to  be  in  writing,"  or  that  a  w^itness  signed  after  the  instru- 
ment was  delivered.^"  So  if  a  vote  of  a  corporation  is  relied  on 
as  a  written  contract  oral  evidence  is  admsisible,  and  indeed 
necessary,  to  show  Avhether  the  adversary  party  ever  knew  of  or 
accepted  such  vote.^^  So  it  may  be  shown  where  a  bond  which 
recites  that  it  is  the  obligation  of  a  specified  principal  and 
sureties,  is  signed  by  the  sureties,  but  not  by  the  principal,  that 

4  Elastic  Tip  Co.  v.  Graham,  174  9  Isliam  v.  Cooper,   56  N.  J.  Eq. 
Mass.  507;  55  N.  E.  315.  398;   39  Atl.  760;  37  Atl.  462.     . 

5  Davis  V.   Furniture   Co.,  41   W.  lo  Gregg   v.    Groesbeck,    11    Utah 
Va.  717;  24  S.  E.  630.  310;  32  L.  E.  A.  266;  40  Pac.  202. 

6  Olmstead   v.   Michaels,    36    Fed.  n  Morton  v.  Murray,  176  111.  54; 
455;  1  L.  R.  A.  840.  43  L.  R.  A.  529;  51  N.  E.  767  (eon- 

7  Aultman  &  Taylor  Co.  v.  Gun-  tract  for  the  sale  of  realty), 
derson,  6  S.  D.  226;  55  Am.  St.  Rep.  12  Webster   v.    Smith,   72   Vt.    12; 
837:   60  K  w.  8.59.  47  Atl.  101. 

8  Bank  v.  Jeflferson,  92  Tenn.  537;  i3  Sears  v.  R.  R..   152  Mass.  151; 
36  Am.  St.  Rep.  100;  22  S.  W.  211.  9  L.  R.  A.  117;  25  N.  E.  98. 


1862  PAGE    ON    CONTRACTS. 

the  sureties  intended  it  to  take  effect  without  the  principal's 
signature.^*  If  the  question  is  as  to  what  the  words  of  the 
written  contract  are  and  if  the  instrument  itself  leaves  any 
doubt  on  this  point,  extrinsic  evidence  is  not  only  admissible 
but  necessary.  Such  evidence  is  admissible  to  show  when  cer- 
tain interlineations  were  made/^  or  to  show  when  and  by  whom 
grantee's  name  was  changed,^®  or  to  show  of  what  words  the 
real  contract  consisted  where  certain  terms  are  found  to  be 
crossed  out  and  marked  "  not  agreed  to.""  The  parol  evidence 
rule  does  not  prevent  one  of  the  parties  to  a  written  contract 
from  showing  the  true  date  thereof,  even  if  such  evidence  con- 
tradicts the  recitals  of  the  written  instrument.^^  Thus  extrin- 
sic evidence  is  admissible  to  show  that  a  sealed  contract  was 
delivered  at  a  time  subsequent  to  its  date.^^ 

§1209.     Extrinsic  evidence  to  annex  condition  precedent. 

If  the  party  against  whom  relief  is  sought  on  a  written  con- 
tract concedes  that  the  contract  was  placed  in  the  possession 
of  the  adversary  party,  but  claims  that  it  was  taken  with  the 
understanding  that  it  was  not  to  go  into  effect  until  some  other 
or  further  event  should  happen,  and  that  such  event  has  not 
happened,  he  is  not  seeking  to  vary  or  contradict  the  contract, 
but  to  show  that  no  contract  between  the  parties  ever  came  into 


14  Safranski  v.  Ry.,  72  Minn.  185;  Irvine,  51  Cal.  172;  Lake  Erie,  etc., 
75  N.  W.  17.  Ry.   V.   Charman,    161    Ind.   95;    67 

15  Pancake    v.    Campbell    County,  N.  E.  923;  Tribble  v.  Oldham,  5  J. 
44  W,  Va.  82;  28  S.  E.  719.  J.    Mar.     (Ky.)     137;     Shaugnessey 

16  Goodwin  v.  Norton,  92  Me.  532;  v.  Lewis,  130  Mass.  355;  Hinson  v. 
43  All.   111.  Forsdick    (Miss.),  25  So.  353;  Lex- 

17  Tate  V.  Torcutt,  100  Mich.  308;  ington  v.  Bank,  75  Miss.  1;   22  So. 
58  N.  W.  993.  291;   State  v.  Moore,  46  Neb.  590,' 

isOshey  v.  Hicks,  Cro.  Jac.  263;  50  Am.  St.  Rep.  626;  65  N.  W.  193; 

Jayne  V.  Hughes,  10  Exch.  430;  Hall  Fisher  v.  Butcher,  19  Ohio  406;  5.i 

V.  Cazenove,  4  East  477;   Steele  v.  Am.  Dec.  436;  Parke  v.  Neeley,  90 

Mart,  4  Barn.  &  C.  272;  District  of  Pa.    St.    52;    Alexander    v.    Bland, 

Columbia  v.  Iron  Works,  181  U.  S.  Cooke   (Tenn.)   431. 

453;   affirming  15  App.  D.  C.  198;  i9  District    of    Columbia    v.    Iron 

United  States  v.  Le  Baron,  19  How.  Works,  181  U.  S.  453;  affirming  15 

(U.   S.)    73;    Merrill  v.  Sypert,  65  App.  D.  C.  198. 
Ark.  51;   44   S.  W.  462;    Gately  v. 


THE    PAROL   EVIDENCE   RULE. 


1863 


effect.  Evidence  of  conditions  precedent  to  the  taking  effect 
of  a  written  contract  is  therefore  admissible.^  This  is  merely 
the  rule  that  an  instrument  may  be  delivered  to  the  adversary 
party  to  take  effect  on  the  happening  of  a  future  event,  restated 
in  terms  of  the  parol  evidence  rule."  Thus  extrinsic  evidence 
may  be  used  to  show  that  a  note  in  the  custody  of  the  payee 
was  to  take  effect  only  on  the  happening  of  some  event  which 
never  has  happened,  as  between  the  parties  and  all  but  bona  fide 
holders.^  Thus  evidence  is  admissible  to  show  that  such  note 
was  to  take  effect  only  if  the  horse  for  whose  price  it  was  given 
should  be  warranted,*  or  if  the  policy  of  insurance  for  which 
it  was  given  should  prove  satisfactory  to  the  maker  of  the  note  f 


iPym  V.  Campbell,  6  El.  &  Bl. 
370;  Wallis  v.  Littell,  11  C.  B. 
N.  S.  369;  Burke  v.  Dulaney,  153 
U.  S.  228;  Ware  v.  Allen,  128  U.  S. 
590;  Tug  River,  etc.,  Co.  v.  Brigel, 
86  Fed.  818;  30  C.  C.  A.  415;  Hurl- 
burt  V.  Duseiibery,  26  Colo.  240;  57 
Pac.  860;  Bourke  v.  Van  Keuren, 
20  Colo.  95;  36  Pac.  882;  McFar- 
land  V.  Sikes,  54  Conn,  250;  1  Am. 
St.  Rep.  Ill;  7  Atl.  408;  Price  v. 
Hudson,  125  111.  284;  17  N.  E.  817; 
McCorraick  Harvesting  Machine  Co. 
r.  Morlan,  121  la.  451;  96  N.  W. 
976;  Riechart  v.  Wilhelm,  83  la. 
510;  50  N.  W.  19;  Beall  v.  Poole, 
27  Md.  645;  Adams  v.  Morgan,  150 
Mass.  143;  22  N.  E.  708;  Wilson  v. 
Powers,  131  Mass.  539;  Fulton  v. 
Priddy,  123  Mich.  298;  81  Am.  St. 
Rep.  201;  82  N.  W.  65;  Westman 
V.  Krumweide,  30  Minn.  313;  15 
N.  W.  255;  Harnickell  v.  Ins.  Co.. 
Ill  N.  Y.  390;  2  L.  R.  A.  150;  18 
N.  E.  632;  Reynolds  v.  Robinson, 
110  X.  Y.  654;  18  N.  E.  127;  Ben- 
ton V.  Martin,  52  N.  Y.  570;  Sweet 
V.  Stevens,  7  R.  I.  375;  Bissenger  v. 
Guiteman,  6  Heisk.  (Tenn.)  277; 
Oilman  v.  Williams.  74  Vt.  327;  52 
Atl.  428;  Catt  v.  Olivier.  98  Va. 
580;  36  S.  E.  980;  Reiner  v.  Craw- 


ford, 23  Wash.  669;  83  Am.  St. 
Rep.  848;  63  Pac.  516;  Curry  v.  Col- 
burn,  99  Wis.  319;  67  Am.  St.  Rep. 
860;  74  N.  W.  778;  Nutting  v.  Ins. 
Co.,  98  Wis.  26;  73  N.  W.  432. 
"  The  making  and  delivering  of  a 
writing,  no  matter  how  complete  a 
contract  according  to  its  terms,  is 
not  a  binding  contract  if  delivered 
upon  a  condition  precedent  to  its 
becoming  obligatory.  In  such  case 
it  does  not  become  operative  as  a 
contract  until  the  performance  on 
happening  of  the  condition  prece- 
dent." Cleveland  Refining  Co.  v. 
Dunning,  115  Mich.  238,  239;  73  N. 
W.  239;  citing  Ware  v,  Allen,  128 
U.  S.  590;  Phelps  v.  Abbott,  114 
Mich.  88. 

2  See  §  595. 

3McFarland  v.  Sikes,  54  Conn. 
250;  1  Am.  St.  Rep.  Ill;  7  Atl. 
408;  Oilman  v.  Williams,  74  Vt. 
327;  52  Atl.  428;  Catt  v.  Olivier, 
98  Va.  580;  36  S.  E.  980. 

4  Trumbull  v.  O'Hara,  71  Conn. 
172;  41  Atl.  546. 

5  Parker  v.  Bond,  121  Ala.  529; 
25  So.  '898.  See  also  Mehlin  v.  Life 
Association,  2  Ind.  Ter.  396;  51  S. 
W.  1063. 


1864  PAGE    ON    CONTKACTS. 

that  the  note  was  to  take  effect  only  if  negotiated  at  a  specified 
place;®  that  it  was  to  take  effect  only  if  the  maker  did  not  de- 
mand by  a  certain  day  that  it  should  be  redelivered;^  that  a 
written  guaranty  was  conditioned  upon  the  purchase  of  a  cer- 
tain amount  of  leather  by  the  party  whose  credit  was  guaran- 
teed;* that  an  insurance  policy  was  not  to  take  effect  until  the 
insured  had  canceled  another  policy  on  the  same  property  in  a 
different  company  f  that  a  written  order  for  goods  was  to  take 
effect  only  if  the  vendee  succeeded  in  canceling  a  written  order 
previously  given  to  another  person  ;^**  that  a  lease  of  a  mining 
claim  was  to  take  effect  only  if  the  lessees  should  be  able  to 
obtain  a  certain  amount  of  money  from  a  third  person  ;^^  that 
a  contract  to  sell  mining  stock  was  to  take  effect  only  on  condi' 
tion  that  the  vendor's  agent  in  another  town  had  not  already 
sold  the  same  stock  ;^^  that  a  note  should  take  effect  only  if  the 
transaction  as  part  of  which  it  was  given  was  approved  by  the 
attorney  of  the  maker  ;^^  that  a  written  contract  of  sale  should 
take  effect  only  if  the  purchase  were  ajDproved  by  the  engineer 
of  the  vendee  ;^*  that  a  note  is  not  to  take  effect  until  the  maker 
has  an  opportunity  to  examine  the  property  purchased  and  ac- 
cepts such  property  ;^^  or  that  an  insurance  policy,  temporarily 
placed  in  the  possession  of  the  insured,  but  afterwards  with- 
drawn by  the  agent,  is  not  to  take  effect  unless  approved  by  the 
insurance  company/®  Thus  evidence  is  admissible  to  show  that 
one  signed  as  surety  with  the  understanding  that  he  was  to  be 

6  United  States  National  Bank  v.  lo  Cleveland  Refining  Co.  v.  Dun- 

Ewing,   131   X.  Y.  506;   27  Am.  St.  ning,  115  Mich.  2.38;  73  N.  W.  239. 

Rep.  615;  30  N.  E.  501.  n  Hurlburt  v.  Dusenbeiy,  26  Colo. 

TMcFarland    v.    Sikes,    54    Conn.  240;  57  Pac.  860. 

250;    1    Am.    St.  Rep.    Ill;    7   Atl.  12  Reiner   v.   Crawford,   23   Wash. 

408.     And  see  to  the  same  effect,  in  669;  83  Am.  St.  Rep.  848;  63  Pac. 

a   written    contract   of  subscription  516. 

for  stock.  Ada  Dairy  Association  v.  is  Ware  v.  Allen,  128  U.  S.  590. 

Mears,    123    Mich.    470;    82   N.    W.  i4  Pym  v.   Campbell,   6  El.  &   B. 

258.  370. 

8  Lennox   v.    Murphy,    171    Mass.  is  Burke   v.    Dulaney,    153   U.    S. 

370;  .50  N.  E.  644.  228. 

»  Moore  v.  Insurance  Association,  i^  Xutting  v.  Ins.  Co.,  98  W'is.  26; 

107  Ga.  199;  33  S.  E.  65.  73  N.  W.  432. 


THE  PAROL  EVIDENCE  RULE.  1865 

liable  only  if  others  signed  with  him/^  In  some  jurisdictions 
where  the  maker  has  voluntarily  put  the  instrument  into  the 
possession  of  the  adversary  party  he  cannot  show  that  it  was 
not  to  take  effect  until  some  other  party  had  signed  it,  on  the 
theory  that  an  escrow  cannot  be  deposited  with  the  adversary- 
party.^^  Thus  where  a  deed^®  or  a  mortgage^"  has  been  volun- 
tarily surrendered  to  the  grantee  or  mortgagee,  it  cannot  be 
shown  that  it  was  to  be  inoperative  until  the  happening  of 
a  specified  event.  So  evidence  is  admissible  to  show  that  a 
written  subscription  for  stock  in  a  corporation  was  not  to  go 
into  effect  until  a  certain  number  of  persons  had  signed.^^ 
If  the  payee  does  not  know  that  the  surety  does  not  intend  to 
be  bound  unless  others  sign  the  contract,  the  surety  cannot 
avoid  liability  to  the  payee  even  if  the  principal  debtor  de- 
livered the  instrument  to  the  payee  in  violation  of  his  agree- 
ment with  his  surety.  This  principle  applies  equally  to  ne- 
gotiable notes"^  and  to  non-negotiable  bonds.^^  This  is  not 
because  of  the  parol  evidence  rule,  however,  but  because  such 
facts  do  not  constitute  a  defense.  This  principle  has  been 
carried  so  far  that  a  written  instrument,  purporting  to  be  a 

"  Dair  V.  United  States,  16  Wall.  22  Clark    v.    Bryce,    64    Ga.    486; 

(U.    S.)     1;    Guild    v.    Thomas,    54  Whitcomb   v.   Miller,    90    Ind.    384; 

Ala.  414;    25  Am.  Rep.   703;    Hud-  Micklewait  v.  Noel,  69  la.  344;  28 

speth's  Administrator  v.  Tyler,   108  N,    W.   630;    Smith   v.   Moberly,    10 

Ky.  520;  56  S.  W.  973;  Inhabitants  B.   Mon.    (Ky.)    266;    52    Am.   Dec. 

of  Readfield  v.  Shaver,  50  Me.  36;  79  543;  Wylie  v.  Bank,  63  S.  C.  406; 

Am.  Dee.   592;   Hessell  v.  Johnson,  41  S.  E.  504;  Lookout  Bank  v.  Aull, 

63  Mich.  623;  6  Am.  St.  Rep.  334;  93  Tenn.  645;  42  Am.  St.  Rep.  934; 

30  N.  W.  209;  Hall  v.  Parker,  37  27  S.  W.  1014;  Farmers',  etc.,  Bank 

Mich.  590;   26  Am.  Rep.  540;   Cut-  v.   Humphrey,   36  Vt.   554;   86  Am. 

ler  V.  Roberts,   7   Neb.  4;    29   Am,  Dec.  671. 

Rep.  371.  23  Carroll  County  v.  Ruggles,  69 

18  Findley  v.  Means,  71  Ark.  289:  la.  269;  58  Am.  Rep.  223;  28  N.  W. 
73  S.  W.  101 ;  Clanin  v.  Machine  Co.,  590.  "  A  surety  on  a  bond  cannot 
118  Ind.  372;  3  L.  R.  A.  863;  21  defeat  his  liability  thereon  by  show- 
N.  E.  35,     See  §  596.  ing  that  it  was  delivered  in  viola- 

19  Hubbard  v.  Greeley,  84  Me.  tion  of  agreements  between  himself 
340;  17  L.  R.  A.  511.  and  the  principal  or  any  other  co- 

2«  Sargent    v.    Cooley,    —    N.    D.  maker,   unknown   to   the   party   for 

— ;  94  N,  W,  576.  whose  benefit  it  was  given."    Rich- 

siGilman  v.  Gross,  97  Wis.  224;  ardson  v.  Bank,  57  0.  S,  299,  314; 

72  N.  W.  885.  48  N.  E.  1100. 


1866  PAGE    ON    CONTEACTS. 

contract  of  sale,  deposited  with  a  third  person,  has  been  ^x 
plained  orally  as  a  mere  memorandum  of  the  terms  on  which 
the  vendee  could  exercise  an  option  to  purchase. 


21 


§1210.     Extrinsic  evidence  to  annex  condition  subsequent. 

If  the  party  against  whom  relief  is  sought  concedes  that  the 
contract  has  taken  effect,  but  seeks  to  add  a  condition  thereto 
by  extrinsic  evidence,  he  is  seeking  to  add  to  a  written  contract 
by  extrinsic  evidence  of  the  intention  of  the  parties  direct.  If 
the  contract  is  complete  and  is  therefore  one  within  the  parol 
evidence  rule,  such  evidence  is  inadmissible.^  The  acceptor 
of  a  bill  of  exchange  cannot  show  that  the  acceptance  was  made 
upon  an  oral  condition.^  But  if  "  executor  "  is  added  to  the 
signature  of  the  acceptor,  an  oral  contract  that  he  should  be 
liable  only  out  of  the  funds  of  the  estate  has  been  held  en- 
forceable.^ If  a  promissory  note  is  executed  and  delivered, 
extrinsic  evidence  is  inadmissible  to  show  a  condition  subse- 
quent,* as  that  it  is  to  be  void  if  the  machinery,  in  payment 
of  which  it  is  given,  does  not  do  a  specified  amount  of  work 
in  a  specified  time,^  that  the  note  is  given  simply  to  show  the 
amount  of  unsold  goods  in  the  possession  of  the  makers  of  the 
note  belonging  to  the  payee,  and  that  the  note  was  not  to  be 
paid  unless  the  goods  were  sold,''  or  that  its  payment  is  oon- 

24  Adams    v.    Morgan,    150    Mass.  2  Burns,    etc.,    Co.    v.    Doyle.    71 

143;  22  N.  E.  708.  Conn.  742;  71  Am.  St.  Rep.  2.35;  43 

iLevy,  etc.,  Co.  v.  Kauflfman,  114  Atl.  483. 

Fed.  170;   52  C.  C.  A.  126;  Mackey  s  Sehmittler  v.   Simon,   114  N.  Y. 

V.   Magnon,   28   Colo.    100;    62   Pac.  176;   11  Am.  St.  Rep.  621;  21  N.  E. 

945;    affirming    54    Pac.    907;    Bass  162. 

Dry  Goods  Co.  v.  Mfg.  Co.,  119  Ga.  4  Aultman  v.  Hawk  (Neb.),  95  N. 

124;  45  S.  E.  980;  Stapleton  v.  Mun-  W.  695. 

roe,  111  Ga.  848;  36  S.  E.  428;  Mc-  5  Lunsford  v.  Malsby,  101  Ga.  39; 

Cormick  Harvesting  Machine  Co.  v.  28  S.  E.  496. 

Markert,  107  la.  340;  78  N.  W.  33;  e  Western  Mfg.  Co.  v.  Rogers,  54 

Gathright      v.      Improvement      Co.  Neb.  456 ;  74  N".  W.  849.     But  while 

(Ky.),  56  S.  W.  163;  Feld  v.  Stew-  inadmissible    as    a    defense,    such    a 

art,  78  Miss.  187;  28  So.  819;  Trip-  contract  has  been  held  available  foi 

lett   V.   Woodward's   Admr.,   98   Va.  a  counter-claim,  as  a  collateral  con^ 

187;    35   S.  E.  455;   Hyde  v.  Bank,  tract.     Clement     Bane     &     Co.     v. 

115  Wis.  170;  91  N.  W.  230.  Houck,  113  la.  504:  85  N.  W.  765, 


THE  PAEOL  EVIDENCE  RULE.  1867 

tingent  on  the  existence  of  an  endowment  fund  ;^  or  that  the 
maker  of  a  note  is  to  have  an  option  of  surrendering  the 
policy  for  which  the  note  was  given,  taking  out  another  policy 
at  a  lower  rate,  and  having  the  note  canceled;*  or  that  it  is 
not  to  be  paid  if  the  maker  of  another  note  for  which  this  is 
given  should  become  bankrupt.''  A  executed  a  note  payable 
to  B,  a  business  college,  and  B  executed  a  certificate  that  A 
had  purchased  a  scholarship  which  in  terms  was  assignable 
and  would  enter  college  at  a  specified  date.  It  was  held  by 
a  divided  court  that  an  oral  contract  that  such  note  should 
not  be  paid  if  the  maker  did  not  attend  and  could  not  sell 
the  scholarship  could  not  be  shown  to  defeat  recovery  upon 
such  note.^^  So  a  bond  to  secure  an  agent's  performance 
of  duty  can  not  be  shown  to  be  upon  oral  condition  that  the 
obligee  of  the  bond  should  give  immediate  notice  of  the  surety 
of  any  default  by  the  agent.^^  So  a  written  contract  for  the 
sale  of  hops,  cannot  be  avoided  by  showing  an  oral  agreement 
that  there  should  be  no  sale  if  the  market  was  not  as  represented 
by  the  vendor.^"  So  a  written  contract  for  the  sale  of  the 
business,  and  the  payment  of  a  certain  sum  of  money  therefor, 
cannot  be  avoided  by  showing  an  oral  agreement  that  this 
money  should  be  paid  only  if  the  business  was  successful.^* 
So  a  written  contract  of  sale  cannot  be  avoided  by  showing 
a  contemporaneous  oral  contract  giving  the  vendee  the  option 
to  cancel  his  order  in  certain  contingencies.^*  So  a  contract 
for  procuring  a  right  of  way  for  a  railroad  cannot  be  avoided 
by  showing  that  the  contract  was  to  be  defeasible  if  the  railroad 

7  Trustees  of  Christian  University  n  Mason,   etc.,    Co.   v.   Gage,    119 

V.  Hoffman,  95  Mo.  App.  488;  69  S.  Mich.  361;  78  N.  W.  130. 

W,  474.  12  Lilienthal  v.  Brewing  Co.,   154 

sMiddleton  v.   Griffith,   57    N.   J.  Mass.  185;  26  Am.  St.  Rep.  234;  12 

L.    442;    51    Am.    St.    Rep.    617;    31  L.  R.  A.  821 ;  28  N.  E.  151. 

Atl.  405.  13  Van  Arsdale  v.  Brown,  18  Ohio 

9  Central  Savings  Bank  v.  O'Con-  C.  C.  52;  9  Ohio  C.  D.  488. 

nor,  —  Mich. — ;  94  N.  W.  11.  "  Houck    v.    Wright    (Miss.),    23 

10  Jamestown  Business  College  So.  422;  Hanrahan  v.  Association, 
Association  v.  Allen,  172  N.  Y.  291;  66  N.  J.  L.  80;  s.  c,  67  N.  J.  L. 
92  Am.  St.  Rep.  741;  64  N.  E.  952.  526;  s.  c,  68  N.  J.  L.  730;  48  Atl. 

517. 


1868  PAGE    ON    CONTRACTS. 

company  did  not  bridge  a  certain  river/'  So  a  written  contract 
guaranteeing  capacity  of  a  heater  cannot  be  shown  by  extrinsic 
evidence  to  be  conditioned  on  the  vendee's  building  a  stone 
wall  under  the  house  where  the  heater  was  to  be  used/^  So  a 
written  contract  of  guaranty  cannot  be  shown  to  be  defeasible 
if  mortgage  security  for  the  debt  were  given/'^  So  if  a  grantee 
assumes  a  mortgage  debt  in  the  deed  to  him,  he  cannot  show 
that  this  was  conditioned  on  the  payment  of  a  certain  sum  by 
the  grantor  to  the  grantee/^  In  all  these  cases  the  condition 
is  nothing  more  than  an  oral  term  sought  to  be  incorporated 
in  a  complete  written  contract,  or  invoked  to  contradict  that 
part  of  the  contract  which  has  been  reduced  to  writing.  It  is 
clearly  unenforceable  under  the  parol  evidence  rule. 

§1211.     Want  of  consideration,  mistake  and  fraud. 

Even  if  the  written  instrument  has  been  delivered,  either 
party  has  the  right  to  show  any  facts  which  prevent  the  writing 
from  constituting  a  valid  contract.  If  this  were  not  so,  a 
written  contract  would  be  free  from  all  defenses  and  outside  of 
all  rules  which  determine  the  validity  of  contracts.  At  the 
same  time,  the  party  who  is  seeking  to  uphold  the  contract  has 
the  right  to  introduce  evidence  to  contradict  that  offered  by 
the  adversary  party  and  to  show  that  the  contract  is  valid. 
Thus  evidence  that  the  contract,^  as  a  note  not  in  the  hands 
of  a  hona  fide  holder;^  or  a  note  and  mortgage;^  or  a 
sealed  instrument  in  equity^  is  without  consideration;  or 
that    the    contract    was    entered    into    by     mistake,'    either 

15  Stanton  v  R.  R.,  59  Conn.  272;  28  S.  E.  632;  Beaty  v.  Carr,  109  la. 

21  Am.  St.  Rep.  110;  22  Atl.  300.  183;  80  N.  W.  326;  First  National 

isMouat  V.  Montague,  122  Mich.  Bank  v.  Felt,  100  la.  680;  69  N.  W. 

334;  81  N.  W.  112.  1057;    Bigelow  v.   Bigelow,   93  Me. 

"Faulkner    v.    Gilbert,    61    Neb.  439;  45  Atl.  513. 
602;    85   N.  W.  843;   rehearing  re-  3  Raird  v.  Baird,  145  111.  659;  28 

fused,  62  Neb.  126.  L.  R.  A.  375;   Anderson  v.  Lee,  73 

18  Woodcock  V.  Bostic,   128  N.  C.  Minn.  397;  76  N.  W.  24. 
243;  38  S.  E.  881.  4  Hale  v.  Dressen,  73  Minn.  277; 

1  Brown  v.  Smedley,  —  Mich.  — ;  76  N.  W.  31. 

98  N.  W.  856.  5  Greer  v.  Caldwell,   14  Ga.  207; 

2  Hawkins  v.  Collier,  101  Ga.  145;      Blanchard  v.  Kenton,  4  Bibb.  (Ky.) 


THE  PAROL  EVIDENCE  RULE. 


1869 


as  to  its  terms"  or  subject-matter/  such  as  prevents  the  con- 
tract from  taking  effect,  or  that  the  contract  was  entered  into 
because  of  fraud/  either  in  the  execution/  or  the  inducement/" 
does  not  violate  the  parol  evidence  rule  and  is  admissible. 
However,  a  breach  of  contract  is  not  fraud /^  and  hence  no 
relief  on  the  ground  of  fraud  can  be  given  against  one  who 
breaks  an  oral  term  of  a  contract  which,  except  such  term,  has 
been  put  in  the  form  of  a  complete  written  contract/^  Thus 
under  a  written  contract  to  carry  mails  according  to  a  certain 
schedule,  an  oral  promise  to  procure  a  change  in  such  schedule 


451;  Lindley  v.  Sharp,  7  T.  B.  Mon. 

(Ky.)  248;  Murphy  v.  Trigg,  1  T.  B. 
Mon,  (Ky.)  72;  Butler  v.  State,  81 
Miss.  734;  33  So.  847;  Bryce  v.  Lo- 
rillard  F.  Ins.  Co.,  55  N.  Y.  240;  14 
Am.  Rep.  249;  Welles  v.  Yates,  44 
N.  Y.  525;  Coles  v.  Bowne,  10  Paige 

(N.  Y.)  526. 

6  Barrie  v.  Frost,  105  111.  App. 
187;  Atwater  v.  Cardwell  (Ky.),  54 
S.  W.  960;  Gwaltney  v.  Assurance 
Society,  132  N.  C.  925;  44  S.  E. 
659;  Lord  v.  Accident  Association, 
89  Wis.  19;  46  Am.  St.  Rep.  815;  26 
L.  R.  A.  741;  61  N.  W.  293. 

7  Bedell  v.  Wilder,  65  Vt.  406; 
36  Am.  St.  Rep.  871 ;  26  Atl.  589. 

sAmer  v.  Hightower,  70  Cal.  440; 
McCrary  v.  Pritchard,  119  Ga.  876; 
47  S.  E.  341;  Barrie  v.  Miller,  104 
Ga.  312;  69  Am.  St.  Rep.  171;  30 
S.  E.  840;  Race  v.  Weston,  86  111. 
91;  Vilett  v.  Moler,  82  Minn.  12; 
84  N.  W.  452;  Howie  v.  Pratt,  — 
Miss.  — ;  35  So.  216;  Anderson  v. 
Scott,  70  N.  H.  350;  47  Atl.  607; 
Cass  V.  Brown,  68  N.  H,  85;  44  Atl. 
86;  Hoitt  v.  Holcomb,  23  N.  H. 
535;  Mayer  v.  Dean,  115  N.  Y.  556; 
5  L.  H.  A.  540;  22  N.  E.  261;  Fine 
V.  Stuart  (Tenn.  Ch.  App.),  48  S. 
W.  371 ;  Griffith  v.  Strand,  19  Wash. 
686;  54  Pac.  613. 

9  Gore  V.  Malsby,  110  Ga.  893;  36 
S.    E.    315;    McBride   v.    Publishing 


Co.,  102  Ga.  422;  30  S.  E.  999; 
Cutler  V.  Lumber  Co.,  128  N.  C. 
477;  39  S.  E.  30;  Cameron  v.  Esta- 
brooks,  73  Vt.  73;  50  Atl.  638. 
Where  the  party  signing  a  release 
was  unable  to  understand  its  con- 
tents because  of  pain.  Girard  v. 
Wheel  Co.,  123  Mo.  358;  45  Am.  St. 
Rep.  556;  25  L.  R.  A.  514;  27  S.  W. 
648.  As  to  the  existence  of  the 
subject-matter.  J.  G.  Shaw  Blank 
Book  Co.  V.  Maybell,  86  Minn.  241; 
90  N.  W.  392. 

10  Barrie  v.  Miller,  104  Ga.  312; 
69  Am.  St.  Rep.  171;  30  S.  E.  840; 
Dowagiac  Mfg.  Co.  v.  Gibson,  73  la. 
525;  5  Am.  St.  Rep.  697;  35  N.  W. 
603;  Sisson  v.  Kaper,  105  la.  599; 
75  N.  W.  490;  Marston  v.  Ins.  Co., 
89  Me.  266;  56  Am.  St.  Rep.  412;  36 
Atl.  389;  Rambo  v.  Patterson,  — 
Mich.  — ;  95  N.  W.  722;  Bauer  v. 
Taylor  (Neb.),  96  N.  W.  268; 
Mayer  v.  Dean,  115  N.  Y.  556;  5  L. 
R.  A.  540;  22  N.  E.  261;  Maute  v. 
Gross,  56  Pa.  St.  250;  94  Am.  Dec. 
62.  Contracts  within  the  statute  of 
Frauds:  Sale  of  realty.  Gustaf- 
son  V.  Rustemeyer,  70  Conn.  125;  66 
Am.  St.  Rep.  92;  39  L.  R.  A.  644; 
39  Atl.  104. 

11  See  §  99, 

i2Knowlton  v.  Keenan,  146  Mass. 
86;  4  Am..  St.  Hep.  282;  15  N.  E. 
127. 


18T0  PAGE    ON    CONTRACTS. 

eannot  be  treated  as  fraud/^  The  parol  evidence  rule  has,  of 
course,  no  application  to  mistake  in  the  expression  where  re- 
formation is  sought/^  If  it  did,  reformation  could  never  be 
had  under  any  circumstances.  The  courts  are  careful,  how- 
ever, to  limit  reformation  to  cases  of  mistake,  fraud  and  the 
like,  since  if  by  reformation  any  oral  term  could  be  added 
to  the  written  contract  the  sole  effect  of  the  parol  evidence 
rule  would  be  to  drive  the  parties  to  equity. ^^ 


§1212.     Illegality. 

Illegal  contracts  are  unenforceable  not  because  of  any  desire 
Du  the  part  of  the  courts  to  aid  either  party  thereto,  but  because 
,oublic  interests  require  that  they  be  not  enforced.  If  the  parties 
thereto  could  make  them  enforceable  by  the  simple  device  of 
putting  them  in  writing,  using  such  words  as  would  conceal  or 
omit  the  illegal  objects  intended  by  them  to  be  accomplished, 
the  rules  on  the  subject  of  illegality  would  be  of  but  little  use. 
A-Ccordingly,  evidence  that  tends  to  show  that  the  written  con- 
tract is  illegal,^  as  to  show  that  the  contract  is  tainted  with 
usury,^  or  is  given  to  compound  a  felony,^  or  that  a  lease*  is  in 
tt?d  of  prostitution,  or  tiiat  a  contract  is  intended  to  create  a 

laKnowlton  v.  Keenan,  146  Mass.  Sherman  v.  Wilder,  106  Mass.  537; 

86;   4  Am.  St.  Eep.  282;   15  N.  iG.  Detroit    Salt    Co.    v.    Salt    Co.,    — 

127.  Mich.  — ;    96   N.   W.    1;    Martin  v. 

14  Lawrence      County      Bank      v.  Clarke,    8   R.    I.    389;    5   Am.    Rep. 

Arndt,  69  Ark.  406;  65  S.  W.  1052;  586. 

Southern,   etc.,   Co.  v.   Ozment,    13^  2  Roe  v.  Riser,  62  Ark.  92 ;  54  Am. 

X.   C.   839;   44  S.  E.  681.     See  Ch.  St.  Rep.  288;  34  S.  W.  534;  Dwelle 

LVII.  V.  Blackwood,  106  Ga.  486;  32  S.  E. 

isKrueger  v.  Nicola,  205  Pa.  St.  593;  Koehler  v.  Dodge,  31  Neb.  328; 

38;  54  Atl.  494.  28    Am.    St.    Rep.    518;    47    N.    W. 

iMcMullen  v.  Hoffman,  174  U.  S.  913;   Cotton  States  Building  Co.  v. 

639;  affirming  83  Fed.  372;  45  L.  R.  Rawlins   (Tex.  Civ.  App.),  62  S.  W. 

A.  410;   28  C.  C.  A.  178,  which  re-  805. 

versed  75  Fed.  547;  Peed  v.  McKee,  s  Friend  v.  INIiller,  52  Kan.   139; 

42  la.  689;  20  Am.  Rep.  631 ;  Friend  39  Am.  St.  Rep.  340;  ,34  Pac.  397. 

V.  Miller,  52  Kan.  139;  39  Am.  St.  4  Sprague  v.  Rooney,  104  Mo.  349; 

Rep.   340;   34  Pac.   397;    Wilhite  v.  16   S.   W.   505;    overruling   Sprague 

Roberts,  4  Dana    (Ky.)    172;   Gould  v.  Rooney,  82  Mo.  493,  52  Am.  Rep. 

v.  Leavitt,  92  Me.  416;  43  Atl.  17;  383. 


THE    TAEOL   EVIDENCE   RULE.  18Y1 

monopoly,^  or  is  in  violation  of  the  anti-trust  statutes,®  that  a 
contract  to  lease  a  railroad  is  illegal/  or  that  a  chattel  mort- 
gage* is  given  to  defraud  creditors,  does  not  violate  the  parol 
evidence  rule  and  is  admissible.  However,  it  has  been  held 
that  it  cannot  be  shown  that  a  note  given  by  a  husband  to  hig 
wife  for  her  release  of  dower  was  a  part  of  an  oral  conti'act 
for  a  collusive  divorce.® 

§1213.    Non-compliance  witii  the  statute  of  frauds. 

If  the  contract  is  within  the  statute  of  frauds,  extrinsic 
evidence  is  admissible  to  show  that  other  terms  than  those 
reduced  to  writing  have  in  fact  been  agreed  upon,  and  thus  to 
show  that  the  memorandum  does  not  satisfy  the  statute.^  Such 
a  contract,  proved  partly  in  writing  and  partly  by  oral  evidence 
cannot  be  enforced.^  If,  however,  a  written  offer  is  accepted 
orally  with  modifications,  the  entire  writing  never  took  effect 
as  a  contract.  The  parties  are,  therefore,  free  to  show  the  con- 
tract actually  made  between  them.^  Thus  a  written  offer  to 
furnish  material  and  to  do  work  for  a  lump  sum  may  be  shown 
to  have  been  accepted  with  the  oral  modification,  assented  to 
by  the  adversary  party,  that  payment  should  be  made  in  install- 
ments.* 

§1214.    Breach  and  performance. 

Performance  and  breach  of  a  contract  are  questions  which 
necessarily  arise  after  the  contract  has  been  entered  into. 
Accordingly,  the  parol  evidence  rule  does  not  prevent  a  party 
to  a  contract  from  showing  such  breach  as  amounts  to  a  dis 

5  Harding  v.  Glucose  Co.,  182  111.  ^Irvin  v.  Irvin,  169  Pa.  St.  529; 
551;  74  Am,  St.  Rep.  189;  55  N.  E.      29  L.  R.  A.  292. 

577.  1  Fisher  v.   Andrews,   94  Md.  46 ; 

6  Detroit  Salt  Co.  v.  Salt  Co.,  —      50  Atl.  407. 

Mich.  — ;   96  N.  W.  1.  2  Beyerstedt  v.  Mill  Co.,  49  Minn. 

7  demons   Electrical   Mfg.   Co.   v.      1;   51   N.  W.  619. 

Walton,    173   Mass.   286;    52   N.   E.  3  Bruce  V.  Pearsall,  59  N.  J.  L.  62 ; 

132;  53  N.  E.  820.  34  Atl.  982. 

sHangen  v.  Hachemeister,  114  N.  *  Bruce  v.  Pearsall,  59  X.  J.  L.  62; 

Y.  566;   11  Am.  St.  Rep.  691;  5  L.  34  Atl.  982. 
R.  A.  137;  21  N.  E.  1046. 


1872  PAGE    ON    CONTRACTS. 

charge ;  such  as  failure  of  consideration/  as  of  a  promissory 
note  not  in  the  hands  of  a  ho7ia  fide  holder."  So  the  parol 
evidence  rule  has  no  application  to  evidence  tending  to  show 
payment.^ 

§1215.    Secondary  evidence. 

The  parol  evidence  rule  does  not  prevent  the  introduction  of 
secondary  evidence  to  prove  the  contents  of  a  lost  instrument 
in  writing.^  Oral  evidence  is  admissible  to  contradict  such 
secondary  evidence  as  to  the  contents  of  the  lost  v^^ritten  instru- 
ment.^ However,  such  evidence  must  always  be  limited  to  the 
contents  of  the  written  instrument.  Other  e:jtrinsic  evidence 
is  governed  by  the  rules  that  would  be  applicable  if  the  written 
instrument  were  in  evidence.  If  the  written  instrument  sup- 
posed to  be  lost  is  found  during  trial,  further  evidence  of  its 
contents  is  inadmissible  even  if  some  evidence  has  already  been 
introduced.^ 

III.     Use  of  Extrinsic  Evidence  in  Cases  "Within  the 

Rule. 

§1216.     Identification  of  parties. 

If  the  written  contract  shows  that  some  particular  parties 
were  intended,  but  does  not  show  with  sufficient  accuracy  who 
such  parties  are,  extrinsic  evidence  is  admissible  to  identify 
such  parties,^  and  as  will  be  seen  from  the  cases  given  evidence 
of  the  intention  direct  may  be  resorted  to.  So  under  a  written 
contract  to  pay  money  to  a  "  railroad,"  extrinsic  evidence  can 

1  Sargent  v.  Cooley,  —  N.  D.  — ;  515;  25  Pac.  187;  Magie  v.  Herman, 

94  N.  W.  576.  50  Minn.  424;  36  Am.  St.  Rep.  660; 

2Kelley  v.  Guy,  116  Mich.  43;  74  52  X,  W.  909. 

N.   W.    291;    Warner    v.    Shulz,    74  2  Strain  v.  Fitzgerald,   130  N.  C. 

Minn.  252;  77  K  W.  25.  600;  41  S.  E.  872. 

3  Payment  of  promissory  note.     G.  3  Grand    Isle    v.    Kinney,    70    Vt. 

Ober  &  Sons  Co.  v.  Drane,   106  Ga.  381;  41  Atl.  130. 

406;  32  S.  E.  371.  i  Morrison   v.   Baeehtold,   93   Md, 

1  Western  Union  Telegraph  Co.  v,  319;  48  Atl.  926. 
Collins,   45   Kan.   88;    10  L.   R.   A. 


THE    PAEOL   EVIDENCE   RULE.  1873 

be  used  to  show  what  railroad  corporation  was  intended/  So 
where  a  written  contract  purporting  on  its  face  to  be  made 
between  A  and  B  is  signed  bj  A,  C,  D  and  B  in  the  order 
given,  it  may  be  shown  that  C  and  D  sign  as  sureties  for  B.^ 
Where  a  note  is  signed  by  A  at  the  right,  and  by  B  at  the  left, 
of  the  instrument,  opposite  A's  signature,  B  may  show  that  he 
signed  as  witness.*  So  under  an  instrument  "  I.  O.  U.  the 
sum  of  one  hundred  sixty  dollars  which  I  shall  pay  on  demand 
to  you,"  the  real  party  intended  by  "  you  "  may  be  shown.^ 
So  where  a  note  omits  payee's  name  but  recites  "  value  received 
of  him,"  the  payee  may  be  shown.®  So  under  a  note  "  we 
promise  to  pay  to  the  order  of  myself,"  signed  by  two  persons, 
the  real  maker  and  payee  may  be  shown.''  If  the  name  set 
forth  in  the  contract  is  shown  not  to  be  the  name  of  the  person 
therein  described,  extrinsic  evidence  may  be  admitted  to  show 
who  such  person  is.  Thus  A  took  out  a  policy  payable  to 
"  Mrs.  Kate  Hogan,  his  wife."  Evidence  was  admitted  to 
show  that  he  had  a  wife,  Ellen  B.  Hogan,  and  a  married  sister, 
Kate  Wallace,  formerly  Kate  Hogan ;  that  the  insured  could 
not  write  and  asked  a  physician  to  make  out  the  application, 
and  that  the  latter  thought  that  the  insured's  wife  was  named 
Kate.^  Parties  may  be  identified  by  extrinsic  evidence  even  if 
the  contract  is  one  required  to  be  proved  in  writing,  or  is  re- 
quired to  be  in  writing.  Thus  extrinsic  evidence  is  admissible 
to  show  that  in  a  promise  to  pay  A's  debt  to  "  your  concern," 
addressed  to  "  Friend  Geo.,"  the  latter  was  the  agent  of  A's 


2  Mansfield,  etc.,  JR.  R.  v.  Brown,  s  Hogan  v.  Wallace,  166  111.  328; 
26  0.  S.  223.  46  X.  E.   1136.      (From  these   facts 

3  Thompson  v.  Coffman,  15  Or.  the  supreme  court  found  that  the 
631;   16  Pac.  713.  wife   was   the   beneficiary    intended. 

4Aultman,    etc.,    Co.    v.    Gunder-  They   rejected,    not   as   inadmissible 

son,  6  S.  D.   226;   55  Am.  St.  Rep.  but  as  improbable,  further  evidence 

837 ;  60  N.  W.  859.  of   the   physician    that   the    insured 

5  Kinney  v,  Flynn,  2  R.  I.  319.  named    the    beneficiary   "Kate    Ho- 

6  Barkley  v.  Tarrant,  20  S.  C.  gan,"  that  the  physician  asked  if 
574;  47  Am.  Rep.  853  (even  where  that  was  the  insured's  wife,  that  in- 
the  note  was  under  seal).  sured  remained  silent,  and  that  toe 

7  Jenkins   v.    Bass.    88    Ky.    397;  physician  added  "his  wife.") 
21    Am.    St.    Rep.    344;    11    S.    W. 

293. 

118 


•1871  PAGE    ON    CONTRACTS. 

creditor,  tlie  "  concern."^  Thus  extrinsic  evidence  is  admis< 
sible  to  show  to  whom  a  mortgage  was  to  be  paid/°  So  where 
a  deed  was  made  to  "  John  Elliott  and  Amanda  Elliott,  his 
wife,"  evidence  is  admissible  to  show  that  Amanda  Elliott,  the 
grantee,  was  a  woman  with  whom  John  Elliott  was  living  in 
unlawful  relations,  though  he  had  a  lawful  wife  living,  named 
Amanda/^  Where  a  deed  was  made  to  a  woman  after  her  mar- 
riage, and  her  maiden  name  was  inserted  as  that  of  grantee, 
extrinsic  evidence  was  admissible  to  show  that  she  was  intended 
as  the  grantee,  and  that  the  gi'antor  did  not  know  of  her  mar- 
riage/^ Where  the  Christian  name  of  a  grantee  is  omitted 
from  a  deed,  extrinsic  evidence  is  admissible  to  show  who  the 
grantee  is/^  Under  a  deed  to  "  Jarrett,  Moon  &  Co.,"  ex- 
trinsic evidence  was  admissible  to  show  whether  Jarrett  was 
one  grantee  and  Moon  another ;  or  whether  Jarrett  Moon  was 
the  name  of  the  sole  grantee/^  Under  a  grant  to  A  "  as  trus- 
tee," extrinsic  evidence  is  admissible  to  show  for  whom  he  was 
acting  as  trustee.^^ 

§1217.     Identification  of  subject-matter. 

If  the  written  contract  is  ambiguous  in  indicating  the  sub- 
ject-matter of  the  contract,  extrinsic  evidence  is  admissible  to 
identify  it.^     Thus   extrinsic  evidence  is  admissible  to  show 

9  Haskell  v.  Tukesbury,  92  Me.  551;  affirmed  (1899),  2  Ch.  309; 
551 ;  69  Am.  St.  Rep.  529 ;  43  Atl.  Reed  v.  Ins.  Co.,  95  U.  S.  23 ;  Brad- 
500.  ley  V.  Packet  Co.,   13  Pet.    (U.  S.) 

10  Morgan  v.  Lake  View  Co.,  97  89;  Edwards  v.  Bender,  121  Ala. 
Wis.  275;  72  N.  W.  872.  77;   25   So.   1010;  Moore  v.  Paving 

11  Wolff  V.  Elliott,  68  Ark.  326;  Co.,  118  Ala.  563;  23  So.  798;  Fol- 
57  S.  W.  1111.  lendore  v.  Follendore,   110  Ga.  359; 

i2Scanlan    v.    Wright,    13    Pick.  35   S.  E.   676;   Barrett  v.   Stow,   15 

(Mass.)   523;  25  Am.  Dee.  344.  111.  423;  Baldwin  v.  Boyce,  152  Ind. 

13  Leach  v.  Dodson,  64  Tex.  185.  46;  51  N.  E.  334;  Stoops  v.  Smith, 

14  Holmes  v.  Jarrett,  7  Heisk.  100  Mass.  63;  1  Am.  Rep.  85;  97 
(Tenn.)  506.  (In  either  case,  the  Am.  Dec.  76;  Swett  v.  Shumway, 
grantee  would  take  in  trust  for  the  102  Mass.  365;  3  Am.  Rep.  471; 
partnership.)  Stoddard    Mfg.    Co.    v.    Miller,    107 

15  Union  Pacific  R.  R.  v.  Durant,  Mich.  51;  64  N.  W.  948;  J.  G. 
95  U.  S.  576.  Shaw,  etc.,  Co.  v.  Maybell.  86  Minn. 

iCowen  V.  Truefitt   (1898),  2  Ch.       241;  90  N.  W.  392;  Reeves  v.  Cress, 


THE    PAEOL   EVIDENCE   RULE. 


1875 


what  is  included  hj  the  words  "  entire  estate.'"*  It  may  be 
shown  what  "  et  cetera  "  includes.^  Thus  extrinsic  evidence  is 
admissible  to  identify  a  debt,*  or  a  note.^  So  in  a  contract  to 
return  a  "  due-bill,"  if  the  company  did  not  issue  a  policy 
applied  for,  evidence  is  admissible  to  show  that  the  "  due-bill " 
was  a  note  given  for  the  premium  of  such  policy.^  So  in  a  con- 
tract to  assume  and  pay  the  "  debts  "  of  a  firm,  it  is  permitted 
to  show  what  are  the  debts  of  the  firm,^  and  to  show  that  a 
debt  appearing  on  the  books  of  the  firm  is  in  fact  the  individual 
debt  of  one  of  the  partners.*  So  in  a  contract  to  assume  and 
pay  "  claims  of  all  persons  who  have  performed  labor  upon, 
or  furnished  materials  for  us,  in  or  on  said  property,"  evidence 
is  admissible  to  show  that  claims  are  included.''  Even  in  a 
contract  required  to  be  proved  by  writing,  oral  evidence  can 
be  used  to  identify  "  the  bills  "  guaranteed,"  or  an  "  account " 
guaranteed.^^  So  where  a  deed  is  given  as  security  for 
"  money  owing,"  extrinsic  evidence  is  admissible  to  show  what 
money  was  owing  when  the  deed  was  delivered,  and  that  this 


80  Minn.  466;  83  N.  W.  443;  Field 
V.  Munson,  47  N.  Y.  221;  Harlan 
County  V.  Whitney,  65  Neb.  105;  90 
N.  W.  993;  Drexel  v.  Murphy,  59 
Neb.  210;  80  N.  W.  813;  Hurd  v. 
Eobinson,  11  O.  S.  232;  Dougherty 
V.  Chestnutt,  86  Tenn.  1 ;  5  S.  W. 
444;  Brown  v.  Markland,  16  Utah 
360;  67  Am.  St.  Kep.  629;  52  Pac. 
597;  Noyes  v.  Canfield,  27  Vt.  79; 
Hart  V.  Hammett,  18  Vt.  127; 
Lynch  v.  Henry,  75  Wis.  631;  44 
N.  W.   837. 

2  Miles  V.  Miles,  78  Miss.  904;  30 
So.  2. 

3  Bagley  v.  Sugar  Co.,  —  La.  — ; 
35  So.  539. 

4  Pay  son  v.  Lamson,  134  Mass. 
593;  45  Am.  Rep.  348;  Manchester 
V.  Bradner,  107  N.  Y.  346;  1  Am. 
St.  Eep.  829;  14  N.  E.  405;  Fitz- 
patrick  v.  Commissioners,  7  Humph. 

(Tenn.)  224;  46  Am.  Dec.  76;  Fosha 
V.  Prosser  —  Wis.  — ;  97  N.  W. 
924. 


5  McConaughy  v.  Wilsey,  115  la. 
589;  88  N.  W.  1101;  Bobbins  v. 
Klein,  60  O.  S.  199;  54  N.  E.  94; 
Hancock  v.  Melloy,  189  Pa.  St,  569; 
42  Atl.  292. 

6  Andrews  v.  Robertson,  111  Wis. 
334;  87  Am.  St.  Rep.  870;  54  L.  R. 
A.  673;  87  N.  W.  190. 

7  Cannon  v.  Moody,  78  Minn.  68; 
80  N.  W.  842. 

8  Hanks  v.  Flynn,  108  la.  165;  78 
N.  W.  839.  (Even  under  a  contract 
to  assume  debts  of  the  firm  "  as 
shown  by  the  books  and  invoices  of 
the  firm  this  day.") 

9  Brown  v.  Markland,  16  Utah 
360;  67  Am.  St.  Rep.  629;  52  Pac. 
597. 

10  Haskell  v.  Tukesbury,  92  Me. 
551;  69  Am.  St.  Rep.  529;  43  AtL 
500. 

iiWaldheim  v.  Miller,  97  Wis. 
300;  72  N.  W.  869.  (As  to  show 
that  it  was  for  future  advances.) 


1876  PAGE    ON    CONTRACTS. 

debt  was  intended  even  if  incurred  after  the  date  of  the  deed/^ 
So  where  two  writs  of  replevin  issued  for  the  same  property 
and  two  replevin  bonds  are  given,  evidence  is  admissible  to 
show  which  bond  was  given  for  which  writ/^  So  in  a  sale  of 
peaches  to  be  grown  in  "  sundry  orchards,"  in  two  counties 
named,^*  or  a  contract  to  sell  all  the  timber  on  "  their  lands,"^^ 
evidence  is  admissible  to  show  what  land  the  parties  intended. 
So  in  a  sale  of  a  certain  lot  of  logs,  evidence  is  admissible  to 
show  what  logs  were  intended,  and  hence  that  the  amount  of 
lumber  was  overestimated.^^  So  evidence  is  admissible  to 
identify  "  nine  walnut  trees."^^  So  extrinsic  evidence  is  admis- 
sible to  identify  the  property  referred  to  in  an  insurance  policy, 
as  to  show  what  was  meant  by  "  shed  and  additions  attached,^* 
or  in  a  policy  insuring  a  "  cold  storage  warehouse,"  to  show 
that  a  shed  was  part  of  the  warehouse.^*  Extrinsic  evidence  is 
not  admissible  to  show  that  the  property  insured  was  a  differ- 
ent piece  of  property  from  that  described  in  the  policy,  if  the 
action  is  brought  on  the  ^^olicy.""  In  a  contract  for  the  sale  of 
realty,  extrinsic  evidence  is  admissible  to  show  what  realty  con- 
forms to  the  description  in  the  written  contract,  and  thus  to 
show  what  realty  the  parties  intended  to  contract  for.^^     Ex- 

12  Swedish  -  American  National  is  Cummins  v.  Ins.  Co.,  197  Pa. 
Bank  v.  Bank,  76  Minn.  409;  79  N.       St.  61;  46  Atl.  902. 

W.  399.     ( But  evidence  to  show  that  i9  Boak  Fish  Co.  v.  Assurance  Co., 

the  deed  was  intended  to  secure  ad-  84  Minn.  419;  87  N,  W.  932. 

vances  made  after  its  delivery  is  in-  20  Sanders  v.   Cooper,    115   N.   Y. 

admissible.)  279;   12  Am.  St.  Rep.  801;   5  L.  R. 

13  McManus  V.  Donohoe,  175  Mass.  A.  638;  sub  nomine.  Landers  v. 
308;   56  N.  E.  291.  Cooper,  22  N.  E.  212.    Coti/m,  where 

14  Ontario,  etc..  Association  v.  the  agent  wrote  the  application, 
Truit  Packing  Co.,  134  Cal.  21 ;  86  describing  other  property  than  that 
Am.  St.  Rep.  231;  53  L.  R.  A.  681;  insured.  Alabama,  etc.,  Ins.  Co.  v. 
66  Pae.  28.  And  see  Reinstein  v.  Minchener,  133  Ala.  632;  32  So. 
Roberts,  34  Or.  87;  75  Am.  St.  Rep.  225. 

564;  55  Pac.  90.  21  Tumlin  v.  Perry,  108  Ga.  520; 

isDorris     v.     King      (Tenn.     Ch.  34  S.  E.  171;  Ainslie  v.  Eason,  107 

App.),  54  S.  W.  683.  Ga.   747;    33   S.   E.   711;    Powers  v. 

16  Rib  River  Lumber  Co.  v.  Ogil-  Scharling,  64  Kan.  339;  67  Pac. 
vie,  113  Wis.  482;  89  N.  W.  483.  820;    Murphy   v.    Robinson,    50   La. 

17  Carpenter  V.  Medford,  99  N.  C.  Ann.  213;  23  So.  323;  Hurley  v. 
495;  6  Am.  St.  Rep.  535;  6  S.  E.  Brown,  98  Mass.  545;  96  Am.  Dec. 
785.  671;    Waring   v.    Ayres,    40    N.    Y. 


THE  PAROL  EVIDENCE  RULE.  1877 

trinsic  evidence  is  admissible  to  show  the  actual  boundaries  of 
the  tract  in  question,^"  as  to  show  what  is  meant  by  the  "  point  " 
of  a  cliff,  and  "  thence  with  the  cliff."^^  So  in  a  contract  to  sell 
*^  coal  in  the  northern  hill  as  far  as  the  center,"  extrinsic  evi- 
dence is  admissible  to  show  the  hill  on  grantor's  land  intended 
by  this  contract."*  So,  if  land  is  described  by  its  ownership, 
and  approximate,  though  not  exact,  location,^^  as  where  in  a 
contract  of  sale  the  name  of  the  owner  is  given  and  it  is  said 
to  front  on  Waters  Road,^''  or  by  its  popular  name,"^  extrinsic 
evidence  is  admissible  to  show  what  land  was  intended.  Thus 
under  a  contract  for  the  sale  of  a  half  interest  in  "  Linn  Grove 
Mills  and  the  land  thereunto  belonging,"  extrinsic  evidence  is 
admissible  to  identify  the  land.^^  Under  a  mortgage  of  "  the 
quartz  mill  and  lode,  formerly  owned  by  "  a  specified  person, 
extrinsic  evidence  is  admissible  to  show  what  property  answer- 
ing to  such  descri^Dtion  was  owned  by  such  person. ^^  So  in  a 
€ontract  to  lease  a  house  described  by  its  ownership,  and  the 
street  on  which  it  is  located,  extrinsic  evidence  is  admissible 
to  supply  the  house  number.^*'  So  in  a  contract  whereby  A 
authorized  B  to  sell  certain  lots,  agreeing  that  when  B  had  sold 
enough  lots  to  realize  five  thousand  five  hundred  dollars  A 
would  convey  to  B  the  remainder  of  the  lots,  B  could  introduce 
parol  evidence  to  show  what  lots  he  had  sold,  in  order  to  show 
what  the  remaining  lots  were.^^  So  under  a  contract  to  divert 
the  waters  of  a  given  brook,  it  may  be  shown  that  both  branches 
thereof  were  intended,  neither  having  a  name.^"     If  the  descrip- 

357;  Lee  v.  Stone,  21  R.  I.  123;  42  26  Mohr  v.  Dillon,  80  Ga.  572;   5 

Atl.  717.  S.  E.  770.   (Decided  under  the  Geor 

22  Hereford  v.  Hereford,   131  Ala.  gia  statute.) 

573;   32  So.  620,  651;   Stamphill  v.  27  Garvey  v.  Parkhurst,  127  Mich 

Bullen,    121   Ala.   250;   25   So.  928;  368;   86  N.  W.  802. 

McMaster  v.  Morse,  18  Utah  21;  55  28  Brown   v.   Ward,    110   la.   123 

Pac.  70.  81  N.  W.  247. 

23Hall  V.  Conlee  (Ky.),  62  S.  W.  29  Hancock    v.    Watson,     18    Cal 

«99.  137. 

24Lulay    V.    Barnes,    172    Pa.    St.  so  Bulkley  v.  Devine,  127  111.  406 

331;   34  Atl.  52.  3  L.  E.  A.  330;  20  N.  E.  16. 

25Cottingham    v.    Hill,    119    Ala.  si  stamets  v.  Deniston,  193  Pa.  St 

353;    72  Am.   St.   Rep.   923;    24   So.  548;  44  Atl.  575. 

552;    Edwards  v.   Deans,   125   N.   C.  32  Petrie  v.  Hamilton  College,  158 

59;   34  S.  E.  105.  N.  Y.  458;  53  N.  E.  216. 


.1878  PAGE    ON    CONTRACTS. 

tion  in  the  contract  is  not  suflScient  when  considered  in  con- 
nection with  evidence  of  the  ownership  and  location  of  the  land 
to  identify  it,  extrinsic  evidence  is  not  admissible  to  show  what 
land  the  parties  intended  to  contract  for.^'^  Such  a  contract 
is  incomplete  on  its  face,  and  the  identification  of  the  subject- 
matter  does  not  therefore  violate  the  parol  evidence  rule.  The 
contract,  however,  is  one  controlled  by  the  statute  of  frauds, 
which  forbids  such  use  of  oral  evidence.  Still  less  can  it  be 
shown  that  a  different  tract  was  intended.^*  Identification 
cannot  be  made  the  means  of  contradiction.^^ 

§1218.     Identification  cannot  be  made  means  of  contradiction. 

Under  a  claim  of  identifying  subject-matter,  the  parties  to 
a  contract  cannot  show  by  extrinsic  evidence  that  they  intended 
to  contract  for  other  and  different  property  from  that  described 
in  their  contract,  for  this  would  be  a  contradiction  of  the  writ- 
ten contract.^  Nor  can  the  parties  shoAV  that  in  addition  to 
the  property  described  in  the  contract,  the  other  and  different 
property  was  also  contracted  for.  If  the  contract  concerns 
personalty,  the  parol  evidence  rule  forbids  such  addition. 
Hence,  if  a  bill  of  sale  is  complete  on  its  face,  the  parties  can- 
not show  that  by  oral  contemporaneous  agreement  other  prop- 
erty was  included.^  If  the  contract  concerns  realty,  such  addi- 
tion would  violate  not  only  the  parol  evidence  rule  but  also  the 
statute  of  frauds.^     Hence,  under  a  lease,  it  cannot  be  shown 

33  Gatins  v.  Angier,  104  Ga.  386;  was  intended.)  Contract  for  sale  of 
30  S.  E.  876;  Ferguson  v,  Blackwell,  realty.  Duggan  v.  Uppendalil,  197 
8  Okla.  489;  58  Pac.  647.  HI.   179;    64   X.  E.  289.     Insurance 

34  Griffin  V.Hall,  115  Ala.  482;  22  policy.  Sanders  v.  Cooper,  115  N. 
So.  162.  Y.  279;   12  Am.  St.  Rep.  801;  5  L. 

35  See  §  1218.  R.  A,  638;   sub  nomine,  Landers  t. 
1  Town  of  Kane  v.  Farrelly,  1«2      Cooper,  22  N.  E.  212. 

111.    521;    61    N.    E.    648.     Chattel  2  Becker  v.  Dalby   (la.),  86  N.  W. 

mortgage.    Johnson  v.  Whitfield,  124  314;  McEnery  v,  McEnery  (la.),  80 

Ala.  508;   82  Am.  St.  Rep.   196;  27  N.  W.  1071;   Drexel  v.  Murphy,  59 

So.  406.      (Ox  described  as  "  one  red  Xeb.  210;  80  N.  W.  813. 

spotted  ox";   as  against  levy,  held  3  See  §  747. 
inadmissible  to  show  that  a  black  ox 


THE    PAROL    EVIDENCE    RULE.  1879 

that  premises  omitted  from  the  description  were  included  by 
the  prior  agreement  of  the  parties.* 

Furthermore,  the  legal  effect  of  the  contract  cannot  be  con- 
tradicted^ under  giiise  of  identifying  the  subject-matter.  If 
the  contract,  by  its  terms,  is  a  contract  which  can  be  performed 
by  furnishing  any  property  of  the  grade  and  quality  described 
in  the  contract,  extrinsic  evidence  is  inadmissible  to  show  that 
the  parties  were  really  contracting  for  a  specific  lot  of  property. 
Thus  in  a  contract  for  "  one  hundred  bales  of  lint  cotton,"  it  is 
not  permitted  to  show  that  cotton  raised  by  the  seller  was  in- 
tended.*' So  under  a  contract  for  the  sale  of  "  one  hundred 
head  of  good  fat  merchantable  hogs,"^  or  "  eight  thousand 
bushels  of  ear-corn,"^  extrinsic  evidence  i-=  'jia'^mi^'^i^^le  to  show 
that  specific  property  was  contracted  fui-.  So  in  n  Cuiitract  to 
pay  "  any  and  all  of  the  grantor's  notes,"  extrinsic  evidence  is 
inadmissible  to  show  that  only  certain  specific  notes  were  in- 
tended." So  if  land  is  conveyed  to  a  railroad  "  for  all  legiti- 
mate railroad  purposes,"  extrinsic  evidence  is  inadmissible  to 
show  that  cetrain  specific  purposes  were  agreed  upon.^"  So  a 
written  contract  whereby  an  actress  agrees  to  "  render  services 
at  any  theaters  "  for  a  specified  time,  cannot  be  modified  by 
showing  an  oral  agreement  that  the  services  were  to  be  in  one 
specified  part  only.^^  There  is  some  apparent  lack  of  harmony 
in  judicial  decision  on  this  question.  Thus  A  agreed  to  deliver 
a  certain  amount  of  hay  to  the  United  States  at  a  certain  point. 
The  contract  was  for  hay  generally,  but  both  parties  knew  that 
the  only  way  that  A  could  obtain  hay  to  furnish  at  that  price 
was  by  cutting  it  in  the  Yellowstone  valley.  The  United 
States  had  all  the  hay  in  that  valley  cut  by  others.     It  was 


4  Haycock   v.   Johnston,   81   Minn.  55  N.  E.  719;  affirming  83  HI.  App. 
f 0 ;  83  N.  W.  494.  297. 

5  See  §  1195.  lo  Abraham  v.  R.  R.,  37  Or.  495; 
eForsythe    Mfg.    Co.    v.    Castlen.  82  Am.  St.  Rep.  779;  60  Pac.  899. 

112  Ga.  199;  81  Am.  St.  Rep.  28;  37  n  Violette  v.  Rice,  173  Mass.  82; 

S.  E.  485.  53   N.    E.    144    (citing   Grimston   v. 

T  Johnson  v.  Pierce,  16  0.  S.  472.  Cuningham    (1894).    1    Q.    B.    125; 

8  Ormsbee  v.  Machir,  20  O.  S.  295.  Drumond  v.  Atty.  Gen.,  2  H.  L.  Cas. 

oMead  v.  Peabody,  183  111.  126;  837;  Nichol  v.  Godts,  10  Exch.  191). 


1880  PAGE    ON    CONTRACTS. 

held  that  A  was  discharged.^"  The  admission  of  these  facts 
was  placed  on  the  theory  of  the  admissibility  of  surrounding 
circumstances,  and  not  on  identification  of  subject-matter. 
Contradiction  is  not  permitted  under  guise  of  identification  of 
parties.  Thus  a  guaranty  addressed  to  "  Crane  Bros.  Co.,"  a 
partnership  cannot  be  shown  to  be  intended  for  a  corporation, 
of  similar  name.^^ 

§1219.     Collateral  consistent  contracts. 

The  rule  that  a  written  contract  merges  all  prior  and  con- 
temporaneous oral  negotiations,  applies  only  to  such  oral  nego- 
tiations as  concern  the  subject-matter  embraced  in  the  written 
contract.^  Accordingly,  a  contract  collateral  to  a  written  com-' 
plete  contract  may  be  shown  by  extrinsic  evidence  if  not  con- 
tradictory." Thus  an  oral  contract  by  an  actress  for  the  fall 
and  winter  may  be  enforced,  though  she  had  made  a  contem- 
poraneous written  contract  for  the  summer.^  So  an  oral  con- 
tract to  pay  commissions  on  a  sale  of  realty  in  addition  to  the 
price  fixed  in  the  written  contract,*  an  oral  contract  not  to  sell 
other  lots  at  less  than  a  given  price,^  an  oral  contract  that  the 
vendor  shall  keep  the  realty  contracted  for  insured  for  the 
benefit  of  the  vendee,^  an  oral  contract  made  when  a  note  is 
given  to  a  bank  to  allow  a  deposit  in  the  bank  to  be  credited 
thereon,^  and  an  oral  contract  that  the  vendee  of  stone  should 
have  a  derrick  ready  to  receive  the  stone  and  should  settle  any 
controversy  over  the  amount  of  stone  furnished,  as  shown  by 

12  United  States  V.  Peck,  102  U.  S.  552;    Quigley   v.    Shedd,    104   Tenn. 
64.  560;  58  S.  W.  266. 

13  Crane    Co.   v.    Specht,    39    Neb.  3  Drake  v.  Allen,   179  Mass.   197; 
123;  42  Am.  St.  Eep.  562;  57  [NT.  W.  60  N.  E.  477. 

1015.  4  Hall  V.  McNally,  23  Utah  606; 

1  Grand  Forks,  etc.,  Co.  v.  Tourte-      65  Pac.  724. 

lot,  7  N.  D.  587;  75  N.  W.  901.  sPvackemann  v.  Improvement  Co.^ 

2  Savings  Bank  V.  Asbury,  117  Cal.      167  Mass.  1;   57  Am.  St.  Rep.  427; 
96;  48  Pac.  1081;  King  v.  Dahl,  82      44  N.  E.  990. 

Minn.  240;   84  X.  W.   737;   Germa-  e  Keefer  v.  Ins.  Co.,  29  Ont.  394; 

nia  Bank  v.  Osborne.  81  Minn.  272;  Parcell  v.  Grosser,  109  Pa.  St.  617; 

83   X.   W.    1084 ;    Brown   v.   Bowen,  1  Atl.  909. 

90  Mo.  184;  2  S.  W.  .398;  Huffman  ^  Roe   v.   Bank,   167   Mo.   406;    67 

V.   Ellis,    64   Xeb.    623;    90    X.    W.  S.  W.  303. 


THE    PAEOL    EVIDENCE    EULE.  1881 

the  tickets  given  bj  vendor  before  using  the  stone,®  are  all  of 
them  so  far  collateral  to  the  written  contract  as  to  be  enforceable. 
So  an  oral  contract  to  extend  a  lease  under  certain  contingen- 
cies has  been  held  so  far  collateral  to  the  lease  as  to  be  enforce- 
able.® So  in  an  action  on  a  note  the  v^^hole  transaction  under 
which  the  note  was  given  may  be  shown,  and  a  counterclaim  may 
be  based  on  an  oral  contract  collateral  to  the  note,  as  on  an  oral 
contract  to  repurchase  the  stock  for  which  the  note  was  given,^* 
or  to  redeem  in  gold  the  bank-notes  for  which  the  note  was 
given, ^^  or  to  place  certain  claims  in  the  hands  of  the  maker 
of  the  note  to  collect  on  commission.^^  Where  a  note  was  de- 
posited with  A  as  collateral  under  a  written  contract,  an  oral 
agreement  that  A  should  not  collect  it  could  not  be  enforced ; 
but  an  agreement  that  the  payee  should  collect  it  as  agent  for  A, 
was  held  to  be  a  collateral  consistent  contract,  and  enforceable.^'* 
Where  A  had  given  B  a  promissory  note,  an  oral  contract 
whereby  B  was  to  collect  certain  rent  for  A,  and  credit  upon 
A's  debt,  is  enforceable.^*  Where  a  note  is  given,^^  or  a  bill 
of  exchange  drawn,^''  an  oral  contract  that  a  set-off  existing  in 
favor  of  the  maker  or  bearer  was  not  waived,  may  be  enforced. 
So,  where  A  bought  a  draft  from  B,  intending  to  use  it  in  the 
purchase  of  cattle,  an  oral  agreement  that  if  A  did  not  make 
such  use  of  the  draft  he  could  return  it  to  B,  and  receive  credit 
therefor  on  his  account  with  B,  can  be  enforced.^^  Where 
certain  securities  are  deposited  under  a  written  contract  and 


8  Mt.  Vernon  Stone  Co.  v.  Sheely,  127 ;  48  N.  W.  847 ;  Jones  v.  Keyes, 

114  la.  313;  86  N.  W.  301.  16  Wis.  .562. 

sArmington    v.    Stelle,    27    Mont.  is  Bennett    v.    Tillmon,    18    Mont. 

13;   94  Am.   St.  Rep.   811;    69   Pac.  28;  44  Pac.  80. 

115  (under  §  2186  of  the  statutes  of  ic  Bohn  Mfg.  Co.  v.  Harrison,   13 
Montana).  Mont.  293;   34  Pac.  313. 

loGermania  Bank  v.  Osborne,  81  i7  Collingwood   v.   Bank,    15   Neb. 

Minn.  272;   83  N.  W.  1084.  118;   17  N.  W.  359.      (In  this  ease, 

11  Racine   County   Bank   v.   Keep,  however,    while    such    contract    was 
13  Wis.  209.  enforceable,   A  had   delayed  the   re- 

12  Singer    Mfg.    Co.    v.    Potts,    59  turn   of  the   draft   an   unreasonable 
Minn.  240;  61  N.  W.  23.  time,   and    the    drawee   had    become 

13  Jenkins  v,  Shinn,  55  Ark.  347 ;  insolvent  in  the  meantime.     A  was 
18  S.  W.  240.  therefor  not  allowed  to  recover.) 

14  Stebbins    v.    Lardner,    2    S.    D. 


1882  PAGE    ON    CONTRACTS. 

receipt,  an  oral  contract,  under  whicli  other  securities  are  de- 
posited, is  enforceable/^  The  cases  in  which  the  action  was 
based  on  a  note  may  however  be  explained  on  the  theory  that 
the  note  was  not  a  complete  contract/^  Where  a  written  bond 
has  been  given  for  the  purchase  of  realty,  an  oral  contract  has 
been  enforced  giving  the  vendee  the  right  to  rescind  the  contract 
and  receive  back  his  bond  and  mortgage  given  therefor.^"  An 
oral  contract  that  a  building  erected  by  a  lessee  upon  the  leased 
premises,  shall  be  the  personal  property  of  the  lessee,  is  so  far 
collateral  to  a  written  lease  that  it  can  be  enforced.^^  Under 
a  contract  between  two  co-owners  of  realty,  whereby  one  of  them 
agreed  to  sell  his  interest  in  such  realty  to  the  other  for  a  speci- 
fied consideration,  an  oral  agreement  that  outstanding  partner- 
ship accounts  between  them  should  be  settled,  and  the  balancfe 
due  from  the  vendor  to  the  vendee  should  be  applied  upon  the 
purchase  price,  has  been  held  enforceable."" 

§1220.     What  contracts  are  collateral. 

To  enforce  the  oral  contract,  even  if  not  inconsistent,  it  must 
be  collateral  to  the  written  contract  and  not  merely  a  term 
thereof.  The  difficulty  lies  in  the  application  of  this  rule. 
Under  cover  of  enforcing  collateral  consistent  contracts  the 
attempt  is  often  made  to  add  oral  terms  to  a  complete  written 
contract.  Courts  which  recog-nize  the  parol  evidence  rule  and 
the  rule  as  to  the  collateral  consistent  contract  in  language 
which  in  the  abstract  would  indicate  that  they  were  in  perfect 
harmony,  will  show  remarkable  differences  of  opinion  in  decid- 
ing whether  the  term  in  question  is  a  collateral  contract  or  a 
mere  term  of  the  written  contract.  The  true  test  of  a  collateral 
contract  seems  to  be  that  it  must  be  so  far  unconnected  with 
the  written  contract  that  the  court  must  be  able  to  hold  that 
the  parties  could  have  concluded  their  negotiations  as  embodied 
in  the  written  contract  without  reference  to  or  consideration  of 

18  Blackwood  v.  Brown,  34  Mich.  4,  21  Rytler  v.  Faxon,  171  Mass.  206; 

19  See  §  1197.  68  Am.  St.  Rep.  417;  50  N.  E.  631. 

20  Cloud   V.    Markle,    186    Pa.    St.  22  Redfield  v.  Gleason,  61  Vt.  220; 
614;  40  Atl.  811.  15  Am.  St.  Rep.  889;   17  Atl.  1075. 


THE  PAROL  EVIDENCE  RULE.  1883 

the  terms  of  the  oral  contract.  "  Oral  testimony  will  not  be 
admitted  of  prior  or  contemporaneovis  promises  on  a  subject 
which  is  so  closely  connected  with  the  principal  transaction  with 
respect  to  which  the  parties  are  contracting,  as  to  be  part  and 
parcel  of  the  transaction  itself,  without  an  adjustment  of  which 
the  parties  cannot  be  considered  as  having  finished  their  nego- 
tiations and  finally  concluded  a  contract."^  Thus  in  an  action 
on  a  note  and  mortgage,  extrinsic  evidence  was  inadmissible  to 
show  a  contract  whereby  the  mortgagee  was  to  receive  board 
from  the  mortgagor  for  life,  and  at  his  death  the  note  and 
mortgage  were  to  be  canceled  though  such  contract  might  be 
available  as  a  counterclaim,^  and  in  deciding  the  case  the  court 
pointed  out  a  test  for  detemiining  whether  the  contract  was 
collateral  or  not.  "  A  very  satisfactory  test  of  the  question 
under  consideration  will  be  to  suppose  this  action  to  have  been 
by  defendant  against  plaintiff  for  his  board  as  a  right  inde- 
pendent of  the  note,  and  that  Kracke  had  pleaded  as  a  defense 
the  obligation  of  Homeyer  to  board  him  because  of  the  stipu- 
lation in  the  note.  The  effect  would  be  to  so  change  the  note 
as  to  make  it  not  only  an  obligation  for  the  payment  of  the 
amount  therein  stipulated,  but  an  obligation  against  Homeyer 
to  board  the  payee  of  the  note  during  his  life  or  until  the  note 
was  paid.  The  right  to  make  such  a  change  in  a  written  con- 
tract by  averments  sustained  only  by  verbal  proofs,  is  not  open 
to  reasonable  discussion."^  One  of  the  English  cases  that  is  often 
cited  as  a  leading  case,  as  recogiiizing  the  theory  of  collateral 
contracts,  and  as  enforcing  an  oral  contract  to  repair  as  colla- 
teral to  a  written  lease,  is  in  reality  directly  opposed  to  the  latter 
rule.*  When  this  case  first  came  before  the  court,  it  did  not 
appear  whether  a  written  lease  had  been  given  or  not,  and  the 
only  question  decided  was  whether  an  oral  contract  to  repair 
could  be  enforced  or  whether  the  statute  of  frauds  made  it 

1  Naiipiberg   v.    Young,    44    N.    J.  2  Kracke  v.  Homeyer,   91   la.   51; 

L.    331,    342;    43    Am.    Rep.    380;       58  N.  W.  1056. 

cited   and    followed   in    McTague   v.  3  Kracke   v.   Homeyer,    91    la.   51, 

Finnegan,  54  N.  J.  Eq.  454;  35  Atl.       53;    58   N.   W.    1056. 
542.  4Angell  v.  Duke,  L.  R.   10  Q.  B. 

174. 


188-i  PAGE    ON    CONTRACTS. 

unenforceable.  The  court  very  proiDcrly  held  that  the  statute 
of  frauds  did  uot  affect  the  contract.^  When  the  case  was 
finally  heard  on  its  merits,  it  appeared  from  the  evidence,  that 
a  written  lease  had  been  given.  The  oral  contract  to  repair 
was  held  unenforceable  under  the  parol  evidence  rule.*^  The 
rule  allowing  collateral  oral  contracts  to  be  enforced  is  unfor- 
tunately sometimes  confused  with  the  rule  allowing  oral  terms 
of  a  contract,  part  only  of  which  has  been  reduced  to  writing 
by  the  parties ;  and  which  is  on  its  face  not  complete  to 
be  enforced,  and  oral  terms  which  are  properly  enforced  under 
the  latter  rule  have  been  ascribed  to  the  former.  If  the  dis- 
tinction between  the  two  rules  is  noted,  cases  apparently  in 
conflict  may  be  reconciled.  Thus  where  the  contract  for  the 
sale  of  a  drug  business  is  complete  on  its  face  extrinsic  evidence 
is  inadmissible  to  show  an  oral  contract  whereby  the  seller 
agreed  not  to  engage  in  such  business  thereafter.'^  A  deed  has 
l)een  held  not  to  merge  an  oral  agreement  by  the  vendor  to 
construct  a  street  if  the  vendee  bought  the  land  conveyed  by 
such  deed.^  Where  a  written  lease  has  been  given,  an  oral 
agreement  whereby  the  lessor  binds  himself  not  to  compete 
with  the  lessee,  can  be  enforced*^  on  the  theory  that  the  lease  is 
not  complete  on  its  face.  Accordingly,  the  better  rule  is  that 
if  the  written  contract  is  incomplete  on  its  face,  then  by  the 
operation  of  a  different  principle,  any  oral  term  consistent  with 
the  writing  may  be  enforced,  while  if  the  contract  is  complete 
on  its  face,  and  the  principle  of  the  collateral  consistent  contract 
is  invoked,  only  such  contracts  as  are  really  collateral  to  the 
written  contract  can  be  enforced. 

§1221.    Examples  of  contracts  held  not  to  be  collateral. 

Illustrations  of  oral  contracts  offered  in  evidence  as  collateral 
to  a  written  contract,  but  held  unenforceable  as  being  really 
terms   of  the  written  contract  are  by  no  means   uncommon. 

BAngell  V.  Duke,  L.  I?.  10  Q.  B.  sDrew  v.  Wiswall,  183  Mass.  554; 

174.  67  N.  K  6G6. 

sAngell  V.  Duke,  32  L.  T.  320.  »  Welz  v.  Rhodius,  87  Ind.  1;   44 

7  Slaughter    v.    Smither,    97    Va.  Am.    Rep.    747 ;    Leineau   v.    Smart, 

202;  33  S.  E.  544.  11  Humph.   (Tenn.)   308. 


THE  PAKOL  EVIDENCE  EULE.  1885 

Thus  an  oral  contract  to  repair  a  house  leased  by  a  written 
lease/  or  to  ditch  the  farm  leased,^  or  not  to  build  within  a 
certain  distance  of  a  rented  building,^  are  so  closely  connected 
with  a  written  lease  that  they  cannot  be  enforced.  The  courts 
are  not  harmonious  on  these  questions,  however.  Thus  in  some 
jurisdictions  an  oral  contract  whereby  the  lessor  agrees  to  put 
the  premises  into  safe  condition  or  to  make  certain  repairs,^ 
or  to  destroy  rabbits  which  were  overrunning  the  farm,^  or  to 
erect  a  kitchen  on  the  property  leased,*'  has  in  each  case  been 
held  enforceable  though  a  written  lease  was  given.  So  a  con- 
tract to  have  the  front  street  graded  and  water-mains  put  in 
has  been  held  so  far  collateral  to  a  deed  for  the  land  as  to  be 
proved  by  parol.^  So  an  oral  contract  that  the  grantor  should 
not  have  a  right  of  way  over  the  land  conveyed  is  so  far  col- 
lateral to  a  deed  that  it  may  be  used  to  rebut  an  implied  right 
of  way  from  necessity.^  So  an  oral  contract  to  repair  has  been 
held  enforceable  though  a  written  contract  for  the  sale  of  the 
property  had  been  entered  into.^  Under  an  oral  contract  be- 
tween A  and  a  railroad  corporation,  whereby  the  railroad  was  to 
construct  two  convenient  and  necessary  crossings  over  its 
tracks  on  A's  land,  an  oral  agreement  between  A  and  the  rail- 
road as  to  the  kind  of  crossing  to  be  constructed,  was  unenforce- 
able.^** An  oral  contract  was  made  for  distributing  the  estate 
of  one  of  the  parties  among  the  other  parties,  his  children. 
Subsequently,  two  branches  of  this  contract  were  put  in  writ- 


1  Gulliver    v.    Fowler,    64    Conn.  App.  756 ;  Morgan  v.  Griffith,  L.  R. 

556;    30   Atl.   852;    Roehrs   v.   Tim-  6  Ex.  70. 

mons,  28  Ind,  App.  578 ;   63  N.  E.  6  Betts    v.     Demumbrane,     Cooke 

481;  Lerch  v.  Times  Co.,  91  la.  750;  (Tenn.)    39. 

60  N.  W.  611;   Grashaw  v.  Wilson,  7  Durkin   v.    Cobleigh,    156    Mass. 

123  Mich.  364;  82  N.  W.  73;  How-  108;    32   Am.   St.   Rep.   436;    17    L. 

ard  V.  Thomas,  12  O.  S.  201.  R.  A.  270;  30  N.  E.  474. 

2Diven  v.  Johnson,  117  Ind.  512;  8  Lebus  v.  Boston,  107  Ky.  98;  47 

3  L.  R.  A.  308;  20  N.  E.  428.  L.  R.  A.  79;  51  S.  W.  609;  52  S.  W. 

3  Haycock  v.  Johnston,   81   Minn.  956. 

49;  83  N.  W.  494,  1118.  9  Manning  v,  Jones,  Busb.  (N.  C.) 

4Hines  v,  Wilcox,  96  Tenn.  148;  368. 

54  Am.  St.  Rep.  823;    34  L.  R.   A.  lo  Martin  v.  R.  R.,  48  W.  Va.  542; 

824;  33  S.  W.  914.  37  S.  E.  563. 

sErskine  v.  Adeane,  L.  R.  8  Ch. 


1886  PAGE    ON.  CONTKACTS. 

ing,  and  the  written  contract  appeared  npon  its  face  to  be  com- 
plete. The  remaining  oral  terms  were  held  to  be  nnenforce- 
able.^^  A  written  contract  was  entered  into  to  compromise  a 
judgment  for  $17,000  upon  payment  of  $5,000,  the  considera- 
tion for  the  reduction  being  expressed  in  the  written  contract  to 
be  one  dollar  "  and  for  the  further  consideration  of  the  relation 
of  myself  and  family  to  P.  Rehill  and  Elizabeth  Rehill  his 
wife,"  Rehill  being  the  judgment  debtor.  A  collateral  oral 
contract  that  in  consideration  of  such  settlement  the  judgment 
creditor's  wife,  who  had  been  brought  up  by  the  Rehills,  should 
be  their  heir  and  devisee  at  their  death,  was  unenforceable.^^ 
Where  A  had  made  a  contract  with  B  to  cut  certain  timber 
growing  on  B's  land,  and  to  haul  it  to  a  certain  stream  at  a 
distance  from  B's  land,  A  could  not  show  an  oral  agreement 
whereby  B  was  to  furnish  a  right  of  way  for  a  tramway  from 
his  land  to  the  stream.^^  Thus,  where  an  inventor  makes  a 
written  assignment  of  his  patents  to  the  government,  in  consid- 
eration of  one  dollar  and  other  considerations,  a  collateral  oral 
contract  that  the  assignor  shall  be  employed  by  the  government 
as  long  as  his  invention  is  used,  and  that  the  government  shall 
pay  a  reasonable  compensation  for  the  use  of  his  patent,  cannot 
be  enforced.^*  So  under  a  written  contract  for  the  sale  of  a 
business  an  oral  contract  not  to  compete  cannot  be  shown.^^ 
So  under  a  contract  of  insurance,  an  oral  provision  for  arbitra- 
tion cannot  be  shown.^''  So  under  a  written  contract  of  adoption, 
complete  on  its  face,  an  oral  contract  to  devise  or  bequeath  prop- 
erty to  the  child  adopted  cannot  be  shown.^^ 

§1222.     Collateral  inconsistent  contracts. 

If  the  collateral  contract   is   inconsistent  with   the  written 
contract,  it  cannot  be  enforced  even  if  it  is  really  collateral,  and 

11  McEnery   v.   McEnery,    110   la.  i^Zanturjian    v.    Boornazian,    — 

718;  80  N.  W.  1071.  R.  1.  — ;  55  Atl.  199. 

i2McTague  v.  Finnegan,  54  N.  J.  le  Rutter  v.  Ins.  Co.,  138  Ala,  202; 

Eq.  454;   35  Atl.  542.  35  So.  33. 

13  Sutton    v„   Lumber   Co.    (Ky.),  "  Brantingham  v.  Huff,  174  N.  Y. 

44  S.  W.  86.  53;  95  Am.  St.  Rep.  545;  66  N.  E. 

i4McAleer  v.  United  States,   150  620. 
U.  S.  424. 


THE    PAROL   EVIDENCE    KULE.  1887 

hence  otherwise  enforceable.^  Thus  an  oral  contract,  collateral 
to  a  written  contract  and  changing  the  time  fixed  therein  for 
performance,  is  unenforceable,  as  an  oral  contract  to  pay  to 
the  vendor  of  realty  two  hundred  dollars  on  the  execution  of 
the  written  contract,"  an  oral  contract  changing  the  time  for 
making  repairs  where  the  written  contract  provided  for  making 
repairs  and  delivering  possession  at  a  specified  time,^  an  oral 
contract  that  a  note,  on  its  face  payable  generally,  should  be 
paid  out  of  certain  specified  funds,*  or  to  credit  on  a  note  given, 
a  sum  in  the  event  of  the  breach  of  another  contract,^  or  an  oral 
contract  to  conform  to  usage  as  to  payment  under  a  written 
building  contract,  where,  no  time  for  payment  being  specified, 
the  payment  was  in  legal  effect  due  only  on  completion  of  the 
building.''  So  one  who  signs  a  note  as  surety  cannot  show  an 
oral  contract  whereby  the  maker  agreed  to  take  a  mortgage  from 
the  principal  debtor  as  further  security  and  to  enforce  such 
mortgage  before  proceeding  against  the  surety.^  So  an  oral 
agreement  that  the  vendor  will  procure  and  file  for  record  a 
patent  for  certain  land  wdiich  he  has  contracted  to  sell  by 
written  contract,  within  sixty  days  from  the  date  of  such  con- 
tract, cannot  be  enforced  where  the  contract  merely  requires  the 
vendor  to  furnish  a  good  abstract  and  a  warranty  deed.^  An 
alleged  collateral  contract  is  as  unenforceable  when  inconsistent 
with  the  legal  effect  of  the  written  provisions  as  when  it  is 
inconsistent  with  express  provisions.  Under  a  written  con- 
tract of  sale,  the  legal  effect  of  which  was  to  pass  title  upon 
delivery,  a  collateral  oral  contract  that  the  vendee  should  test 

1  Keith   V.  Parker,   115   Fed.  397;  2  Walker  v.  Mack,  129  Mich.  527; 

Adams  v.  Turner,  73  Conn.  38;   46  89  N.  W.  338. 

Atl.  247;  Younie  v.  Walrod,  104  la.  s  Tripp  v.  Smith,  180  Mass.  122-; 

475;  73  N.  W.  1021;  Kracke  v.  Ho-  61  N.  E.  804. 

meyer,   91   la.  51;   58  N.  W.   1056;  4  Keith  v.  Parker,  115  Fed.  397. 

Tripp  V.  Smith,  180  Mass.  122;   61  5  phelps  v.  Abbott,  114  Mich.  88; 

N.    E.   804;    Phelps  v.  Abbott,    114  72  N.  W.  3. 

Mich.  88;   72  N.  W.   3;   Rooney  v.  e  Riddell    v.    Ventilating    Co.,    27 

Koenig,    80   Minn.    483;    83    N.    W.  Mont.  44;  69  Pae.  241. 

399 ;    Daggett    v.    Johnson,    49    Vt.  ^  Anderson  v.  Matheny,  —  S.  D. 

345;  Hunter  v.  Hathaway,  108  Wis.  — ;  95  N.  W.  911. 

620;   84  N.  W.  996.  8  Younie  v.  Walrod,  104  la.  475; 

73  N.  W.  1021. 


1888  PAGE    ON    COI^TKACTS. 

the  property  sold  before  accepting  it,  and  before  acquiring  the 
title,  was  unenforceable.''  So  under  a  written  contract  the 
effect  of  which  is  to  make  a  separate  complete  sale  of  each 
installment  as  delivered,  an  oral  contract  providing  for  redeliv- 
ery in  the  event  of  failure  to  pay  for  subsequent  installments 
cannot  be  enforced.^'*  Where  A  made  a  contract  with  B, 
whereby  A  was  to  make  application  for,  and  if  possible  obtain, 
letters  patent  for  "  certain  new  and  useful  improvements  in 
hat  pouncing,  or  finishing  machines,"  in  certain  countries,  in 
consideration  of  five  thousand  five  hundred  dollars  to  be  paid 
by  B  to  A,  B  could  not  show  an  oral  agreement  that  future 
improvements  were  included  in  addition  to  those  already  made 
by  A,  nor  could  he  show  that  the  money  was  to  be  paid  by 
him  only  if  the  improvements  made  the  machines  able  to  pounce 
hats  in  the  English  method/^ 

IV.     Application  of  Foregoing  Principles. 

§1223.     Method  of  performance. 

It  is  sometimes  said  in  very  general  language  that  extrinsic 
evidence  is  always  admissible  to  show  contemporaneous  oral 
agreements  as  to  the  method  of  performing  a  written  contract 
as  long  as  the  evidence  does  not  contradict  the  terms  thereof. 
The  application  of  this  rule  in  its  most  general  form  would  go 
a  long  way  toward  annulling  the  parol  evidence  rule.  In  cer- 
tain cases,  its  operation  is  clear.  The  case  in  which  it  un- 
doubtedly applies  is  where  the  written  contract  is  incomplete 
on  its  face.  Thus  if  a  contract  is  on  its  face  incomplete,  ex- 
trinsic evidence  is  admissible  to  show  the  manner  of  payment/ 
or   the  character,^   size,^   or  quality,*  of  material  to  be   fur- 

9  Van  Winkle  v.  Crowell,   146  U.  167    Mass.    426;    57    Am.    St.    Rep. 

S.  42.  466;   46  N.   E.   52. 

loHardwick  v.  McClurg,  —  Colo.  2  whatley  v,  Reese,  128  Ala.  500; 

App.  — ;  65  Pac.  405.  29  So.  606. 

11  Adams  v.  Turner,  73  Conn.  38;  sMeader    v.    Allen,    110    la.    588; 

46  Atl.  247.  81  N.  W.  799. 

1  Block  Queensware   Co.   v.   Metz-  *  Aultman    v.    Clifford,    55    Minn, 

ger,    70   Ark.    232;    65    S.    W.    929.  159;  43  Am.  St.  Rep.  478;  56  N.  W. 

Even   if  the  contract  is  within  the  593. 
statute    of    frauds.     See    v.    Butler, 


THE    PAEOL    EVIDENCE    RULE.  1889 

nished,  or  to  show  how  and  by  whom  logs  sold  are  to  be  meas- 
ured/ or  where  railroad  ties  are  to  be  inspected,"  or  to  show 
where  a  furnace  whose  erection  is  contracted  for  is  to  be  placed." 
So  where  a  furnace  is  sold  under  a  guaranty  that  it  will  save 
a  certain  per  cent  of  fuel,  extrinsic  evidence  is  admissible  to 
show  what  kind  of  test  is  to  be  made.*  So  if  the  written  con- 
tract is  incomplete,  extrinsic  evidence  is  admissible  to  show 
the  time  of  performance,®  as  the  time  of  payment. ^°  If  the 
contract  shows  that  some  credit  is  to  be  given,  evidence  is  ad- 
missible to  show  for  what  length  of  time  it  was  given,^^  as  the 
time  of  paying  an  agent  commissions,^^  or  the  length  of  time 
for  which  the  contract  is  to  run,^^  as  that  it  is  a  contract  at 
will.^*  So  if  no  time  is  fixed  in  the  cojitmct  for  passing  title, 
extrinsic  evidence  is  admissible  to  show  that  title  is  to  be 
retained  until  the  property  is  paid  for.^^  If  the  contract  is 
incomplete,  evidence  is  admissible  to  show  the  place  of  pay- 
ment.^'' In  some  cases  this  principle  has  been  applied  to  notes 
which  did  not  provide  for  the  place  of  payment,  and  extrinsic 
evidence  has  been  admitted  to  show  an  oral  agreement  fixing 
the  place  of  payment. ^^  In  other  cases  it  has  been  held  that 
in  the  absence  of  a  provision  in  the  note  fixing  a  place  of  pay 
ment,  the  law  would  draw  inferences  as  to  such  place,  which 
inferences  could  not  be  contradicted  by  extrinsic  evidence.^^ 
Another  class  of  cases,  elsewhere  discussed,  exists  where  a  con- 
sistent collateral  contract  is  entered  into  between  the  parties 

5  Gould  V.  Excelsior  Co.,   91   Me.  12  Walters  v.  King,  119  Cal.  172 
214;   64  Am.  St.  .Rep.  221;   39  Atl.      51  Pae.  35. 

554.  13  Bankers'    Accident    Ins.    Co.    v 

6  Havana,  etc.,    Ry.  v.   Walsh,   85      Rogers,  73  Minn.  12;  75  N.  W.  747 
111.  58.  14  Real  Estate  Title  Co.'s  Appeal 

TKumberger    v.    Spring   Co.,    158  125  Pa.  St.  549;    11   Am.  St.  Rep 

N.  Y.  339;  53  N.  E.  3.  920;  17  Atl.  450. 

8  Hawley,  etc.,  Co.  v.  Hooper,  90  is  Myers  v.  Taylor,  107  Tenn.  364 

Md.  390;  45  Atl.  456.  64  S.  W.  719. 

sWhatley  v.  Reese,  128  Ala.  500;  le  Ebert  v.  Arends,   190   111.  221 

29   So.   606;    Richter   v.   Stock  Co.,  60  N.  E.  211. 

129  Cal.  367;  62  Pac.  39.  i7  Cox   v.    Bank,    100   U.    S.    704 

10  Schaeppi  v.  Glade,  195  111.  62 ;  Blackerly  v.  Ins.  Co.,  83  Ky.  574. 
62  N.  E.  874.  -«  Moore  v.  Davidson,  18  Ala.  209. 

11  Crowley  v.  Langdon,  127  Mich. 
51;  86  N.  W.  391. 

119 


1890  PAGE    ON    CONTKACTS. 

whereby  they  provide  a  means  for  the  performance  of  their 
"written  contract.  Thus  where  A  gave  B  his  note,  an  oral 
agreement  whereby  B  was  to  collect  certain  rents  belonging  to 
A  and  apply  them  on  such  note  was  enforceable/^  So  where  a 
note  under  seal  was  given,  the  maker  was  allowed  to  show  that 
it  was  not  to  be  paid  until  another  note  given  therewith  had 
been  collected.^"  Beyond  these  classes  of  cases  the  courts  should 
not  go.  It  must  be  admitted,  however,  that  some  authorities 
permit  oral  terms  to  be  added  to  a  complete  written  contract, 
and  in  some  cases  even  allow  the  written  terms  to  be  contra- 
dicted under  guise  of  showing  the  method  of  performance. 
Thus  where  A  had  given  a  note  to  B,  it  was  held  that  A  could 
show  that  A  and  B  had  sold  to  X  land  owned  by  A  and  B,  that 
X  had  given  therefor  his  note  to  A,  and  that  the  note  in  litiga- 
tion, given  by  A  to  B  and  for  one  half  the  amount  of  X's 
note  to  A,  was  to  be  paid  only  out  of  X's  note."^  This  case, 
however,  is,  on  this  point,  contrary  to  the  weight  of  authority, 
as  such  evidence  is  generally  held  to  contradict  the  written  con- 
tract. Where  A  had  bought  land  from  B  and  had  given  his 
note  therefor,  it  was  held  that  A  could  show  that  the  note  was 
payable  only  after  the  land  was  surveyed  and  that  a  reduction 
in  the  price  was  to  be  made  proportional  to  the  deficiency  in 
acreage  below  the  estimated  amount. ^^  This  case  may  be  sus- 
tained on  the  theory  that  a  partial  failure  of  consideration  was 
shown.  So  an  oral  contract  for  the  payment  of  a  note  by  saw- 
ing lumber  has  been  enforced. ^^  So  a  written  contract  to 
deliver  a  quantity  of  JDcaches  ranging  from  a  maximum  to  a 
minimum  quantity  at  vendor's  option,  to  be  grown  in  "  sundry 
orchards  "  in  certain  sjDecified  county,  may  be  shown  by  oral 
evidence  to  be  a  contract  for  the  product  of  certain  specific 
orchards  and  to  be  conditioned  on  the  fact  of  producing  a  crop 
on  such  orchards.^* 

19  Stebbins    v.    Lardner,    2    S.    D.  23  Ramsay   v.    Capshaw,    71    Ark. 
127;  48  N.  W.  847.  408;  75  S.  W.  479. 

20  Quin  V.  Sexton,  125  X.  C.  447;  24  Ontario,     etc.,     Association     v. 
34  S.  E.  542.  Cutting.    134    Cal.   21;    86   Am.    St. 

21  Quin  V.  Sexton,  125  N.  C.  447;  Rep.  231;  53  L.  R.  A.  681;  66  Pac. 
34  S.  E.  542.  28. 

22McGee    v.    Craven,    106    N.    C. 
351;  11  S. E.  375. 


THE  PAEOL  EVIDENCE  RULE.  1891 

§1224.     Agreement  as  to  performance  contradicting  written  con- 
tract. 

An  oral  contemporaneous  contract  whicli  changes  the  time 
of  performance  from  that  fixed  by  a  complete  written  contract, 
cannot  be  enforced/  Thus  an  oral  contract  contemporaneous 
with  the  execution  of  a  promissory  note,  providing  for  an  exten- 
sion thereof,  is  unenforceable.^  So,  if  a  note  by  its  terms 
matures  at  a  certain  time,  extrinsic  evidence  of  a  contem- 
poraneous contract  to  renew  until  the  maker's  business  is  in 
such  condition  that  he  does  not  need  the  payee's  financial  assist- 
ance, is  inadmissible.^  So  a  prior  oral  agreement  not  to  fore- 
close a  chattel  mortgage  at  maturity  is  unenforceable.*  So  a 
contemporaneous  oral  contract  to  renew  a  bill  of  exchange  can- 
uot  be  enforced.^  So  where  a  contract  does  not  fix  the  time 
for  payment,  and  accordingly  payment  is  to  be  made  when  the 
contract  is  performed,  an  oral  contract  for  payment  in  advance 
is  unenforceable.^  So  where  a  certificate  of  deposit,  payable  in 
twelve  months  was  given,  extrinsic  evidence  is  inadmissible  to 
show  that  the  holder  had  agreed  to  present  the  certificate  for 
payment  at  the  end  of  six  months.'^  So  a  continuing  guarantee 
"  until  further  notice  "  cannot  be  shown  to  be  limited  to  a 
period  of  one  year.^  So  a  written  contract  of  guaranty  for 
consignments  made  to  another  during  one  year,  cannot  be  shown 
to  be  limited  to  the  first  shipment.®  So  under  a  chattel  mort- 
gage an  oral  agreement  that  the  mortgagor  may  retain  posses- 
sion of  the  property  until  a  future  time,  is  inadmissible  where, 

iHarloe  v.  Lambie,  132  Cal.  133:  *  Moore  v.  Howe,   115   la.  62;   87 

64  Pac.  88;  Allen  v.  Thompson,  108  N.   W.  750. 

Ky.  476;   56  S.  W.  823;  Tallmadge  5  New  London  Credit  Syndicate  v. 

V.  Hooper,  37  Or.  503,  61  Pac.  349;  Neale   (1898),  2  Q.  B.  487. 

rehearing  denied  37  Or.  514;  61  Pac.  6  Langley   v.   Rodriquez,    122   Cal. 

1127;  Edgar  v.  Golden,  36  Or.  448;  580;   68  Am.   St.  Rep.   70;   55  Pac. 

60  Pac.  2;  48  Pac.  1118.  406;     Kistler    v.    McBride     (N.    J. 

2  Thomas    v.    Plow    Co..    56    Neb.  Eq.),   48   Atl.   558. 

383;  76  N.  W.  876;  Homewood  Pec-  7  Citizens'  Bank  v.  Jones,  121  Cal. 

pie's   Bank  v.  Heckert,  207   Pa.  St.  30;  53  Pac.  354. 

231;  56  Atl.  431.  s  Indiana    Bicycle    Co.    v.    Tattle, 

3  Hall  V.  Bank,  173  Mass.  16;  73  74  Conn.  489;  51  Atl.  538. 

Am.  St.  Rep.  255;  44  L.  R.  A.  319;  o  Brann   v.    Woollacott,    129    Cal. 

53  N.  E.  154.  107;  61  Pac.  801, 


1892  PAGE    OlSr    CONTRACTS. 

by  the  terms  of  the  mortgage,  the  mortgagee  is  entitled  to  the 
immediate  possession.^"  If  a  written  contract  for  sawing  logs 
shows  the  method  of  delivery  agreed  upon,  a  contemporaneous 
oral  contract  for  another  method  of  delivery  cannot  be  en- 
forced/^ 

§1225.    Warranties. 

A  complete  written  contract  cannot  be  added  to  by  showing 
a  prior  or  contemporaneous  oral  warranty.^  Thus,  where  there 
was  an  express  warranty  that  an  engine  is  made  of  good  ma- 
terial, an  oral  warranty  that  it  had  power  to  run  a  certain 
separator  could  not  be  enforced.^  So  where  there  is  an  express 
written  warranty  against  breakage,  evidence  of  an  oral  warranty 
against  defective  working  is  inadmissible.^  So  where  a  written 
order  is  given  for  a  fire-proof  safe,  evidence  of  a  cpntempo- 
raneous  oral  warranty  is  inadmissible,  and  the  language  of  the 
order  itself  does  not  imply  a  warranty  that  the  safe  is  fire 
proof.*  The  parties  cannot  introduce  evidence  of  facts  from 
which  a  warranty  could  be  implied,  where  the  contract  is  in 
writing.  Thus  they  cannot  show  that  the  sale  was  by  sample,^ 
or  that  an  apparatus  was  sold  for  a  specific  purpose.^  The 
rule  forbidding  the  addition  of  oral  warranties  to  complete 

loRobieson  v.  Royce,  63  Kan.  886;  Milwaukee  Boiler  Co.  v.  Duncan,  87 

66    Pac.    646.      (No    opinion    in   of-  Wis.   120;  41  Am.  St.  Rep.  33;  58 

ficial  report. )  N.  W.   232.     Contra,  Puget  Sound, 

11  Mead    v.    Dunlevie,    174    N.    Y.  etc..  Works  v.  Clemmons,  32  Wash. 

108;   66  N.  E.  658.  36;  72  Pac.  465. 

iSeitz  V.  Machine  Co..  141  U.  S.  2  Nichols    v.    Crandall,    77    Mich. 

510;    Wilson   V.    Cattle-Rranch    Co.,  401;  6  L.  R.  A.  412;  43  N.  W.  875. 

73  Fed.  994 ;   20  C.  C.  A.  244 ;  Me-  ^  Dowagiac  Mfg.  Co.  v.  Corbit,  127 

Cormick  Harvesting  Machine  Co.  v.  Mich.  473;  86  N.  W.  954;  rehearing 

Yoeman,  26  Ind.  App.  415;  59  N.  E.  denied  87  N.  W.  886. 

1069;    Ehrsam    v.    Brown,    64   Kan.  4  Diebold    Safe    and    Lock    Co.    v. 

466;  67  Pac.  867;  Diebold,  etc.,  Lock  Huston,  55  Kan.   104;   28  L.  R.  A. 

Co.  V.  Huston.  55  Kan.  104;  28  L.  R.  53;  39  Pac.  1035. 

A.    53;    39    Pac.    1035;    D.    M.    Os-  5  Wiener  v.  Whipple,  53  Wis.  298; 

borne   &   Co.   v.   Wigent,    127   Mich.  40  Am.  Rep.  775;  10  N,  W.  433. 

624;  86  N.  W.  1022;  Hallwood  Cash  6  McCray,   etc.,   Co.  v.  Woods,   99 

Register  Co.   v.   Millard,    127   Mich.  Mich.  269;  41  Am.  St.  Rep.  599;  53 

316;    86   N.   W.    833;    Thompson   v.  N.  W.  320. 
Libby,  34  Minn.   374;   26  X.  W.   1; 


THE    PAKOL,   EVIDENCE   RULE.  1893 

written  contracts,  applies  to  other  contracts  beside  those  of  sale. 
Thus  in  a  contract  for  employing  a  life  insurance  agent,  and 
paying  him  commissions  on  renewals,  an  oral  guaranty  as  to 
the  amount  of  renewals  is  unenforceable.^  So  in  an  assignment 
of  a  mortgage,  an  oral  guaranty  that  the  mortgage  was  a  valid 
lien  on  the  property  is  unenforceable.^  So  in  a  written  contract 
for  the  sale  of  land,  an  oral  warranty  as  to  the  location  of  an 
electric  railway  cannot  be  enforced.^  So  where  a  written  lease 
has  been  given,  evidence  of  an  oral  warranty  as  to  the  condition 
of  the  property  leased,  cannot  be  enforced.^**  So  an  oral  war- 
ranty that  a  boiler  and  engine  situated  on  leased  property  is 
in  good  condition,  is  unenforceable  where  a  written  lease  has 
been  given. ^^  The  admission  of  evidence  of  an  express  oral 
warranty,  which  is  the  same  as  that  which  would  be  implied 
without  such  evidence,  is  not,  however,  prejudicial  error.^^ 

§1226.     Surety. 

A  surety  who  signs  as  a  joint-maker  may  show  his  relation  to 
the  instrument  in  an  action  thereon  between  himself  and  the 
payee.^  Showing  such  relationship  does  not  contradict  the 
instrument  on  which  action  is  brought.  However,  as  such  rela- 
tionship is  usually  important  as  between  the  surety  and  the 
payee  when  the  surety  has  been  released  by  the  payee's  giving 
an  extension  of  time  to  the  principal  without  the  consent  of  the 

7  Montgomery  v.  Ins.  Co.,  97  Fed.  12  Tufts    v.    Verkuyl,    124    Mich. 

913;   38  C.  C.  A.  553.  242;   82  N.  W.  891. 

sNally  V.  Long,  71  Md.  585;    17  1  Compton  v.  Smith,  120  Ala.  233; 

Am.  St.  Rep.  547;  18  Atl.  811.  25  So.  300;   Buck  v.  Bank,  104  Ga. 

9  Baker  v.  Flick,  200  Pa.  St.  13;  660;  30  S.  E.  872;  Daneri  v.  Gazzo- 
49  Atl.  349.  la,  139  Cal.  416;  73  Pac.  179;  Crad- 

10  Stevens  v.  Pierce,  151  Mass.  dock  v.  Lee  (Ky.),  61  S.  W.  22; 
207;  23  N.  E.  1006;  McLean  v.  Youtsey  v.  Kutz  (Ky.),  60  S.  W. 
Nicol,  43  Minn.  169;  45  N.  W.  15;  857;  Weeks  v.  Parsons,  176  Mass. 
York  V.  Steward,  21  Mont.  515;  43  570;  58  N.  E.  157;  Hitchcock  v. 
L.  R.  A.  125;  55  Pac.  29;  Naumberg  Fraekleton,  116  Mich.  487;  74  N. 
V.  Young,  44  N.  J.  L.  331;  43  Am.  W.  720;  Stovall  v.  Adair,  9  Okla. 
Rep.  380.  620 ;  60  Pac.  282 ;  Faulkner  v.  Thom- 

iiNaumberg  v.  Young.   44   N.   J.  as,  48  W.  Va.,   148;   35   S.  E.  915; 

L.    331;    43    Am.   Rep.    380;    citing  Breitengross  v.  Farr,  100  Wis.  215; 

Button  V.  Gerrish,  9  Gush.   (Mass.)  75  N.  W.  893. 
89. 


1894  PAGE    ON    CONTRACTS. 

surety,"  or  when  the  jurisdiction  of  the  court  is  affected  by  the 
question  of  suretyship,  the  effect  of  such  evidence  is  to  change 
the  legal  rights  of  the  parties,  though  not  the  legal  effect  of  the 
contract.  Thus  where  A  the  real  surety  signed  as  maker,  B 
the  real  borrower  appeared  as  payee,  and  B  endorsed  to  C  the 
real  lender,  these  facts  may  be  shown  where  by  reason  of  citizen- 
ship in  different  states,  the  United  States  courts  would  not  have 
jurisdiction  otherwise.^  So  the  makers  of  a  note  may  show 
that  they  are  all  sureties  for  a  principal  who  never  signed  at 
all,  and  thus  show  that  they  are  discharged  because  the  payee 
has  released  other  security.*  So  a  wife  who  gives  a  mortgage 
on  her  own  realty  to  secure  her  husband's  debt  can  show  that 
she  was  surety  for  him.^  In  an  action  between  sureties  for 
contribution  even  greater  latitude  is  allowed,  since  the  contract 
between  the  sureties  is  scarcely  ever  in  writing,  and  the  action 
is  therefore  not  between  the  parties  to  the  written  contract. 
Thus  where  a  note  was  signed  by  A,  B,  C  and  D,  and  the  word 
"  surety  "  was  added  to  D's  signature,  C  may  show  that  he, 
too,  was  a  surety,  and,  having  paid  the  note,  is  entitled  to  con- 
tribution against  C.^ 

§1227.     Drawer. 

The  drawer  of  a  bill  of  exchange  is  not  protected  by  a  con' 
temporaneous  oral  agreement  with  the  payee,  exonerating  him 
from  liability  if  the  drawee  does  not  honor  the  draft.^  But 
where  the  original  draft  was  lost  and  the  payee  so  delayed 
through  his  agent's  negligence  as  to  release  the  drawer,  it  was 
held  that  the  drawer's  giving  a  duplicate  draft,  to  enable  the 

2  Buck  V.  Bank,  104  Ga.  660;  30  6  Bulkeley  v.  House,  62  Conn.  459 ; 
S.  E.  872.  21  L.  R.  A.  247;  26  Atl.  352. 

3  Goldsmith  v.  Holmes,  36  Fed.  i  Leadbitter  v.  Farrow,  5  Maule  & 
484;  13  Sawyer  526;  1  L.  R.  A.  S.  345;  Citizens'  Bank  v.  Millett, 
816.  103   Ky.    1;    82  Am.   St.  Rep.   546; 

4  Hoffman  v.  Habighorst,  38  Or.  44  L.  .R.  A.  664;  44  S.  W.  366; 
261;   53  L.  R.  A.  908;   63  Pae.  610.  Pentz    v.    Stanton,    10    Wend.     (N. 

5  Price  V.  Cooper,  123  Ala.  392;  Y.)  270;  25  Am.  Dee.  558;  Biyan 
26  So.  238.  The  Alabama  Code  §  v.  Duff.  12  Wash.  233;  50  Am.  St. 
2529  prohibitinor  a  wife  from  becom-  Rep.  889;  40  Pac.  936. 

ing  surety  for  her  husband. 


THE  PAROL  EVIDENCE  RULE. 


1895 


payee  to  collect  if  possible  from  the  drawee,  did  not  revive  his 
liability.  Accordingly,  an  oral  contract  that  the  drawer  should 
not  be  liable  on  such  duplicate  draft  is  enforceable.^ 

§1228.    Indorsement. —  Regular  indorsement  held  to  be  complete 
contract. 

Whether  a  contract  of  indorsement  can  be  varied  by  contem- 
poraneous parol  agreement  depends  on  whether  it  is  looked  upon 
as  a  complete  contract.  A  regular  indorsement,  that  is,  an 
indorsement  by  one  in  the  chain  of  title  is  held  in  many  juris- 
dictions to  be  a  complete  contract,  and  hence  within  the  parol 
evidence  rule.^  Where  this  view  obtains  a  parol  agreement 
that  an  indorsement  was  without  recourse,"  that  indorsement 
was  made  only  to  pass  title,^  that  the  indorser  was  merely  a 
guarantor,*  or  a  witness,^  or  that  he  indorsed  for  identification 
only/  or  that  he  only  guaranteed  a  deficiency  after  applying 


2  Bank  v.  Farnsworth,  7  N.  D.  6 ; 
38  L.  R.  A.  843;  72  N.  W.  901. 

1  Martin  v.  Cole,  104  U.  S.  30; 
United  States  Bank  v.  Dunn,  6  Pet. 
(U.  S.)  51;  Citizens'  Bank  v.  Jones, 
121  Cal.  30;  53  Pac.  354;  Hately 
V.  Pike,  162  111.  241 ;  53  Am.  St.  Rep. 
304;  44  N.  E.  441;  Skelton  v.  Dus- 
tin,  92  111.  49;  Shaw  v.  Jacobs,  89 
la.  713,  719;  48  Am.  St.  Rep.  411: 
21  L.  R.  A.  440;  55  K  W.  333;  56 
N.  W.  684;  Porter  v.  Grain  Co.,  78 
Minn.  210;  80  N.  W.  965;  Farwell 
V.  Trust  Co.,  45  Minn.  495;  22  Am. 
St.  Rep.  742;  48  N.  W.  326;  Kern 
V.  Von  Phul,  7  Minn.  426;  82  Am. 
Dec.  105;  Cliaddoek  v.  Vanness,  35 
N.  J.  L.  517;  10  Am.  Rep.  256;  Fas- 
sin  V.  Hubbard,  55  N.  Y.  465,;  River- 
view  Land  Co.  v.  Dance,  98  Va.  239 ; 
35  S.  E.  720;  Citizens'  National 
Bank  v.  Walton,  96  Va.  435;  31  S. 
E.  890. 

2  Martin  v.  Cole,  104  U.  S.  30; 
United  States  Bank  v.  Dunn,  6  Pet. 
(U.  S.)  51;  Citizens'  Bank  v.  Jones, 


121  Cal.  30;  53  Pac.  354;  Randle 
V.  Coke  Co.,  15  App.  D.  C.  357; 
Courtney  v.  Hogan,  93  111.  101; 
Clarke  v.  Patrick,  60  Minn.  269;  62 
N.  W.  284 ;  Lewis  v.  Dunlap,  72  Mo. 
174;  Fassin  v.  Hubbard,  55  N.  Y. 
465;  Charles  v.  Denis,  42  Wis.  56; 
24  Am.  Rep.  383. 

3  Iowa  Valley  State  Bank  v.  Sig- 
stad,  96  I».  491;   65  N.  W.  407. 

4  Hately  v.  Pike,  162  111.  241;  53 
Am.  St.  .Rep.  304;  44  N.  E.  441; 
Howe  V.  Merrill,  5  Cush.  (Mass.) 
80;  Youngberg  v.  Nelson,  51  Minn. 
172;  38  Am.  St.  Rep.  497;  53  N. 
W.  629. 

5  Stack  V.  Beach,  74  Ind.  571 ;  39 
Am.  Rep.  113;  Cochran  v.  Atchison, 
27  Kan.  728;  Prescott  Bank  v.  Cav- 
erly,  7  Gray  (Mass.)  217;  66  Am. 
Dec.  473 ;  Bowler  v.  Braun,  63  Minn. 
32;  56  Am.  St.  Rep.  449;  65  N.  W. 
124. 

6  Alabama  National  Bank  v.  Riv« 
ers,  116  Ala.  1;  67  Am.  St.  Rep. 
95;  22  So.  580. 


1896  PAGE    ON    CONTRACTS. 

certain  securities/  or  that  he  entered  into  an  oral  contract  of 
guaranty,^  or  that  he  was  a  maker,^  is  in  each  case  unenforce- 
able. Even  in  jurisdictions  which  hold  that  a  regular  indorse- 
ment is  a  complete  contract,  there  is  a  conflict  as  to  whether  a 
contemporaneous  oral  waiver  of  demand  and  notice  is  enforce- 
able. ^"^  If  waiver  of  demand  and  notice  is  stamped  on  the 
back  of  a  note  above  the  signatures  of  the  indorsers,  evidence 
of  an  oral  agreement  that  demand  and  notice  should  not  be 
waived  is  unenforceable.^^  Even  in  jurisdictions  which  hold 
that  a  blank  indorsement  is  complete,  a  memorandum  over  the 
indorser's  signature  may  show  that  some  special  contract  was 
entered  into  and  that  this  contract  was  not  completely  set  forth. 
Thus  a  memorandum,  "  Sold  one  half  this  note  to  A,"  above  the 
signature  of  the  alleged  indorser,  may  show  that  the  contract 
was  not  one  of  indorsement,  but  a  mere  memorandum  of  A's 
interest.^^  If  the  note  is  non-negotiable  the  oral  agreement 
under  which  the  promisee  who  signs  as  a  first  indorser  would, 
had  the  note  been  negotiable,  and  another  person  who  signs  as  a 
second  indorser  would,  may  be  enforced.^^ 

§1229.     Regular  indorsement  held  to  be  incomplete. 

In  other  jurisdictions  a  regular  indorsement  is  treated  as  an 
incomplete  contract,  or  as  some  courts  express  it,  only  evidence 
that  some  contract  has  been  entered  into.  Where  such  view 
obtains  extrinsic  evidence  is  admissible  to  show  the  terms  of 

7  Adams  v.  Wallace,  119  Cal.  67;  Bank  v.  Kettering,  106  Pa.  St.  531; 
51   Pae.   14.  51    Am.   Rep.    536.     That   it   is   not 

8  Johnson  v.  Glover,  121  III.  283;  enforceable.  Goldman  v.  Davis,  23 
12  N.  E.  257;  overruling  Worden  v.  Cal.  256;  Farwell  v.  Trust  Co.,  45 
Salter,  90  111.  160.  Minn.   495;    22   Am.   St.   Rep.   742: 

9  Finley  v.  Green,  85  111.  535 ;  Vore  48  X.  W.  326 ;  J^odney  v.  Wilson,  67 
V.  Hurst,  13  Ind.  551;  74  Am.  Dec.  Mo.  125;  29  Am.  Rep.  499. 

268;  Porter  v.  Grain  Co.,  78  Minn.  "Farmers'     Exchange     Bank     v. 

210;   80  N.  W.  965.  Mining  Co.,   129   Cal.   263;    61   Pac. 

10  That   it   is.     Markland    v.    Mc-       1077. 

Daniel,   51   Kan.   350;    20   L.   R.   A.  12  Hathaway    v.    Rogers,    112    la. 

96;  32  Pac.  1114;  Taunton  Bank  v.  638;   84  N.  W.  674. 

Richardson,    5    Pick.    (Mass.)     436;  "  Young  v.  Sehon,  53  W.  Va.  127; 

Dye  V.  Scott,  35  0.  S.  194;  35  Am.  62  L.  R.  A.  499;  44  S.  E.  136. 
Am.    Rep.    604;    Aunville    National 


THE    PAROL   EVIDENCE   RULE.  1897 

the  contract.^  Thus  a  parol  contract  that  the  indorsement  was 
without  recourse,^  or  that  the  indorser  was  a  joint  maker/  is 
enforceable  where  this  rule  obtains.  Even  where  a  blank  in- 
dorsement is  held  to  be  incomplete  a  memorandum  over  the 
signature  may  show  a  complete  written  contract.  Extrinsic 
evidence  of  the  terms  of  the  contract  is  then  inadmissible.* 

§1230.     Indorsement  without  recourse. 

An  indorsement  without  recourse  has  been  held  not  to  be  a 
complete  contract.^  Hence,  an  oral  contract  relieving  the  in- 
dorser for  liability  even  for  forgery  is  enforceable.^  In  other 
jurisdictions  an  indorsement  "  without  recourse  "  constitutes  a 
complete  contract,  and  an  oral  guaranty  cannot  be  shown.^ 
Under  either  theory  an  oral  agreement  that  an  indorsement 
without  recourse  should  have  the  legal  effect  of  an  uncondi- 
tional indorsement  contradicts  the  terms  of  the  writing  and  is 
unenforceable.'* 

§1231.    Irregular  indorsers. 

An  irregular  indorsement,  that  is  an  indorsement  by  one  not 
in  the  chain  of  title,  may  be  explained  by  parol  in  many  juris- 

1  First  National  Bank  V.  Crabtree,  3  Barger   v.    Farnham,    130   Mieh. 

86  la.  731;  62  N.  W.  559;  Ragsdale  487;  90  N.  W.  281. 

V.   Ragsdale,    105   La.   405;    29    So.  4  Harrison  v.  McKim,  18  la.  485; 

906;    Roads  v.   Webb,   91   Me.   406;  Leary    v.    Blanchard,    48    Me.    269; 

64  Am.  St.  Rep.  246;   40  Atl.   128;  United     States     National     Bank     v. 

Jaster    v.    Currie,    —   Neb.    — ;    94  Geer,  55  Neb.  462;  70  Am.  St.  Rep. 

N.    W.   995;    Corbett   v.   Fetzer,   47  390;    41   L.   R.   A.   444;    75   N.    W. 

Neb.  269;  66  N.  W.  417;  Holmes  v.  1088;     (reversing   on    rehearing,    53 

Bank,  38  Neb.  326;  41  Am.  St.  Rep.  Neb.  67;  41  L.  R.  A.  439;  73  N.  W. 

733;  56  N.  W.  1011;  Coffin  v.  Smith,  266). 

128  N.  C.  252;  38  S.  E.  864;  Taylor  i  Carroll   v.   Nodine,   41   Or.   412; 

V.  French,  2  Lea    (Tenn.)    257;    31  93  Am.  St.  Rep.  743;  61  Pac.  51. 

Am.  Rep.  609.  2  Carroll  v.   Nodine,   41   Or.   412; 

aPritchett  v.  Hape    (Ky.),  51   S.  93  Am.  St.  Rep.  743;  69  Pac.  51. 

W.   608.      (By   statute.)      Dickinson  s  Youngberg  v.   Nelson,   51   Minn. 

V.   Burke,  8  N.  D.   118;    77  N.   W.  172;  38  Am.  St.  Rep,  497;  53  N.  W. 

279;  Cake  v.  Bank,  116  Pa.  St.  264;  629. 

2  Am.  St.  Rep.  600;  9  Atl.  302.  4  Cross  v.  Hollister,  47  Kan.  652; 

28  Pac.  693. 


1898 


PAGE    ON    CONTRACTS. 


dictions/  Thus  such  indorser  may  be  shown  to  be  a  joint 
maker,^  or  the  real  debtor/  or  that  a  new  note  secured  bj  mort- 
gage was  to  have  been  given  when  the  first  note  was  half  paid/ 
or  that  successive  blank  indorsers  were  co-indorsers.^  In  othei 
jurisdictions  the  law  regards  the  liability  of  an  irregular  in- 
dorser as  so  clear  and  certain  that  oral  evidence  of  the  real 
contract  is  inadmissible,  though  there  is  no  harmony  among  the 
different  jurisdictions  as  to  what  that  liability  is.*' 

§1232.     Purpose  of  indorsement. 

As  in  the  case  of  other  assignments  of  title,  the  purpose  foi* 
which  the  indorsement  is  given  may  be  shown  as  long  as  the 
legal  effect  of  the  indorsement  is  not  contradicted.^     Thus  an 


1  Carter  v.  Long,  125  Ala.  280; 
28  So.  74;  Kingsland  v.  Koepper, 
137  111.  344;  13  L.  R.  A.  649;  28 
N.  E.  48 ;  Fullerton  v.  Hill,  48  Kan. 
558;  18  L.  R.  A.  33;  29  Pac.  583; 
Herndon  v.  Lewis,  175  Mo.  116;  74 
S.  W.  976;  Elliott  v.  Moreland,  — 
N.  J.  L.  — ;  54  Atl.  224;  Ewau  v. 
Brooks-Waterfield  Co.,  55  O.  S.  596; 
60  Am.  St.  Rep.  719;  35  L,  R.  A. 
786;   45  N.  'E.  1094. 

2  Commercial    National    Bank    v. 
Atkinson,  62  Kan.  775;  64  Pac.  617 
Richardson  v.  Foster,  73  Miss.   12 
55  Am.  St.  Eep.  481;    18   So.   573 
Young  V.  Sehon,  53  W.  Va.  127 ;  97 

-Am.  St.  Rep.  970;  44  S.  E.  136. 

3  Witherow  v.  Slayback,  158  N.  Y. 
649 ;  70  Am.  St.  Rep.  507 ;  53  N.  E. 
681.  (So  the  directors  of  the  in- 
dorsing corporation  are  liable  by 
statute  for  not  including  such  note 
in  their  report  filed  after  the  note 
was  given  but  before  it  fell  due.) 

4  Fullerton  v.  Hill,  48  Kan.  558; 
18  L.  R.  A.  33;  29  Pac.  583. 

5  Sloan  V,  Gibbes,  56  S.  C.  480; 
76  Am.  St.  Rep.  559;  35  S.  E.  408; 
[citing  Phillips  v.  Preston,  5  How. 
(U.  S.)   278;  Graves  v,  Johnson,  48 


Conn.  160;  40  Am.  Rep.  162; 
Holmes  v.  Bank,  38  Neb.  326;  41 
Am.  St.  Rep.  733;  56  N.  W.  1011; 
Taylor  v.  French,  2  Lea  (Tenn.) 
257;  31  Am.  Rep.  609];  Brewer  v. 
Woodward,  54  Vt.  581 ;  41  Am.  Rep. 
857. 

6  Indorser  —  by  statute.  Spencer 
V.  Allerton,  60  Conn.  410;  13  L.  R. 
A.  806;  13  L.  R.  A.  806;  22  AtL 
778;  (cannot  be  shown  to  be  guar- 
antor). Second  indorser.  Temple 
V.  Baker,  125  Pa.  St.  634;  11  Am. 
St.  Rep.  926;  3  L.  R.  A.  709;  17 
Atl.  516.  (Oral  evidence  inadmis- 
sible to  ■  show  a  guarantor  and 
hence  liable  to  payee).  Comaker,  if 
indorsement  before  delivery.  Dennis 
V.  Jackson,  57  Minn.  286 ;  47  Am.  St. 
Rep.  603;  59  N.  W.  198.  (Cannot 
be  shown  to  be  indorser. ) 

1  The  last  qualification  of  course 
applies  in  jurisdictions  where  an  in- 
dorsement is  held  to  be  a  complete 
contract,  or  else  to  indorsements  in 
full  which  show  the  purpose  for 
which  they  were  given.  Lawrence 
v.  Bank,  6  Conn.  521 ;  Hazzard  v. 
Duke,  64  Ind.  220;  Barker  v.  Pren- 
tiss,  6  Mass.  430. 


THE  PAROL  EVIDENCE  RULE.  1899 

indorsement  in  blank  may  be  shown  to  be  for  collection  only,^ 
or  as  collateral  security/  However,  a  blank  indorsement  to  a 
bank,  credit  for  the  amount  of  the  instrument  being  given  to 
the  indorser,  cannot  be  shown  to  be  for  collection  only.*  If  the 
indorsement  shows  the  purpose  of  the  instrument,  however, 
extrinsic  evidence  is  not  admissible  to  contradict  the  purpose 
therein  expressed.  Thus  an  indorsement  for  collection  cannot 
be  shown  by  parol  to  have  been  intended  as  an  absolute  indorse- 
ment.^ So  "  Pay  to  the  order  of  R.  C.  O.,  cashier,  for  account  " 
of  a  given  bank,  shows  an  indorsement  for  collection  only. 
Extrinsic  evidence  is  inadmissible  to  show  that  the  indorsement 
was  an  absolute  transfer." 

k 

§1233.     Contract  signed  by  agent. —  Evidence  to  relieve  agent 
from  liability. 

If  a  written  contract  with  B,  executed  by  A  on  behalf  of  X, 
is  signed  by  A  in  such  form  as  to  bind  him  personally,  the 
question  of  the  right  of  the  parties  to  the  contract  to  show  that 
A  was  the  agent  of  X  and  that  such  contract  was  intended  to 
bind  X,  depends  on  the  nature  of  the  contract  and  the  purpose 
for  which  A's  agency  is  to  be  shown.  If  B  sues  on  the  contract 
and  A  seeks  to  show  that  he  was  agent  and  X  was  principal  in 
order  to  avoid  liability,  such  evidence  is  inadmissible.^  If  A 
signs  his  own  name,  without  any  addition  thereto  suggesting 
agency,  the  only  effect  of  evidence  showing  A's  agency  and 
thereby  relieving  A  from  liability  would  be  to  contradict  the 

2McPherson   v.    Weston,    85   Cal.  444;   75  N.  W.   1088;   reversing  on 

90;  24  Pac.  733;  Scammon  v.  Adams,  rehearing,  53  Neb.  67;  41  L.  K.  A. 

11  111.  575;  Armstrong  v.  Bank,  90  439;   73  N.  W.  266. 

Ky.  431;  9  L.  R.  A.  553;  14  S.  W.  6  United  States  National  Bank  v. 

411.  Geer,  55  Neb.  462;  70  Am.  St.  Rep. 

3Hazzard  v.  Duke,  64  Ind.  220.  390;    41    L.   R.   A.   444;    75   N.   W. 

4  Shaw  V.  Jacobs,  89  la.  713,  719;  1088;  reversing  on  rehearing  53  Neb. 
48  Am.  St.  Rep.  411;  21  L.  R.  A.  67;  41  L.  R.  A.  439;  73  N.  W.  266. 
440 ;  55  N.  W.  333 ;  56  N.  W.  684.  i  American    Alkali    Co.    v.    Bean, 

5  Syracuse  Third  National  Bank  v.  125  Fed.  823;  Vail  v.  Ins.  Co.,  192 
Clark,  23  Minn.  263;  United  States  111.  567;  61  N.  E.  651;  Hancock 
National  Bank  v.  Geer,  55  Neb.  462;  v.  Fairfield,  30  Me.  299. 

70  Am.  St.  Rep.  390;   41  L.  R.  A. 


1900  PAGE    ON    CONTRACTS. 

terms  of  the  contract.  This  rule  applies  alike  to  negotiable 
contracts  such  as  notes"  and  drafts,  so  that  the  agency  of  an 
indorser  who  signs  his  individual  name  cannot  be  shown  to 
relieve  him/  and  to  non-negotiable  contracts/  such  as  a  contract 
of  sale/  a  contract  of  warranty/  or  a  contract  on  behalf  of 
corporation  to  be  formed,  signed  so  as  to  bind  the  promoters 
individually.^ 

§1234.     Addition  of  word  "agent"  held  not  to  make  contract 
ambiguous. 

If  a  contract  is  signed  by  A,  with  the  addition  to  his  signa- 
ture of  the  word  "  agent  "  or  some  other  word  importing  agency, 
but  the  language  of  the  contract  is  such  as  to  bind  A  personally, 
A  is  held  personally  liable  in  many  jurisdictions,  and  the  con- 
tract is  not  looked  upon  as  ambiguous.  Where  this  view  pre- 
vails, A  cannot  introduce  extrinsic  evidence  that  he  was  acting 
solely  on  behalf  of  his  principal  to  relieve  himself  from  liabil- 
ity.^ This  rule  applies  to  negotiable  contracts.  Thus  where 
a  note  was  sigTied  "  Mattress  Co.,  John  Knapp.  Pt.,"  and  begins 
"  we  promise,""  or  where  a  note  begins  "  we  promise,"  and  is 
signed,  "  Canning  Co.,  H.  TTessel  Sec'y.,  Hartman  Pres.,"^  or 
begins  "  I  promise,"  and  is  sigTied  "  A,  agent,"*  or  begins  "  we 
jointly  and  severally  promise  to  pay  to  X  in  official  capacity," 
and  is  signed  by  the  individual  names  of  the  makers  with  the 

2  Sparks  v.  Despatch  Co.,  104  i  Moragne  v.  Machine  Works,  124 
Mo.  531;  24  Am.  St.  JRep.  351;  12  Ala.  537;  27  So.  240;  Lawrence 
L.  R.  A.  714;  15  S.  W.  417;  Shuey  County  Bank  v.  Arndt,  69  Ark.  406; 
V.  Adair,  18  Wash.  188;  63  Am.  St.  65  S.  W.  1052. 

Rep.  879;  39  L.  R.  A.  473;  51  Pac.  2  Matthews  v.  Mattress  Co.,  87  la. 

388.  246;  19  L.  R.  A.  676;  54  N.  W.  225. 

3  Condon  v.  Pearce.  43  Hd.  83.  s^cCandless  v.  Canning  Co.,  78 
4Cliandler  v.  Coe,  54  X.  H.  561.  la.  161;  16  Am.  St.  Rep.  429;  4  L. 
sBulwinkle  v.   Cramer,   27   S.   C.  R.  A.  396;   42  N,  W.   635.     For  a 

376;   13  Am.  St.  Rep.  645;  3  S.  E.  similar  note  signed  by  the  name  of 

776.  the      company.     A,     "Mnger.,"     B, 

6  Cream  City  Glass  Co.  v.  Fried-  "  Pres."     See  Albany  Furniture  Co. 

lander,  84  Wis.  53;  36  Am.  St.  Rep.  v.  Bank,  17  Ind.  App.  531;   60  Am. 

895;  21  L.  R.  A.  135,  54  X.  W.  28.  St.  J?ep.  178;  47  X.  E.  227. 

7De  Remer  v.  Brown,  165  X.  Y.  *  Collins  v.  Ins.  Co.,  17  O.  S.  215; 

410;  59  X.  E.  129.  93    Am.   Dec.    612. 


THE    PAROL   EVIDENCE   RULE.  1901 

addition  "  Whitfield  Eoad  Committee,"^  or  is  signed  "  0.  O. 
Prescott,  Pres.,"  of  a  given  corporation,®  or  is  signed  by  several 
who  add  "  Board  of  Business  Managers  '"  or  "  as  stockholders/'^ 
or  where  a  draft  is  drawn  by  "  A,  Treas.,"^  or  by  "  A,  agent 
for  B,"^"  or  is  indorsed  "  A,  agent,"^^  or  where  a  draft  is  ac- 
cepted "  H.  P.  Eells,  Treasurer,"  ^^  or  by  "  A,  agent  K.  &  O. 
C.  Co.,"^^  extrinsic  evidence  is  inadmissible  to  relieve  the  party 
so  signing  from  personal  liability. 

§1235.     Addition  of  word  "agent"  held  to  make  contract  am- 
biguous. 

In  other  jurisdictions  the  addition  of  "  agent "  or  some  sim- 
ilar word  to  the  signature  is  held  to  make  it  ambiguous  whether 
personal  liability  is  intended  or  not,  and  to  make  extrinsic 
evidence  of  the  intention  of  the  parties  admissible.^  Thus  the 
addition  "  Sec'y  Enid  Town  Co.,"^  "  Pt.,"'  "  agt.,"*  or  "  ex- 
ecutor,"^ have  been  held  to  make  extrinsic  evidence  admissible. 
So  where  a  note  is  signed  "  U.  M.  Benham,  President  Odd 
Fellows'  Hall  Association ;  A.  T.  Lea,  Secretary,"  it  is  held 
proper  to  admit  evidence  to  show  that  the  note  is  the  note 
of  the  association.^  So  where  a  note  given  by  a  corporation 
was  signed  on  the  bank  by  the  individual  names  of  the  directors 

5  Savage  v.   Eix,   9   X.  H.   263.  i  Powell   v.   Construction   Co.,    88 

6  Prescott  V.  Hixon,  22  Ind.  App.  Tenn.  692;  17  Am.  St.  Rep.  925; 
139;  72  Am.  St.  Pvcp.  291;  53  N.  E.  13  S.  W.  691;  Heffron  v.  Pollard, 
391.  73  Tex.  96;    15  Am.  St.  Eep.  764; 

7  Richmond,   etc.,    Works  v.  Mor-  11  S.  W.  165. 

agne,  119  Ala.  80;  24  So,  834.  2  Janes  v.  Bank,  9  Okla.  546;  60 

8  Savings  Bank  v.  Market  Co.,  122  Pac.  290;  expressly  overruling  Keo- 
Cal.  28;  54  Pac.  273.  kuk,  etc.,  Co.  v.  Mfg.  Co.,  5  Okla. 

9  Bank  v.  Cook,  38  0.  S.  442.  32;  47  Pac.  484. 

lOTannatt  v.  Bank,   1  Colo.  278;  3  Small  v.  Elliott,  12  S.  D.  570; 

9  Am.  Rep.  156;  Sturdivant  v,  Hull,  76  Am.  St.  Rep.  630;  82  N.  W.  92. 

59  Me.  172;  8  Am.  Hep.  409.  4  Keidan    v.    Winegar,    95    Mich. 

iiBarnhisel  v.  Bank,  14  Ohio  C.  430;    20  L.  JR.  A.   705;    54   N.   W. 

C.  124.     Contra,  Babcock  v,  Beman,  901. 

11  N.  Y.  200.  sSchmittler  v.  Simon,  114  N.  Y. 

i2Eells   v.    Shea,    20   Ohio    C.   C  176;  11  Am.  St.  Rep.  621;  21  N.  E. 

527;  11  Ohio  C.  D.  304.  162. 

13  Robinson  v.  Bank,  44  0.  S.  441;  e  Benham  v.  Smith,  53  Kan.  495; 

58  Am.  Rep.  829;  8  N.  E.  583.  36  Pac.  997. 


1902  PAGE    ON    CONTKACTS. 

with  the  addition  "  Board  of  Directors,"  extrinsic  evidence  is 
admissible.'  A  signature  "  H.  H.  Gardner,  Cashier,"  has  been 
held  to  import  a  personal  liability,  but  open  to  so  much  doubt 
that  extrinsic  evidence  was  admissible.^  In  some  jurisdictions 
an  instrument  in  which  the  official  character  of  the  promisor 
is  set  forth  in  the  instrument,  and  individual  signature  is  affixed 
is  so  far  ambiguous  as  to  make  extrinsic  evidence  admissible  to 
relieve  the  party  so  signing  from  personal  liability.'*  Thus 
where  the  instrument  began  "  We,  the  president  and  directors  " 
of  a  designated  company,  and  was  signed  individually,  extrinsic 
evidence  was  admitted  to  show  that  no  personal  liability  was 
intended,  but  only  the  liability  of  the  corporation  of  which  such 
persons  were  officials.^''  The  heading  or  contents  of  the  instru- 
ment may  help  to  make  the  question  of  personal  liability  am- 
biguous. Thus  a  note  headed  "  Midland  Steel  Co."  and  signed 
"  R.  J.  Beatty,  Pres.,"  is  so  ambiguous  that  extrinsic  evidence  is 
admissible.^^  But  in  Indiana,  while  a  note  signed  by  the  name 
of  the  corporation  followed  by  the  name  of  one  officer  imports 
signature  as  agent  only,  a  signature  of  the  corporate  name  fol- 
lowed by  the  names  of  two  officials,  imports  personal  liability 
so  clearly  that  extrinsic  evidence  is  inadmissible,  even  if 
"  Mngr."  and  "  Pres."  are  added  to  the  names.^"  A  contract 
consisting  of  writings  on  two  pieces  of  paper,  each  headed, 
"  ISTeubauer  Decorating  Company,"  one  signed  "  D.  E.  L., 
Mfg.  Agt.  &  Supt.  of  Contracts,"  and  the  other  "  Xeubauer 
Decorating  Company,  D.  E.  L.  Supt.  of  Contracts,"  may  be 
explained  by  extrinsic  evidence  to  show  that  no  personal  liability 
was  intended.^^ 

7  Kline  v.   Bank,  50  Kan.  91 ;   34  lo  Haile  v.  Peirce,  32  Md.  327 ;   3 
Am.  St.  Rep.  107;  18  L.  R.  A.  533;      Am.  Rep.  139. 

31  Pac.  688.  "  Second  National  Bank  v.   Steel 

8  Gardner  v.  Cooper,  9  Kan.  App.      Co.,  155  Ind.  581;  52  L.  R.  A.  307; 
587;   60  Pac.   540;   affirming  on  re-      58  N.  E.  833. 

hearing,   58   Pac.  230;    (citing  Ben-  12  Albany  Furniture  Co.  v.  Bank, 

ham  V.  Smith,  53  Kan.  495;  36  Pac.  17  Ind.  App.  531;   60  Am.  St.  Rep. 

997;    Kline  v.   Bank,   50  Kan.   91;  178;  47  N.  E.  227. 

18  L.  R.  A.  533;  31  Pac.  688;  Bank  But    extrinsic    evidence    was    ad- 

V.  Boardman,  46  Minn.  293;   48  N.  mitted  under  a  similar  form  of  sig- 

W.  1116;  Rowell  v.  Alsen,  32  Minn.  nature  in  Holt  v.  Svveetzer,  23  Ind. 

288;  20  X.  W.  227).  App.  237;  55  N.  E.  254. 

9  Armstrong     v.      Andrews,      109  is  Keeley  Brewing  Co.  v.  Decorat- 
Mich.  537;  67  N.  W.  567.  ing  Co.,  194  111.  580;  62  N.  E.  923. 


THE    PAROL    EVIDENCE    RULE.  1903 

§1236.     Extrinsic  evidence  to  enable  principal  to  sue. 

If  the.  real  principal  X  wishes  to  sue  upon  the  contract,  the 
parol  evidence  rule  does  not  prevent  him  from  showing  that  A 
was  his  agent  and  that  X  is  the  real  party  adversary  to  B.'' 
The  fact  that  the  contract  is  one  of  those  required  by  law  to 
be  proved  in  writing  does  not  prevent  the  principal  from  show- 
ing that  he  is  the  real  party  in  interest,  and  enforcing  the  con- 
tract in  his  own  right.^  A  different  principle  applies  if  the 
contract  is  one  of  those  which  by  law  must  be  in  writing.' 
Questions  involving  the  right  of  the  adversary  party  to  go  out- 
side the  writing  and  hold  the  real  principal  thereon  have  been 
discussed  elsewhere.*  The  name  of  an  individual  signed  to  a 
contract  may  be  shown  to  be  the  name  of  a  partnership,^  but  a 
contract  signed  by  the  names  of  two  individuals  cannot  be  shown 
to  be  the  contract  of  a  partnership  composed  of  those  individuals 
and  others.® 

1  New  Jersey,  etc.,   Co.   v.   Bank,  2  See  §  695. 

6   How.    (U.    S.)    344;    Conklin    v.  3  See  §  761. 

Leeds,    58    111.    178;    Harrington   v.  ^As    to    contracts    which    are   in 

Foley,   108  la.  287;   79  N.  W.  64;  writing,    see    §§    606,    607.     As    to 

Tauton,   etc.,   Turnpike  v.   Whiting,  contracts  which  must  be  proved  in 

10  Mass.  328;  Elkins  v.  Ey.,  19  N.  writing,    see    §    695.     As    to    con- 

H.  337;  51  Am.  Dec.  184;  Beebe  v.  tracts    which    must   be    in    writing, 

Robert,  12  Wend.    (N.  Y.)    413;  27  see  §  761. 

Am.  Dec.  132;  Elkinton  v.  Newman,  5  Butterfield  v.  Hemsley,  12  Gray 

20  Pa.  St.  281 ;  Belt  v.  Water  Power  (Mass.)    226. 

Co.,   24   Wash.    387 ;    64    Pac.    525 ;  e  New   England   Dredging   Co.   v. 

Coulter  V.  Blatchley,  51  W.  Va.  163;  Granite  Co.,   149  Mass.  381;   21  N. 

41  S.  E.  133.  E.  947. 


1904  PAGE    ON    CONTRACTS. 


CHAPTER   LVII. 


REFORMATION. 

§1237.    Relation  of  reformation  to  the  parol  evidence  rule. 

From  the  preceding  discussion  of  the  parol  evidence  rule/ 
it  appears  that  at  law,  and  in  most  cases  in  equity,  the  real 
agreement  between  the  parties,  if  differing  in  terms  from  the 
written  contract,  can  never  be  enforced.  Extrinsic  evidence 
may  overthrow  the  contract  as  a  whole,^  or  it  may  be  used  to 
show  some  form  of  subsequent  discharge,^  but  no  method  has 
thus  far  been  considered  by  which  the  real  agreement  which  is 
often  back  of  the  written  contract  can  be  enforced.  Accord- 
ingly, a  discussion  of  some  of  the  general  principles  of  Reforma- 
tion is  necessary,  since  by  means  of  this  form  of  relief,  equity 
can  in  proper  cases  and  under  proper  limitations,  unhampered 
by  the  parol  evidence  rule,  enforce  the  oral  contract  which  the 
parties,  through  mistake  in  the  expression,  have  not  reduced  to 
writing  correctly.* 

§1238.    Mutuality  of  mistake  in  reformation. 

Reformation  is  given  either  (a)  when  the  mistake  is  mutual 
or  (b)  when  there  is  mistake  on  the  one  side  and  fraud  or  un- 
fair dealing  on  the  other.  By  mutual  mistake  is  meant  that 
the  parties  must  have  come  to  an  actual  oral  agreement  before 
they  have  attempted  to  reduce  it  to  writing,  which  attempt  fails 

iSee  Ch.  LVI.  Ky.    88;    49    S.    W.    1059;    Lindley 

2  See  §§   1207-1213.  v.  Sharp,  7  T.  B.  Mon.   (Ky.)   248; 

3  See   §   1214.  Conner    v.    Groh,    90    Md.    674;    45 

4  Newton  v.  Wooley,  105  Fed.  Atl.  1024;  Sidney  School-Furniture 
541;  Brown  v.  Meserve,  91  Fed.  Co.  v.  School  District,  130  Pa.  St. 
229;    33    C.    C.    A.   472;    Kentucky,  76;   18  Atl.  604. 

etc.,    Association   v.    Lawrence,    106 


EEFOEMATION. 


1905 


by  reason  of  mistake,  and  reformation  enforces  the  original 
contract.  The  rule  that  mistake  in  expression  must  be  mutual 
means  therefore  that  to  obtain  reformation  the  parties  must 
show  that  there  was  a  valid  contract  between  them,  which  con- 
tract is  not  correctly  set  forth  in  the  writing  to  be  reformed/ 
In  granting  reformation,  therefore,  equity  is  not  making  a  new 
contract  for  the  parties,  but  is  establishing  and  perpetuating  the 
real  contract  between  the  parties  which,  under  the  technical 
rules  of  law,  could  not  be  enforced  but  for  such  reformation.^ 
On  the  other  hand,  reformation  is  often  sought  where  A  intends 
to  have  a  certain  stipulation  in  the  contract,  but  this  intent  has 
not  been  communicated  to  B,  or  B  has  not  assented  thereto. 
In  such  case,  whether  or  not  A  can  have  rescission,^  he  cannot 
have  the  contract  reformed  so  as  to  express  his  own  uncom- 
municated  intention,  or  to  express  his  proposition  to  which  B  has 
not  assented,  even  if  A  thought  that  such  term  was  incorporated 
in  the  written  contract.*     Thus  where  the  grantee  assumes  a 


1  Henkle  v.  Assurance  Co.,  1  Ves. 
Sr.  317;  Townshend  v.  Stangroom, 
6  Ves.  Jr.  328;  Shelburne  v.  Inc-hi- 
quin,  1  Bro.  Ch.  338;  Stone  v.  God- 
frey, 5  DeG.  M.  &  G.  76;  Haddon 
V.  Xeighbarger,  9  Kan.  App.  529; 
58  Pac.  568;  ^Yheel  Co.  v.  Miller 
(Ky.),  50  S.  W.  62;  Conner  v. 
Groh,  90  Md.  674;  45  Atl.  1024; 
Ludington  v.  Ford,  33  Mich.  123; 
Benn  v.  Pritchett,  163  Mo.  560; 
63  S.  W.  1103;  Scheer  v.  Scheer, 
148  Mo.  447;  50  S.  W.  Ill;  affirm- 
ing 67  Mo.  App.  371;  Nebraska, 
etc.,  Co.  V.  Ignowski,  54  Neb.  398; 
74  N.  W.  852 ;  Wilson  v.  Wilson,  23 
Nev.  267;  45  Pac.  1009;  Green  v. 
Stone,  54  N.  J.  Eq.  387 ;  55  Am.  St. 
Jlep.  577;  34  Atl.  1099;  reversing 
32  Atl.  706;  Ray  v.  Durham  Coun- 
ty, 110  N.  C.  169;  14  S.  E.  646; 
Diman  v.  R.  R.  Co.,  5  R.  I.  130; 
Deseret  National  Bank  v.  Din- 
woodey,  17  Utah  43;  53  Pac.  215; 
Robinson  v.  Braiden,  44  W.  Va. 
183;  28  S.  E.  798. 
120 


sRoszell  V.  Roszell,  109  Ind.  354; 
10  N.  E.  114;  Welshbillig  v.  Dien- 
hart,  65  Ind.  94. 

3  See  §  71  et  seq. 

4  Hearne  v.  Ins,  Co.,  20  Wall 
(U.  S.)  488;  Tyson  v.  Chestnut, 
100  Ala.  571;  13  So.  763;  MeGuigan 
V.  Gaines,  71  Ark.  614;  77  S.  W.  52; 
Ward  V.  Yorba,  123  Cal.  447;  56 
Pac.  58;  Loftus  v.  Fischer,  106  Cal. 
616;  39  Pac.  1064;  Crane  v.  McCor- 
mick,  92  Cal.  176;  28  Pac.  222; 
Bowman  v.  Besley,  122  la.  42;  97 
N.  W.  60;  Williams  v.  Hamilton, 
104  la.  423;  65  Am.  St.  Rep.  475; 
73  N,  W.  1029;  Bigelow  v.  Wilson, 
99  la.  456;  68  N.  W.  798;  Simpson 
V.  Kane,  98  la.  271;  67  N.  W.  247; 
Breja  v.  Pryne,  94  la.  755;  64  N. 
W.  669;  Buckley  v.  Frankfort 
(Ky.),  44  S.  W.  139;  J.  G.  Mat- 
tingly  Co.  v.  Mattingly,  96  Ky. 
430;  27  S.  W.  985;  rehearing  de- 
nied 31  S.  W.  279;  Byrne  v.  Gun- 
ning, 75  Md.  30;  23  Atl.  1;  Whit- 
worth  V.  Lowell,  178  Mass.  43;  59 


1906  PAGE    ON    CONTEACTS. 

specific  mortgage,  and  a  second  mortgage  exists  of  whicli  the 
grantor  was  in  ignorance  when  he  executed  the  conveyance,  the 
deed  will  not  be  reformed  so  as  to  require  the  grantee  to  assume 
such  second  mortgage.^  Thus  where  A  intended  that  a  clause 
should  be  inserted  in  a  contract  allowing  him  to  draw  certain 
additional  funds,^  or  providing  for  a  mortgage  on  land  sold,^ 
or  that  a  certain  clause  in  the  printed  form  of  the  contract 
should  be  stricken  out,^  or  where  A  meant  to  have  an  assign- 
ment made  to  B  and  himself  jointly  and  by  inadvertence  had 
it  made  to  B  alone,**  or  where  A  thinks  that  the  price  fixed  in 
the  contract  is  for  a  part  of  the  buildings  contracted  for,  when 
in  fact  it  is  for  all  the  buildings,^"  or  thinks  that  certain  goods 
are  to  be  invoiced  at  the  actual  wholesale  cost,  when  the  con- 
tract provides  for  invoice  "  at  wholesale  cost  as  shown  by  cost 
marks  on  the  goods,"^^  or  that  the  area  of  a  lot,  which  he  offers 
for  sale,  is  less  than  it  really  is,  so  that  he  offers  it  for  sale  for 
less  than  it  is  worth,^^  or  that  land  conveyed  by  a  mortgage  does 
not  include  certain  lots  actually  covered  by  it,^^  or  that  the 
amount  of  goods  covered  by  his  order  is  different  from  that 

N.   K    760;    Chute    v.   Quincy,    156  Kropp   v.   Kropp,   97   Wis.    137;    72 

Mass.   189;    30  N.  E.  550;   Page  v.  N.  W.  381;  Coates  v.  Buck,  93  Wis. 

Higgins,   150  Mass.  27;   5  L.  R.  A.  128;   67  N.  W.  23. 

152;  22  N.  E.  63;  Ocean  Beach  As-  5  Moore   v.   Graves,   97   la.   4;    65 

sociation  v.  Trust  Co.    (N.  J.  Eq.),  N.   W.    1008. 

48  Atl.  559;   Green  v.  Stone,  54  N.  6  Mitchell  v.  Holman,  30  Or.  280; 

J.  Eq.  387;   55  Am.  St.  Rep.  577;  47  Pac.  616. 

34  Atl.  1099;  reversing  32  Atl.  706;  ?  Breja  v.  Pryne,  94   la.  755;    64 

Miller    v.    Ins.    Co.,    42    N.    J.    Eq.  N.  W.  669. 

459;   7   Atl.  895;   Atkinson  v.  Far-  8  Crane    v.    McCormick,    92    Cal. 

rington    Co.     (N.    J.    Eq.),    28    Atl.  176;    28   Pac.   222. 

315;   Harbeck  v.  Pupin,   145  N.  Y.  9  Kropp   v.   Kropp,  97   Wis.   137; 

7©;    39   N.   E.   722;    Syms   v.   New  72  N.  W.  381. 

York,  105  N.  Y.  153;  11  N.  E.  369;  lo  Whitworth      v.      Lowell,      178 

Mitchell  V.  Holman,  30  Or.  280 ;  47  Mass.  43 ;   59  N.  E.  760. 

Pac.     616;      (citing    Kleinsorge    v.  n  Simpson  v.   Kane,   98   la.  271; 

Rohse,  25  Or.  51;  34  Pac.  874;  Ep-  67   N.   W.   247. 

stein   V.    Ins.    Co.,    21    Or.    179;    27  12  Chute    v.     Quincy,    156    Mass. 

Pac.    1045;    Stephens   v.   Murton.   6  189;   30  N.  E.  550. 

Or.    193;     Lewis    v.    Lewis,    5    Or.  is  Ocean     Beach     Association     v. 

169)  ;    Phillips    v.    Port    Townsend  Safe   Deposit   Co.    (N.   J.   Eq.),   48 

Lodge,  8  Wash.  529;   36  Pac.  476;  Atl.  559. 


EEFOEMATION.  '  1907 

expressed  therein/*  or  that  a  deed  to  him  does  not  contain  a 
clause  whereby  he  assumes  a  mortgage,  the  grantor  not  knowing 
of  such  mistake,^^  or  where  A  thinks  that  he  is  buying  from  B 
a  larger  tract  than  B  thinks  he  is  selling,^"  he  cannot  have  the 
contract  reformed  to  express  his  intention  if  B  did  not  acquiesce 
therein.  So  a  term  to  which  B  did  not  assent  and  which  was 
inadvertently  omitted  from  the  written  contract  cannot  be  in- 
serted by  reformation  though  A  had  offered  such  term  and  it 
was  accepted  by  B's  attorney,  since  the  attorney  had  no  au- 
thority to  do  anything  but  advise  B,  and  he  did  not  in  fact, 
communicate  such  offer  to  B/^  So  if  there  is  a  mistake  as  to 
the  identity  of  the  realty  conveyed,^^  or  leased,^^  rescission  may 
be  had  in  a  proper  case  but  not  reformation.  Reformation  is 
even  more  clearly  denied  where  one  party  believes  that  he  will 
receive  more  than  the  contract  provides  for  and  the  adversary 
party  does  not  know  of  such  mistake.  Thus  A  agreed  to  convey 
to  B,  four  acres  along  a  section  line.  B  assumed  that  this  ex- 
cluded the  area  of  a  highway  along  such  line,  though  there  was 
nothing  in  the  contract  or  negotiations  to  warrant  such  belief. 
Reformation  was  denied.'"  Even  if  each  party  had  intended 
that  certain  realty  should  be  included  in  a  given  conveyance, 

i*Coates   V.   Buck,   93   Wis.    128;  the   deed   and   inserted   the   descrip- 

67  N.  W.  23.  tion  and  B,  being  illiterate  thought 

15  Green   v.    Stone,    54   N.   J.   Eq.  that   the    land    conveyed    was    what 
387;  55  Am.  St.  Rep.  577;   34  Atl.  he  had  agreed  to  sell,  namely  "what 
1099;  reversing  32  Atl.  706;  distin-  he  owned"  east  of  a  given  wall, 
guishing   Bull   v.   Titsworth,   29   N.  i7  Ward  v.  Yorba,   123   Cal.  447; 
J.   Eq.    73,   on   the   ground   that   in  56  Pae.  58. 

the    earlier    case    the    grantee    had  is  Page  v.  Higgins,  150  Mass.  27; 

demanded  rescission  promptly.  5  L.  R.  A.  152;  22  N.  E.  63;  Stew- 

16  Page  V.  Higgins,  150  Mass.  27;  art  v.   Gordon,    60   O.    S.    170;    53 
5  L.  R.  A.  152;   22  N.  E.  63.     The  N.  E.  797. 

court  said  that  this  was  "  not  one  is  Morris  v.  Kettle,  56  N.  J.  Eq. 

and  the  same  mistake     .     .     .     but  826;    34  Atl.   376. 

two     different    mistakes."     In    this  20  Clark  v.  Mossman,  58  Neb.  87; 

case   A    and    B    owned    tracts    near  78  N.  W.  399;    (citing  Huyck  v.  An- 

each   other   but  not   adjoining,   and  drev/s,    113   N.   Y.    81;    10   Am.    St. 

A  thought  that  B  owned  an  inter-  Rep.  432;  3  L.  R.  A.  789;  20  N.  E. 

mediate   tract,    while   B    thought    C  581 ;     Wilson    v.    Cochran,    46    Pa. 

owned   it.     Hence   in   their   negotia-  229;    Scribner   v.   Holmes,    16    Ind. 

tions   both   referred   to    B   tract   as  142;  Kutz  v.  McCune,  22  Wis.  628; 

beginning  at  A's  boundary.     A  drew  99  Am.  Dec.  85). 


1908  PAGE   ON    CONTRACTS. 

reformation  will  not  be  given  if  such  intention  was  not  com^ 
niunicated  by  each  to  the  other.^^  Still  less  can  the  erroneous 
understanding  of  the  parties  after  the  execution  of  a  contract, 
as  to  the  legal  effect  thereof,  give  the  right  to  reformation.^^ 

§1239.     Mistake  on  one  side  —  inequitable  conduct  on  the  other. 

Where  A  is  entering  into  a  contract  under  mistake  and  the 
circumstances  are  such  that  if  B,  too,  were  mistaken,  reforma- 
tion would  be  given  on  A's  application,  a  still  clearer  case  for 
reformation  exists  where  B  knew  of  A's  mistake  and  took  ad- 
vantage of  it,  or  by  his  own  conduct  or  representations  led  him 
into  such  mistake.^  The  difference  between  this  class  of  cases 
and  the  general  types  of  cases  where  reformation  is  allowed  is 
that  there  is  no  valid  oral  prior  agreement  to  which  the  written 
contract  is  to  be  reformed  to  conform.  By  a  principle  anal- 
ogous to  estoppel,  however,  the  party  who  led  the  other  into 
mistake  or  took  advantage  of  the  mistake,  is  not  allowed  to 
deny  that  the  contract  which  he  induced  the  adversary  party 
to  think  he  was  making  ,is  not  in  force  as  it  would  have  been 
had  the  mistake  not  been  made.  It  is  in  cases  of  this  sort  that 
equity  comes  the  nearest  to  making  a  new  contract  for  the 

21  Citizens'  National  Bank  v.  Ju-  Rep.    612;    59    N.    W.    294;    Smith 

dy,   146  Ind.   322;   43  N.  E.  259.  v.   Jordan,    13   Minn.   264;    97   Am. 

22Gaflfney  Mercantile  Co.  v.  Hop-  Dee.    232;     Sanford    v.    Gates,    21 

kins,  21  Mont.  13;  52  Pac.  561.  Mont.  277;  53  Pac.  749;  Husted  v. 

1  Simmons  Creek  Coal  Co.  v.  Do-  Van  Ness,  158  N.  Y.  104;  52  N.  E. 

ran,   142  U.  S.  417;   Home  Ins.  Co.  645;  Welles  v.  Yates,  44  N.  Y.  525; 

V.  Chemical  Co.,  109  Fed.  681;  Bow-  Jones  v.  Warren,  134  N.  C.  390;  46 

ers  V.  Ins.   Co.,   68   Fed.   785;    Hig-  S.  E.  740;  Day  v.  Day,  84  N.  C.  408; 

gins  V.  Parsons,  65  Cal.  280;  3  Pac.  Archer  v.  Lumber  Co.,  24  Or.  341; 

881;  Deischer  v.  Price,  148  111.  383;  33   Pac.   526;    McCormick,  etc.,   Co. 

36   N.   E.    105;    Koszell    v.    Roszell,  v.  Woulph,  11  S.  D.  252;  76  N.  W. 

109  Ind.  354;  Sutton  v.  Risser,  104  939;       McCormick       v.       RatcliflFe 

la.  631;  74  N.  W.  23;  Williams  v.  (Tenn.   Ch.   App.),   64   S.   W.    332; 

Hamilton,  104  la.  423;   65  Am.  St.  Graham  v.  Guinn   (Tenn.  Ch.  App.), 

Rep.  475;   73  N.  W.  1029;   Winans  43   S.   W.   749;    Kyle  v.   Fehley,   81 

V.  Huyck,  71  la.  4.59;  32  N.  W.  422;  Wis.  67;   29  Am.   St.  Rep.   866;   51 

Goodenow  v.  Curtis,   18  Mich.  298;  N.    W.    257;    James    v.    Cutler,    54 

Stanek  v.  Libera,  73  Minn.  171;  75  Wis.   172;    10  N.  W.   147;   Dane  v. 

N.  W.  1124;  Crookston  Imp.  Co.  v.  Derber,  28  Wis.  216. 
Marshall,  57  Minn.  333;  47  Am.  St. 


EEFOEMATION.  1909 

parties.  Thus  where  B  misleads  A  as  to  the  description  of  the 
specific  property  contracted  for,^  or  as  to  the  amount  to  be  paid/ 
or  where  A  is  a  member  of  a  firm  which  has  made  an  oral  con- 
tract with  B,  and  on  reducing  it  to  writing  B  inserts  a  term 
and  falsely  represents  to  A  that  his  co-partner  has  assented 
thereto/  A  may  have  the  mistake  corrected  and  the  contract, 
as  reformed,  enforced  with  the  mistake  eliminated,  though  B 
did  not  intend  to  be  bound  thereby.  Reformation  may  be  given 
for  a  mistake  caused  by  an  innocent  misrepresentation  by  the 
adversary  party.^  Reformation  may  also  be  given  where  A 
understands  that  he  is  contracting  for  a  given  subject-matter 
and  the  adversary  party  B  knows  that  A  will  not  receive  such 
property  by  the  terms  of  the  contract  as  executed.*'  So  where 
the  grantee  knows  that  the  grantor  believes  that  a  coal  vein 
under  the  realty  conveyed  is  excepted  from  the  operation  of 
such  conveyance,  when  in  fact  it  is  not  and  grantee  knows  that 
it  is  not,  reformation  will  be  granted.'^ 

If  from  the  entire  contract  it  can  be  seen  that  a  certain  clause 
does  not  express  the  real  intention  of  the  parties,  reformation 
can  be  had  without  showing  specifically  that  the  parties  had  a 
mutual  understanding  of  what  the  term  in  question  should 
really  be.  Thus  where  A  took  thirteen  shares  in  a  building  and 
loan  association,  the  by-laws  of  which,  being  a  part  of  the  con- 
tract, required  a  payment  of  one  dollar  per  share  per  month, 
a  clause  in  the  note  requiring  a  payment  of  twenty-six  dollars 
per  month  on  such  shares  may  be  corrected.^  This  is  really  a 
question  of  construction,  not  reformation,  and  involves  the 
principle  that  the  paramount  general  intent  prevails  over  an 
inconsistent  subordinate  particular  intent.^ 

2  McCormick,  etc.,  Co.  v.  Woulph,  6  Stevens    v.    Holman,     1 12    Cal. 

11   S.  D.  252;    76  N.  W.  939;   Mc-  345;   53  Am.  St.  Rep.  216;  44  Pac. 

Cormick    v.    Rateliflfe     (Tenn.    Ch.  670. 

App.),  64  S.  W.  332.  7  Cook  v.  Listen,  192  Pa.  St.  19; 

3Sanford  v.  Gates,  21  Mont.  277;  43  Atl.  389. 

53     Pac.     749;     Graham    v.     Guinn  8  Abbott  v.   Loan  Association,   86 

(Tenn.  Ch.  App.),  43  S.  W.  749.  Tex.  467;   25  S.  W.  620;  reversing 

4  Sutton   V.   Risser,    104   la.   631;  23  S.  W.  629. 
74  N.  W.  23.  9See§  1113. 

5  Bush     V.    Merriman,    87    Mich. 
260;  49  N.  W.  567. 


1910 


PAGE    ON    CONTRACTS. 


§1240.     Mistake  in  expression. —  Mistake  as  to  words  used. 

The  typical  form  of  mistake  in  expression  is  found  where 
the  parties  have  agreed  orally  upon  the  terms  of  a  contract,  have 
then  attempted  to  express  these  terms  in  writing  and  have, 
through  inadvertence,  omitted  or  misstated  terms,  or  inserted 
some  stipulation  which  was  not  agreed  upon.  Mistake  of  this 
sort  does  not  affect  the  validity  of  the  contract.  The  question 
presented  to  the  courts  is  whether  uj>on  these  facts  the  original 
contract  can  be  enforced  or  whether  the  parties  are  bound  by 
the  written  stipulations.  This  question  is  answered  at  law  by 
the  rule  that  oral  evidence  of  prior  or  contemporaneous  negotia- 
tions cannot  contradict  the  terms  of  a  written  contract.  This 
is  really  a  rule  of  substantive  law,  though  stated  as  a  rule  of 
evidence.'  Hence  there  can  be  no  reformation  at  law."  In 
equity,  subject  to  proper  limitations  to  be  discussed  hereafter,^ 
a  contract  of  the  type  under  discussion  may  be  reformed  so  as 
to  express  the  actual  agreement  of  the  parties.* 


1  See  §  1189  et  seq. 

-  American,  etc.,  Ins.  Co.  v.  Simp- 
son, 43  111.  App.  98;  Nance  v.  Met- 
calf,  19  Mo.  App.  183;  Winnipi- 
seogee  Paper  Co.  v.  Eaton,  64  N.  H. 
234;  9  Atl.  221. 

3  See  §  1241  et  seq. 

*  Adams  v.  Henderson,  168  U.  S. 
573;   Equitable  Ins.   Co.  v.  Hearne, 

20  Wall.  (U.  S.)  494;  Hearne  v. 
Ins.  Co.,  20  Wall.  (U.  S.)  488; 
Bradford  v.  Bank,  13  How.  (U.  S.) 
57;  New  York  Life  Ins.  Co.  v.  Mc- 
Master,  87  Fed.  63;  30  C.  C.  A. 
532;  Western  Assurance  Co.  v. 
Ward,  75  Fed.  338;  State  v.  Paup, 
13  Ark.  129;  56  Am.  Dec.  303; 
West  V.  Suda,  69  Conn.  60;  36  Atl. 
1015;  Newell  v.  Smith,  53  Conn. 
72;  3  Atl.  674;  Franklin  v.  Jones, 
22    Fla.    526;    Jackson    v.    Magbee, 

21  Fla.  622;  Snell  v.  Snell,  123  111. 
403;  5  Am.  St.  Rep.  526;  14  N.  E. 
684;  Lindsay  v.  Davenport.  18  111. 
375;    Roszell    v.    Roszell,    109    Ind. 


354;  10  N.  E.  114;  Zenor  v.  John- 
son, 107  Ind.  69;  7  N.  E.  751; 
Green  v.  Mfg.  Co.  (la.),  82  N.  W. 
483;  Huston  v.  Fumas,  31  la,  154; 
Stiles  V.  Willis,  66  Md.  552;  8  Atl. 
353;  Page  v.  Higgins,  150  Mass. 
27;  5  L.  R.  A.  152;  22  N.  E.  63; 
Griffith  V.  Townley,  69  Mo.  13;  33 
Am.  Rep.  476;  Beall  v.  Martin,  48 
Neb.  479;  67  N.  W.  433;  Searles 
V.  Churchill,  69  N.  H.  530;  43  Atl. 
184;  Minot  v.  Tilton,  64  N.  H.  371; 
10  Atl.  682;  Green  v.  Stone,  54  N. 
J.  Eq.  387;  55  Am.  St.  Rep.  577; 
34  Atl.  1099;  Whittemore  v.  Far- 
rington,  76  N.  Y.  452;  Moran  v. 
McLarty,  75  N.  Y.  25;  Jackson  v. 
Andrews,  59  N.  Y.  244;  Bryce  v. 
Ins.  Co.,  55  N.  Y.  240;  14  Am. 
Rep.  249;  Welles  v.  Yates,  44  N. 
Y.  525 ;  Nevins  v.  Dunlap,  33  N.  Y. 
676;  Rider  v.  Powell,  28  N.  Y.  310; 
Curtis  V.  Leavitt,  l5  N.  Y.  1 ;  Gil- 
lespie V.  Moon,  2  Johns.  Ch.  (N. 
Y.)   585;   7  Am.  Dec.  559;  Botsford 


REFORMATION. 


1911 


§1241.     Mistake  as  to  legal  effect  of  words  used. 

A  form  of  mistake,  which  involves  different  principles  from 
the  form  already  discussed,  exists  where  the  parties  to  a  written 
contract  know  the  very  words  which  they  insert  in  the  contract, 
but  do  not  intend  that  it  shall  have  the  legal  effect  which  it 
actually  has.  This  form  of  mistake  is  of  course  due  to  igno- 
rance or  mistake  of  law.  The  question  of  the  right  of  either 
party  to  reformation  in  such  cases  depends  in  the  first  instance 
on  whether  the  parties  had  a  prior  valid  oral  contract  which 
they  have  attempted  to  reduce  to  writing,  differing  from  the 
written  contract.  If  there  has  been  no  prior  valid  oral  contract, 
differing  from  the  written  contract,  one  party  cannot  have 
reformation  to  make  the  contract  express  his  intention,  since 
this  would  be  to  substitute  his  intention  for  the  contract  be- 
tween the  two  parties.^  Illustrations  of  mistake  of  this  sort 
where  reformation  has  been  refused  are  as  follows :  Where  the 
parties  execute  an  irrevocable  power  of  attorney,  thinking  it 


V.  McLean,  45  Barb.  (N.  Y.)  478; 
Kent  V.  Manchester,  29  Barb.  (N. 
Y.)  595;  Hall  v.  Reed,  2  Barb.  Ch. 
(N.  Y.)  500;  McHugh  v.  Ins.  Co., 
48  How.  Pr.  (N.  Y.)  230;  Lyman  v. 
Ins.  Co.,  17  Johns.  (N.  Y.)  373; 
Jones  V,  Warren,  134  N.  C.  390;  46 
S.  E.  740;  Neininger  v.  State,  50 
O.  S.  394;  40  Am.  St.  Rep.  674; 
34  N.  E.  633;  Evants  v.  Strode,  11 
Ohio  480;  38  Am.  Dec.  744;  Win- 
ner V.  Lundis,  137  Pa.  St.  61;  20 
Atl.  950;  Graham  v.  Guinn  (Tenn. 
Ch.  App.),  43  S.  W.  749;  Kelley  v. 
Ward,  94  Tex.  289;  60  S.  W.  311; 
affirming  58  S.  W.  207;  Griffin  v. 
Salt  Lake  City,  18  Utah  132;  55 
Pac.  383;  Pennybacker  v.  Laidley, 
33   W.  Va.  624;    II   S.  E.  39. 

iSnell  V.  Ins.  Co.,  98  U.  S.  85; 
Hunt  V.  Rousmanier,  8  Wheat.  (U. 
S.)  174;  Hunt  v.  Rousmanier,  1 
Pet.  (U.  S.)  I;  Bank  v.  Daniel, 
12  Pet.  (U.  S.)  33;  Travelers'  Ins. 
Co.  V.  Henderson,   69   Fed.   762;    16 


C.  C.  A.  390;  Illingworth  v. 
Spaulding,  43  Fed.  827;  Tyson  v. 
Chestnut,  100  Ala.  571;  13  So.  763; 
Ohlander  v.  Dexter,  97  Ala.  476; 
12  So.  51;  Hershey  v.  Luce,  56  Ark. 
320,  323;  19  S.  W.  963;  20  S.  W. 
6;  Loftus  V.  Fischer,  106  Cal.  616; 
39  Pac.  1064;  Goodenow  v.  Ewer, 
16  Cal.  461;  76  Am.  Dec.  540; 
Hackemack  v.  Wiebrock,  172  111. 
98;  49  N.  E.  984;  affirming  71  111. 
App.  170;  Wolsey  v.  Neeley,  46  III 
App.  387;  Calverly  v.  Harper,  40 
III.  App.  96 ;  Marshall  v.  Westrope, 
98  la.  324;  67  N.  W.  257;  Jurgen- 
sen  V.  Carlsen,  97  la.  627 ;  66  N.  W. 
877;  Brintnall  v.  Briggs,  87  la. 
538;  54  N.  W.  531;  Bellande's  Sue- 
cession,  42  La.  Ann.  241;  7  So.  535; 
Taylor  v.  Buttrick,  165  Mass.  547; 
52  Am.  St.  Rep.  530;  43  N.  E.  507; 
Canedy  v.  Marcy,  13  Gray  (Mass.) 
373;  Renard  v.  Clink,  91  Mich.  I; 
30  Am.  St.  Rep.  458;  51  N.  W.  692; 
Benson    v.    Markoe,    37    Minn.    30; 


1912  PAGE    ON    CONTKACTS. 

will  operate  as  a  mortgage;^  or  a  bill  of  sale,  thinking  that  it 
will  operate  as  a  chattel  mortgage  f  or  a  contract  for  the  sur- 
render of  a  lease,  thinking  that  it  will  operate  as  an  option, 
to  be  accepted  at  the  election  of  one  party  ;■*  where  an  insurance 
policy  is  taken  in  the  name  of  a  mortgagee,  who  applies  for  it, 
thinking  that  it  will  operate  as  if  taken  out  by  the  owner  of 
the  building  with  a  clause  making  the  loss  payable  to  the  mort- 
gagee f  or  in  the  name  of  the  husband  who  effects  it,  thinking 
that  it  will  protect  the  interest  of  his  wife,  the  real  owner  of 
the  building;**  or  payable  to  the  owner  who  takes  it,  thinking 
that  it  will  protect  the  interest  of  the  contractor  who  is  erect- 
ing the  building  f  or  a  contract  which  a  party  to  it  exetates,  be- 
lieving that  it  does  not  make  him  liable  as  partner.^  So  if  the 
parties  know  and  intend  the  very  words  used,  the  fact  that 
such  words  do  not  pass  the  estate  intended  owing  to  mistake 
of  law  does  not  justify  reformation.  Thus  where  a  deed  is 
made  to  A  and  his  "  minor  heirs,"  under  the  belief  that 
"  heirs  "  is  equivalent  to  "  children,""  or  A  deeds  land  to  B,  his 
daughter,  and  C,  her  husband,  "  and  their  bodily  heirs,"  think- 
ing that  this  includes  all  the  heirs  of  her  body,^^  no  relief  can 
I6e  given.     Rescission  is  also  refused  in  cases  of  this  sort.    Thus 

5  Am.  St.  Rep.  816;  33  N.  W.  38;  my  v.  Ins.  Co.,  93  Wis.  57;   66  N. 

Gaffney  Mercantile  Co.  v.  Hopkins,  W.    1140. 

•21  Mont.  13;   52  Pac.  561;   Mullin  2  Hunt  v.   Rousmanier,   8    Wheat, 

V.    Eaton     (N.    H.),    19    Atl.    371;  (U.   S.)    174. 

Ordway  v.  Chace,  57  N.  J.  Eq.  478;  3  Hershey  v.  Luce,   56   Ark.    320, 

42  Atl.  149;   Berry  v.  Ins.  Co.,  132  323;   19  S.  W.  963;  20  S.  W.  6. 

N.  Y.  49;  28  Am  St.  Rep.  548;   30  4  Ohlander     v.     Dexter,     97     Ala. 

N.    E.   254;    King   v.    Holbrook,    38  476;  12  So.  51. 

Or.  452;    63  Pac.   651;    Mitchell  v.  s  Ordway  v.  Chace,  57  N.  J.  Eq 

Holman,  30  Or.  280;   47  Pac.  616;  478;    42   Atl.    149. 

Kleinsorge    v.    Rohse,    25    Or.    51;  s  Schmid  v.   Ins.   Co.    (Tenn.   Oh. 

34  Pac.  874;  Archer  v.  Lumber  Co.,  App.),  37   S.  W.  1013. 

24  Or.  341 ;   33  Pac.  526 ;   Cochran  7  St.    Clara    Female    Academy    v. 

V.   Pew,    159   Pa.    St.    184;    28   Atl.  Ins.  Co.,  93  Wis.  57;  66  N.  W.  1140. 

219;  Schmid  v.  Ins.  Co.    (Tenn.  Ch.  » Woolworth     v.     McPherson,     55 

App.),  37  S.  W.  1013;  Deseret  Na-  Fed.  558. 

tional  Bank  v.  Dinwoodey,  17  Utah  9  Seymour  v.  Bowles,  172  111.  521 ; 

43;    53   Pac.   215;    Phillips  v.   Port  50  N.  E.  122. 

Townsend  Lodge,   8   Wash.   529;    36  10  Atherton    v.     Roche,     192     111. 

Pac.  476;  St.  Clara  Female  Acade-  252;    55   L.   R.    A.    591;    61    N.   E. 

357. 


EEFOEMATION.  1913 

where  A  deeded  a  right  of  way  to  a  railroad  not  knowing  that 
it  would  prevent  him  from  recovering  damages  inflicted  on  the 
rest  of  his  proijerty  by  the  operation  of  the  railroad,  he  cannot 
avoid  his  contract,  at  least  where  the  railroad  company  did  not 
know  of  his  mistake  and  take  advantage  of  it.^^ 

If,  on  the  other  hand,  there  has  been  a  valid  oral  contract 
prior  to  the  written  contract  which  the  parties  have  failed  to  re^ 
diice  to  writing  correctly  because  of  mistake  as  to  the  legal 
effect  of  the  words  used  in  the  written  contract,  reformation 
can  be  had,  and  the  written  contract  thus  made  to  conform  to 
the  oral  agreement/^  Thus  where  A  and  B  agreed  that  a  cer- 
tain debt  should  bear  interest,  but  omitted  reference  thereto 
from  the  note  given  for  such  debt,  thinking  it  would  bear  inter- 
est without  a  provision  therefor  ;^^  or  agreed  orally  that  B 
would  accept  such  amount  of  tool  steel  prior  to  January  1,  1890, 
as  he  needed  in  his  work,  not  to  exceed  fifteen  tons,  and  by  mis- 
take as  to  the  effect  of  the  written  contract  worded  it  so  that 
B  was  to  take  fifteen  tons  of  tool  steel  prior  to  January  1, 
1890,^*  reformation  may  be  had  to  make  the  written  contract 
express  the  oral  agreement.     So  if  the  contract  provides  for  a 

"Eldridge  v.  R.  R.,  88  Me.  191;  v.  Pittman,  51  Mass.  511;  Corrigan 

«3  All.  974.  V.  Tiernay,   100  Mo.  276;   13  S.  W, 

12  Hunt    V.    Rousmanier,     1     Pet.  401 ;   Michigan  Buggy  Co.  v.  Wood- 

(U.    S.)     1;    Park    v.    Blodgett,    64  son,  59  Mo.  App.   550;   Eastman  v. 

Conn.   28;    29   Atl.    133;    Palmer  v.  Provident,    etc.,    Association,    65   N. 

Ins.  Co.,  54  Conn.  488;  9  Atl.  248;  H.   176;   23  Am.  St.  Rep.   29;   5  L. 

Loudermilk   v.   Loudermilk,    98   Ga.  R.   A.   712;    18  Atl.   745;    Avery  v. 

780;  25  S.  E.  927;  Pierce  v.  Hough-  Society,  117  N.  Y.  451;  23  N.  E.  3; 

ton,  122  la.  477;  sm6  nomtne,  Fierce  Maher    v    Ins.    Co.,    67    N    Y.    283; 

V.   Houghton,   98  N.   W.   306;    Bon-  Kornegay  v.  Everett,  99  N.  C.   30; 

bright  V.   Bonbright,  —  la.  — ;   98  5  S.  E.  418;  Lutz  v.  Thompson,  87 

N.    W.    784;     Turpin    v.    Gresham,  X.   C.  334;   Sprague  v.  Thurber,   17 

106  la.    187;    76  N.  W.   680;    Wil-  R.  I.  454;  22  Atl.  1057;   Beardsley 

liams    V.    Hamilton,    104    la.    423;  v.  Knight,  10  Vt.  185;  33  Am.  Dec. 

65    Am.    St.    Rep.    475;    73    N.    W.  193;  Wisconsin,  etc..  Bank  v.  Mann, 

1029;  Williams  v.  Everham,  90  la.  100  Wis.  596;  76  N.  W.  777;    (ques- 

420;  57  N.  W.  901;  Lee  v.  Percival,  tioning  NefT  v.  Rains,  33  Wis.  689). 
85  la.  639;  52  N.  W.  543;   Reed  v.  is  Loudermilk   v.    Loudermilk,   98 

Root,    59   la.    359;    13    N.   W.    323;  Ga.   780;    25   S.   E.   927. 
Stafford   v.   Fetters.    55    la.   484;    8  "Park  v.  Blodgett,  64  Conn.  28; 

N.   W.   322;   Holdsworth   v.   Tucker,  29    Atl.    133. 
143  Mass.  369;  9  N.  E.  764;  Sparks 


1914  PAGE    ON    CONTEACTS. 

conveyance  to  A  and  B,  and  by  mistake  as  to  the  legal  effect  of 
the  deed  conveyance  is  made  to  A  only/^  or  if  the  contract 
requires  a  conveyance  of  an  undivided  four  fifths  interest  in 
certain  realty  and  by  mistake  as  to  its  legal  effect  the  grantee 
accepts  a  deed  which  conveys  only  "  three  fifths  "  thereof/^ 
reformation  may  be  had.  Where  an  instrument  intended  as  a 
receipt  for  an  advancement  has  by  mistake  as  to  the  legal  effect 
thereof  been  drawn  in  the  form  of  a  note,  reformation  may  be 
given/^  Where  specific  property  is  agreed  upon,  a  misde- 
scription thereof  may  be  reformed  even  if  the  parties  know 
the  very  form  of  expression  which  they  have  used  to  describe 
it/^  Reformation  will  be  given  where  a  mortgage  is  drawn 
covering  "  fixtures  and  furniture  "  under  the  belief  that  suet 
description  includes  property  which  in  law  comes  under  neither 
of  these  terms/**  So  where  the  parties  agreed  on  specific  prop- 
erty to  be  covered  by  insurance  a  mistake  in  describing  it,  due 
to  a  mistake  as  to  the  effect  of  the  terms  used  in  describing  it 
may  be  corrected  by  reformation."*'  Where  a  husband  and  wife 
have  agreed  to  convey  a  homestead  and  by  mistake  as  to  the 
legal  effect  of  the  conveyance  the  husband  alone  executes  it, 
reformation  may  be  had.^^  There  are,  however,  cases  in  which 
reformation  has  been  denied  where  the  parties  have  deliber- 
ately chosen  language  which  does  not  express  their  intention 
as  embodied  in  their  oral  contract,  and  where  the  mistake  is 
not  as  to  the  words  used,  but  only  as  to  their  legal  effect. 
Reformation  has  been  denied  where  a  guardian  under  these 
circumstances  executes  a  mortgage  intended  to  bind  his  ward's 
property  only,  and  instead  makes  himself  personally  liable."^ 

isCorrigan   v.    Tiernay,    100    Mo.  Wash.  173;  50  Pac.  785;  modifying 

276;    13  S.  W.  401.  on  rehearing  17  Wash.  160;  49  Pac. 

16  Parish  v.  Camplin,  139  Ind.  1;  247. 

37  N.  E.  607.  19  Ryder  v.   Ryder,   19  R.  I.   188; 

iTHausbrandt   v.   Hofler,    117    la.  32  Atl.  919. 

103;    94  Am.   St.   Rep.   289;    90   N.  20  Maher    v.    Ins.    Co.,    67    N.    Y. 

W.  494.  283. 

isWalden   v.    Skinner,    101    U.   S.  21  Whitmore  v.  Hay,  85  Wis.  240; 

577;    Eberle   v.    Heaton,    124    Mich.  39    Am.    St.    Rep.    838;    55    N.    W. 

205;    82   N.   W.   820;    State   v.   Lo-  708. 

renz,   22  Wash.   289;    60   Pac.   644;  22Andrus    v.    Blazzard,    23    Utah 

Jenkins    v.    Jenkins    University,    17  233;   54  L.  R.  A.  354;  63  Pac.  888. 


EEFOEMATION.  1915 

So  if  the  parties  intend  to  convey  a  fee,  but  deliberately  select 
words  which  pass  a  lesser  estate,  reformation  has  been  denied.^' 

§1242.     Intentional  omission  of  term  from  written  contract. 

If  the  parties  purposely  omitted  a  part  of  their  oral 
agreement  from  their  written  contract,  no  mistake  exists  except 
possibly  in  their  belief  that  they  can  prove  the  oral  contract 
and  enforce  it  as  well  as  the  written  one.  In  cases  of  this  sort 
equity  does  not  grant  reformation.^  Elementary  as  this  propo- 
sition may  seem  in  view  of  the  so-called  parol  evidence  rule,^ 
there  is  some  authority  for  allowing  an  oral  term  of  a  contract 
agreed  upon  before  the  rest  of  the  contract  was  reduced  to  writ- 
ing and  executed,  to  be  added  thereto  by  reformation.^ 

A  written  contract  cannot  be  reformed  by  adding  a  provision 
agreed  uj)on  by  the  parties  orally  after  the  written  contract  was 
made.* 

§1243.     Controlling  effect  of  paramount  intent. 

In  reformation  as  in  construction,^  the  question  is  sometimes 
presented  as  to  the  effect  of  a  contract  containing  inconsistent 
provisions,  where  the  predominant  general  intent  is  apparently 
contradicted  by  some  subordinate  particular  intent.  When  this 
question  is  presented  in  reformation,  the  general  intent  if  clear 
is  enforced  and  reformation  is  given  by  disregarding  the  incon- 


23  Wilson    V.    Watkins,    48    S.    C.  which  cannot  be  resorted  to  to  vary 

341;   26  S.  E.  663.  or    control    the    written    contract." 

1  Ware   v.    Cowles,    24    Ala.    446 ;  Braun    v.    Rendering    Co.,    92    Wis. 

60  Am.  Dec.  482;   Dunham  v.  New  245,  249;  66  N.  W.  196. 

Britain,  55  Conn.  378;  11  Atl.  354;  2  See  Ch.  LVI. 

Dwight  V.   Pomeroy,   17  Mass.  303;  3  Quinn   v.   Roatli,    37    Conn.    16; 

9  Am.  Dec.  148;  Martin  v.  Hamlin,  Coger  v.  McGee,  2  Bibb.   (Ky.)   321  j 

18   Mich.   354;    100  Am.   Dec.    181;  5  Am.  Dec.  610;   Taylor  v.  Oilman, 

Seitz  Brewing  Co.   v.   Ayres,  60  N.  25   Vt.    411. 

J.  Eq.   190;   46  Atl.  535;   Meade  v.  *  Wilson     v.     Moriarty,     88     Cal. 

Ry.,    89    Va.    296;    15    S.    E.    497;  207;    26    Pac.    85:     (apparently   ig- 

Braun    v.    Rendering    Co.,    92    Wis.  noring    Murray    v.    Dake,    46    Cal. 

245;    66    N.    W.    196.     "It    was    a  644). 

mere  simultaneous  parol  agreement  i  See   §   1113- 


1916  PAGE    ON    CONTEACTS. 

sistent  subordinate  intent  when  due  to  mistake.^  Thus  where 
A  intended  to  sell  and  B  to  buj  one  half  of  A's  tract  which 
they  think  is  lot  4,  A  owning  lots  1  and  5,  but  lot  4  is  much 
larger  than  lot  5,  a  contract  to  sell  lot  4  will  be  reformed  to 
transfer  one  half  of  the  entire  tract.^  Where  A  agrees  to  mort- 
gage to  B  all  his  land,  not  exempt,  and  by  mistake  of  law  both 
parties  believe  that  A  has  an  exempt  homestead  in  a  certain 
tract,  and  accordingly  omit  such  tract  from  the  description  of 
the  realty  mortgaged,*  or  where  A  agrees  to  pay  B  a  certain  sum 
per  yard  for  excavation,  but  in  reducing  the  contract  to  writing 
the  total  amount  was  incorrectly  stated  because  of  a  mistake  in 
computing  the  number  of  yards,^  reformation  may  be  had  and 
the  real  intention  of  the  parties  expressed  and  enforced.  In  ap- 
plying this  principle  care  must  be  taken  not  to  make  a  new  con- 
tract for  the  parties  under  guise  of  enforcing  the  predominant 
intent.  Thus  where  the  parties  agreed  on  a  specific  boundary 
line,  thinking  it  the  true  one,  the  court  will  not  assume  that  their 
paramount  intent  w^as  to  locate  the  boundary  at  the  true  line  and 
reform  the  contract  so  as  to  show  that  intention.® 

§1244.     Illustrations  of  mistake  in  expression. —  Property  con- 
veyed. 

Among  the  many  forms  of  mistake  in  expression  of  the  type 
referred  to  tlie  following  are  given  as  illustrations : 

Where  the  parties  have  agreed  for  the  sale,  lease  or  mortgage 
of  a  specific  tract  of  realty,  and  by  mistake  such  property  is 
erroneously  described  in  the  written  contract  or  conveyance, 
equity   will   reform   such    instrument.^      Mistake  of   this   sort 

2  Thompson  v.  Ladd,  169  111.  73;  Malott,  151  Ind.  371;  51  N.  E.  471; 
48  N.  E.  174;   Dunn  v.  O'Mara,  70      reversing  46  N.  E.  23. 

111.   App.  609;   Lear  v.  Pratlier,   89  i  Adams  v.  Henderson,   168  U.  S. 

Ky.  501 ;  12  S.  W.  946.  573 ;  Wasatch  Mining  Co.  v.  Mining 

3  Thompson  v.  Ladd,  169  111.  73;  Co.,  148  U.  S.  293;  Walden  v.  Skin- 
48  N.  E.  174.  ner,   101   U.  S.  577;   Hill  v.  Kuhl- 

4  Lear  v.  Prather,  89  Ky.  501;  man,  87  Fed.  498;  Green  v.  Dick- 
12  S.  W.  946.  son.     119    Ala.    346;     24    So.    422: 

5  Dunn  V.  O'Mara,  70  111.  App.  Fields  v.  Clayton,  117  Ala.  538;  67 
609.  Am.  St.  Rep.  189;  23  So.  530;  Par- 

6  Phillip     Zorn     Brewing    Co.     v.  ker  v.  Parker,  88  Ala.  362;   16  Am. 


EEFOEMATION. 


1917 


may  be  made  in  countless  ways.  Land  which  was  to  have  been 
conveyed  may  be  omitted ;"  land  which  was  not  to  be  conveyed 
may  be  included;^  field-notes  may  be  reversed;^  the  quarter- 


St.  Rep.  52;  6  So.  740;  Busey  v. 
Moraga,  130  Cal.  586;  62  Pac.  1081; 
Stonesifer  v.  Kilbuin,  122  Cal.  659; 
55  Pac.  587 ;  Sullivan  v.  Moorhead, 
99  Cal.  157;  33  Pac.  796;  Blakeman 
V.  Blakeman,  39  Conn.  320;  Ma- 
nogue  V.  Bryant,  15  App.  D.  C. 
245;  Phillips  v.  Roquemore,  96  Ga. 
719;  23  S.  E.  855;  Allen  v.  Elder, 
76  Ga.  674;  2  Am.  St.  Rep.  63; 
Kelly  V.  Galbraith,  186  111.  593;  58 
N.  E.  431;  affirming  87  111.  App. 
63;  Henderson  v.  McKernan,  151 
111.  273;  37  N.  E.  867;  Halliday 
V.  Hess,  147  111.  588;  35  N.  E.  380; 
Merchants'  etc.,  Association  v. 
Scanlan,  144  Ind.  11;  42  N.  E. 
1008;  Herring  v.  Peaslee,  92  la. 
391;  60  N.  W.  650;  Reed  v.  Root, 
59  la.  359;  13  N.  W.  323;  Burton, 
etc.,  Co.  V.  Handy,  54  Kan.  13;  37 
Pac.  108;  Wilson  v.  Jasper,  90  Ky. 
211;  13  S.  W.  885;  Tichenor  v. 
Yankey,  89  Ky.  508;  12  S.  W.  947; 
Moye  V.  Lane  (Ky.),  12  S.  W.  154; 
Perry  v.  Knight,  85  Me.  184;  .27 
Atl.  96;  Goode  v.  Riley,  153  Mass. 
585;  28  N.  E.  228;  Eberle  v.  Hea- 
ton,  124  Mich.  205;  82  N.  W.  820; 
Perkins  v.  Canine,  113  Mich.  72; 
71  N.  W.  457;  Judson  v.  Miller, 
106  Mich.  140;  63  N.  W.  965;  Met- 
ropolitan Lumber  Co.  v.  Iron  Co., 
101  Mich.  577;  60  N.  W.  278;  Con- 
lin  V.  Masecar,  80  Mich.  139;  45  N. 
W.  67;  Burke  v.  Clixby,  75  Mich. 
311;  42  N.  W.  1135;  Layman  v. 
Realty  Co.,  60  Minn.  136;  62  N. 
W.  113;  Olson  v.  Erickson,  42  Minn. 
440;  44  N.  W.  317;  Brinson  v. 
Berry  (Miss.),  7  So.  322;  Epperson 
V.  Epperson,  161  Mo.  577;  61  S.  W. 
853;  Harding  v.  Wright,  138  Mo, 
11;    39    S.    W.    456;    Henderson   v. 


Beasley,  137  Mo.  199;  38  S.  W. 
950;  Ezell  v.  Peyton,  134  Mo.  484; 
36  S.  W.  35;  Sellwood  v.  Henne- 
man,  36  Or.  575;  60  Pac.  12;  Elder 
V.  Bank,  91  Tex.  423;  44  S.  W.  62; 
Avery  v..  Hunton,  23  Tex.  Civ.  App. 
353;  56  S.  W.  210;  American,  etc., 
Co.  V.  Pace,  23  Tex.  Civ.  App. 
222;  56  S.  W.  377;  Land  Mortgage 
Bank  v.  Nicholson,  24  Wash.  258; 
64  Pac.  156;  State  v.  Lorenz,  22 
Wash.  289;  60  Pac.  644;  Jenkins 
V.  Jenkins  University,  17  Wash. 
160;  49  Pac.  247;  modified  on  re- 
hearing, 17  Wash.  173;  50  Pac. 
785;  Baxter  v.  Tanner,  35  W.  Va. 
60;  12  S.  E.  1094;  Ingles  v.  Merri- 
man,  96  Wis.  400;  71  N.  W.  368; 
Fischer  v.  Laack,  85  Wis.  280;  55 
N.  W.  398. 

2  Simmons  Creek  Coal  Co.  v.  Do- 
ran,  142  U.  S.  417;  Stonesifer  v. 
Kilburn,  122  Cal.  659;  55  Pac. 
587;  Stevens  v.  Holman,  112  Cal. 
345;  53  Am.  St.  Rep.  216;  44  Pac. 
670;  Smith  v.  Schweigerer,  129  Ind. 
363;  28  N.  E.  696;  Brinson  v.  Ber- 
ry (Miss.),  7  So.  322;  Epperson  v. 
Epperson,  161  Mo.  577;  61  S.  W. 
853;  Ezell  v.  Peyton,  134  Mo.  484; 
36  S.  W.  35;  Land  Mortgage  Bank 
V.  Nicholson,  24  Wash.  258;  64  Pac. 
156. 

3  Thompson  v.  Ladd,  169  111.  73; 
48  N.  E.  174;  Jordan  v.  Walters 
(la.),    80    N.    W.    530;    Conlin    v. 

Masecar,  80  Mich.  139;  45  N.  W. 
67;  Stites  v.  Wldener,  35  O.  S. 
555:  Elder  v.  Bank,  91  Tex.  423; 
44  S.  W.  62;  American,  etc.,  Co.  v. 
Pace,  23  Tex  Civ.  App.  222;  56  S. 
W.  377;  Baxter  v.  Tanner,  35  W. 
Va.   60;    12   S.   E.    1094. 

4  Hill  V.  Kuhlman,   87    Fed.  498. 


1918 


PAGE    ON    CONTEACTS. 


section  may  be  misnamed;^  an  erroneous  number  of  the  lot* 
or  block/  or  an  erroneous  street  number^  may  be  inserted ;  the 
wrong  point  be  taken  as  a  corner;®  or  the  length  of  a  boundary 
line  may  be  misstated/**  So  an  easement  may  be  omitted/^  or 
only  partially  conveyed/^  or  a  reservation,  as  of  timber/^  coal,^* 
or  growing  crops/^  may  be  omitted ;  or  a  reservation  may  be 
inserted  by  mistake/®  So  a  release  intended  to  cover  only  part 
of  the  realty  mortgaged  may  by  mistake  be  so  drawn  as  to  in- 
clude all  the  realty/^ 

§1245.     Mistake  as  to  grantee. 

Where  by  mistake  an  estate  which  by  agreement  should  have 
passed  to  A  alone  is  conveyed  to  A  and  B/  or  one  which  should 
have  passed  to  A  and  B  is  conveyed  to  A  alone,^  or  where  prop- 
erty was  to  be  settled  on  a  married  woman  to  her  separate  use, 
and  by  mistake  is  so  conveyed  as  to  be  part  of  her  general  prop- 
erty,^ reformation  may  be  had.  So  if  the  name  of  the  grantee 
corporation  is  erroneously  stated  reformation  may  be  had.* 


5  Epperson  v.  Epperson,  161  Mo. 
577;  61  S.  W.  853;  McCormick, 
etc.,  Co.  V.  Woulph,  11  S.  D.  252; 
76  N.  W.  939. 

6  Skerrett  v.  Society,  41  O.  S. 
606;  Avery  v.  Hunton,  23  Tex.  Civ. 
App.  353;  56  S.  W.  210. 

7  Busey  v.  Moraga,  130  Cal.  586; 
62  Pac.  1081. 

8  Kelly  V.  Galbraith,  186  111.  593; 
58  N.  E.  431;  affirming  87  111.  App. 
63. 

sMoye  v.  Lane  (Ky.),  12  S.  W. 
154;  Eberle  v.  Heaton,  124  Mich. 
205;  82  N.  W.  820. 

loManogue  v.  Bryant,  15  App. 
D.  C.  245. 

11  Blakeman  v.  Blakeman,  39 
Conn.  320;  Schautz  v.  Keener,  87 
Ind.  258;  Howard  v.  Britton,  67  N. 
H.  484;   41  Atl.  269. 

12  State  V.  Lorenz,  22  Wash.  289; 
60   Pac.   644. 

13  Smith  V.  Wakeman,  114  Mich. 
611;  72  N.  W.  599;  Fero  v.  Lumber 


Co.,   101  Mich.  310;   59  N.  W.  603, 

14  Cook  V.  Liston,  192  Pa.  St, 
19;  43  Atl.  389. 

15  Warrick  v.  Smith,  137  111.  504; 
27  N.  E.  709;  Hendrickson  v.  Ivins, 
1  N.  J.  Eq.   562. 

16  Stockbridge  Iron  Co.  v.  Iron 
Co.,  107  Mass.  290. 

17  Kane  v.  Williams,  99  Wis.  65; 
74  N.  W.  570. 

1  Stedwell  v.  Anderson,  21  Conn, 
139;  McLeod  v.  Free,  96  Mich.  57  j 
55  N.  W.  685. 

2  Corrigan  v.  Tierney,  100  Mo. 
276;  13  S.  W.  401.  So  where  notes 
and  stock  to  be  transferred  to  A 
and  B  are  transferred  to  B  alone. 
Kropp  V.  Kropp,  97  Wis.  137;  72 
N.  W.  381. 

sLarkins  v.  Biddle,  21  Ala.  252; 
Stone  V.  Hill,  17  Ala.  557;  52  Am. 
Dec.   185. 

•iRosser  v.  Pvy.,  102  Ga.  164;  29 
S.  E.  171. 


REFOKMATION.  1919 

§1246.     Mistake  as  to  estate. 

If  by  mistake  words  are  omitted  or  inserted  creating  a 
greater^  or  less^  estate  than  that  agreed  upon,  reformation  may 
be  given.  So  where  words  creating  a  fee/  such  as  "  and  their 
heirs  forever,"*  are  omitted ;  or  where  the  phrase  "  their  bodily 
heirs  "  was  used  by  mistake  for  "  their  heirs,"^  or  "  successors  " 
is  used  by  mistake  for  "  heirs,'"^  or  an  instrument  whereby  a 
means  to  reserve  to  himself  a  life  estate,  passing  the  fee  to  B, 
is  by  mistake  so  worded  as  to  constitute  a  will,^  or  a  deed  meant 
to  pass  an  undivided  interest  in  realty  is  by  mistake  so  drawn 
as  to  pass  the  entire  realty,^  reformation  can  be  had.  So 
reformation  may  be  given  where  by  mistake  a  condition  subse- 
quent has  been  omitted,® 

§1247.     Mistake  as  to  effect  of  signature. 

If  A,  not  meaning  to  bind  himself  personally,  signs  the  con- 
tract in  such  a  way  as  to  bind  himself,  the  question  of  his  right 
to  reformation  depends  on  substantially  the  same  principles  as 
those  governing  a  mistake  as  to  the  legal  effect  of  the  words 
employed.^     If  there  has  been  a  prior  valid  contract  between 

iDulo    V.    Miller,    112    Ala.    687;  *  Vickers  v.  Leigh,  104  N.  C.  248; 

20  So.  981;  Cooke  v.  Husbands,  11  10  S.  E.  308. 

Md.  492;  Clayton  v.  Freet,  10  0.  S.  5  Kyner  v.  Ball,  182  111.  171;   54 

544;    as    failing   to    reserve    a    life-  N.    E.    925.      (Thus    creating    what 

estate     as     intended.     Purvines     v.  at  Common  Law  was  a  fee-tail  but 

Harrison,    151    111.    219;    37   N.    E.  under    the    Illinois    statutes    was    a 

705.  life  estate  in  the  first  taker  and  a 

2  Kyner  v.  Ball,  182  111.  171;   54  fee  in  his  descendants.) 

N.  E.  925;  Nicholson  v.  Caress,  59  6  M.  E.  Church  v.  Town,  47  N.  J, 

Ind.  39;   Holme  v.  Shinn,   62  N.  J.  Eq.  400;  20  Atl.  488. 

Eq.     1;    49    Atl.    151;     Vickers    v.  7  pinkham   v.    Pinkham.    60    Neb. 

Leigh,  104  N.  C.  248;  10  S.  E.  308;  600;    83    N.    W.    837;    affirmed    on 

Brock   V.   O'Dell,   44    S.    C.    22;    21  rehearing   61    Neb.    336;    85   N.   W= 

S.  E.  976;  Lardner  v.  Williams,  98  285. 

Wis.  514;  74  N.  W.  346.  8  Canedy     v.     Marcy,     13     Gray 

sTrusdell    v.    Lehman,    47    N.    J.  (Mass)  373;  Green  Bay,  etc..  Co.  v. 

Eq.   218;    20   Atl.    391;    Springs   v.  Hewitt,  62  Wis.  316;  21  N.  W.  216; 

Harven,    3   Jones   Eq.    (N.   C.)    96;  22  N.  W.  588. 

Brock   V.   O'Dell,   44   S.   C.   22;    21  » Hamilton  County  v.  Owens,  138 

S-  E.  976.  Ind.  183;   37  N.  E.  602. 


See  §  1241. 


1920  PAGE    ON    CONTEACTS. 

the  parties,  by  the  terms  of  which  no  personal  liability  waa 
fixed  on  A,  and  in  attempting  to  reduce  this  to  writing  A  by 
mistake  as  to  the  legal  effect  of  the  method  of  executing  the 
contract  employed  by  himself  signs  it  so  as  to  incur  a  personal 
liability,  he  may  have  reformation.^  Thus  where  A  is  agent  for 
X  and  signs  "  A,  agent  of  X,"  he  may  have  reformation  so  as 
to  relieve  himself  from  personal  liability.^  Conversely  in  an 
action  against  X,  reformation  may  be  had  so  as  to  make  him 
personally  liable  on  the  written  contract.*  Thus  where  the 
name  of  the  corporation  was  printed  at  the  top  of  the  contract, 
followed  by  the  words  "  we  promise  "  and  signed  "  R.  J.  Beatty, 
President,"  reformation  was  allowed  in  a  suit  against  the  cor- 
poration.^ So  where  A  signs  as  township  trustee  when  he 
means  to  sign  as  trustee  for  the  school  township,  the  latter  office 
being  held  by  A  ex  officio  as  township  trustee,  reformation  may 
be  had  to  make  the  school  township  liable.®  Further,  if  A  does 
not  sign  so  as  to  assume  the  liability  intended  by  the  oral  con- 
tract, reformation  may  be  had  against  him  on  B's  application. 
This  rule  has  been  applied  where  the  parties  meant  to  sign  an 
injunction  bond  so  as  to  make  it  valid,  though  probably  they 

2  Fisher  v.  Bainett,  56  111.  App.  139;  72  Am.  St.  Rep.  291;  53  N.  E. 
649;  Second  National  Bank  v.  Steel      391. 

Co.,  155  Ind.  581;  52  L.  R.  A.  307;  4  Second   National   Bank  v.   Steel 

58  N.  E.  833;  Sparta  School  Town-  Co.,  155  Ind.  581;  52  L.  R.  A.  307; 

ship  V.  Mendell,   138   Ind,   188;    37  58  N.  E.  833;  McNaughten  v.  Par- 

N.   E.  .604;    Prescott   v.   Hixon,   22  tridge,    11   Ohio   223;    38   Am.   Dec. 

Ind.    App.    139;    72    Am.    St.    Rep.  731;   Moser  v.   Libenguth,   2   Rawle 

291;  53  N.  E.  391;  Lee  v.  Pereival,  (Pa.)   428. 

85  la.   639;    52   N.   W.   543;    Rich-  5  Second   National   Bank  v.   Steel 

mond   V.   Ry.,    —   Or.   — ;    74    Pac.  Co.,  155  Ind.  581;  52  L.  R.  A.  307; 

333;   Moser  v.  Libenguth,  2  Rawle  58  N.  E.  833. 

(Pa.)   428.  6  Sparta  School  Township  v.  Men- 

3  Western  Wheeler  Scraper  Co.  v.  dell,  138  Ind.  188;  37  N.  E.  604. 
Stiekleman,  122  la.  396;  98  N.  W.  While  in  some  of  these  eases  the 
139;  Western  Wheeler  Scraper  Co.  party  signing  the  contract  might  be 
V.  McMillen,  —  Neb.  — ;  99  N.  W.  shown  in  an  action  at  law  on  the 
512.  Thus  a  signature  in  the  fol-  contract  to  be  the  real  principal 
lowing  form  has  been  corrected  by  (see  §§  606,  607,  695,  761,  1233- 
reformation:  "  O.  O.  Prescott,  1236),  reformation  may  be  had 
Pres.  Mid.  B.  &  Cheese  Co.;  M.  A.  in  cases  where  the  real  principal 
Cordrey,  Sec.  Cr.  &  Cheese  Co."  could  not  be  held  in  an  action  ai 
Prescott    V.    Hixon,    22    Ind.    App.  law. 


REFOKMATION.  •  1921 

had  no  specific  intention  to  seal,  as  they  did  not  know  that  it 
was  necessary,  but  the  bond  purported  on  its  face  to  be  a  sealed 
instrument/  Some  authorities  seem  to  deny  the  right  of  equity 
to  reform  so  as  to  give  relief  against  a  mistake  as  to  the  legal 
effect  of  a  signature.^  In  these  cases,  however,  though  it  is  not 
always  clear  from  the  report,  the  decision  is  often  based  on  the 
other  branch  of  the  principle  under  discussion ;  that  if  there 
is  no  prior  oral  contract,  reformation  cannot  be  given  to  a  party 
who  makes  himself  personally  liable  when  he  did  not  intend  to. 
Thus  where  A  signs  a  contract  so  as  to  bind  himself  personally, 
though  he  thinks  he  is  liable  as  guardian  only,"  or  officers  of  a 
corporation,  meaning  to  bind  the  corporation,  sign  a  note  so  as 
to  bind  themselves  personally,^"  or  A  on  depositing  money  in  a 
bank  accepts  as  security  therefor  the  individual  notes  of  the 
president  and  the  cashier,  thinking  they  were  certificates  of 
deposit,^^  reformation  has  been  refused. 

§1248.    Other  examples  of  mistake. 

A  mistake  in  the  date,^  in  the  rate  of  interest,^  or  in  the 
amount  on  which  interest  is  to  be  computed,^  or  the  mistaken 

7  Henkleman  v.  Peterson,  154  111.  lo  San  Bernardino  National  Bank 
419;  40  N.  E.  359;  reversing  50  111.  v.  Andreson  (Cal.),  32  Pac.  168. 
App.  601.  Omission  of  a  seal  may  n  Murphy  v.  Bank,  95  la.  325; 
be  corrected.  Probate  Court  v.  63  N.  W.  702.  A's  belief  was  due 
May,  52  Vt.  182.  So  where  a  seal  to  the  fraud  of  the  president  and  the 
was  omitted  from  a  mortgage.  Al-  cashier.  A  could  read,  however, 
len  V.  Elder,  76  Ga.  674;  2  Am.  St.  and  kept  the  notes  until  the  presi- 
I?ep.  63.  (Possibly  this  may  have  dent  and  cashier  had  become  in- 
been  a  mistake  of  fact.)  solvent,  before   seeking   relief. 

8  Mabb  v.  Merriam,  129  Cal.  663 ;  i  Lewiston  v.  Gagne,  89  Me.  395 ; 
62  Pac.  212;  San  Bernardino  Na-  56  Am.  St.  Rep.  432;  36  Atl.  629; 
tional  Bank  v.  Andreson  (Cal.),  32  O'Donnell  v.  Harmon,  3  Daly  (N. 
Pac.  168;  Murphy  v.  Bank,  95  la.  Y.)  424;  First  National  Bank  v. 
325;  63  N.  W.  702;  Morehead  Bank-  Pearson,  119  N.  C.  494;  26  S.  E. 
ing  Co.  V.  Morehead,  124  N.  C.  622 ;  46 ;  Cameron  v.  White,  74  Wis. 
32  S.  E.  967;  denying  rehearing  425;  5  L.  R.  A,  493;  43  N.  W.  155. 
122  N.  C.  318;  30  S.  E.  331;  An-  2  Loudermilk  v.  Loudermilk,  98 
drus  V.  Blazzard,  23  Utah  233;  54  Ga.  780;  25  S.  E.  927;  Greene  v. 
L.   R.    A.    354;    63    Pac.    888.  Smith,    160    N.   Y.    533;    55    N.    E. 

9Andrus    v.    Blazzard,    23    Utah      210. 
233;  54  L.  R.  A.  354;  63  Pac.  888.  3  Rider  v.  Powell,  28  N.  Y.  310, 

121 


1922  PAGE    ON    CONTRACTS. 

addition*  or  omission®  of  a  clause  whereby  the  grantee  assumes 
a  mortgage;  the  omission  of  a  clause  deducting  the  amount  of 
the  mortgage  from  the  purchase  price,®  or  excepting  the  princi- 
pal of  a  prior  mortgage  from  the  covenants  of  a  second  mort- 
gage/ or  the  omission  of  a  clause  providing  for  a  vendor's  lien,* 
may  be  reformed  in  equity.  So  other  omissions,^  as  in  a  clause 
intended  to  provide  that  a  bond  "  shall  be  and  remain  a  special 
lien  upon  the  said  property  above  described,  and  for  the  pay- 
ment "  of  the  note  in  question  the  omission  of  "  the  said  prop- 
erty above  described  ;"^"  the  omission  of  the  consideration^^ 
from  a  deed ;  the  omission  of  a  provision  for  ascertaining  the 
amount  of  corn  to  be  delivered  as  rent  for  the  land  lease  f^  an 
erroneous  statement  of  a  consideration  in  a  deed  as  love  and 
affection  when  in  reality  it  is  on  a  valuable  consideration;^' 
an  omission  of  the  time  for  which  a  teacher  is  employed  ;^*  an 
erroneous  statement  in  a  mortgage  of  the  time  at  which  the 
debt  secured  thereby  matures  ;^^  an  omission  of  statutory  re- 
quirements in  a  bill  of  sale  of  a  vessel  necessary  to  enable  vendee 
to  have  it  registered  in  his  name  as  an  American  vessel  ',^^  or  the 
omission  of  some  of  the  descriptive  marks  identifying  some  of 
the  logs  sold,"  are  all  mistakes  for  which  reformation  is  al- 
lowed. 

4  Adams    v.     Wheeler,     122     Ind.      nessey,  48  N.  Y.  415;  Y'oung  v.  Mil- 
251;  23  N.  E.  760;  Jones  v.  Price      ler,  10  Ohio  85. 

(la.),  86  N.  W.  219.  lo  Smith  v.   Brunk,   14  Colo.   75; 

5  Williams    v.    Everham,    90    la.      23   Pac.   325. 

420;    57    N.    W.    901.      (Where   the  n  Huss  v.  Morris,  63  Pa.  St.  367. 

property    was    conveyed    "subject"  i^Reid  v.   Cook,   88   la.   717;    54 

to  a  mortgage,  the  parties  intend-  X.  W.  353. 

ing    that    the    grantee    should    as-  is  Orr    v.    Echols,    119    Ala.    340: 

sume  it.)      Stephenson  v.  Elliott,  53  24  So.  357. 

Kan.  550;  36  Pac.  980.  i*  Marion     School     Township     v- 

6  Burns  v.  Caskey,  100  Mich.  94;  Carpenter,    12    Ind.    App.    191;     39 
58  N.  W.  642.  N.  E.  878. 

TAllis  V.  Hall,  76  Conn.  322;   56  is  Commercial    National    Bank    v. 

Atl.  637.  Johnson,    16    Wash.    53<5;    48    Pac. 

sWorley     v.     Tuggle,     4     Bush.  267. 

(Ky.)    168.  icSprague   v.    Thurb<*-,    17    R.    I. 

9Viditz  V.  O'Hagan   (1899),  2  Ch.  454;   22  Atl.   1057. 

569;   Rice  v.  Hall    (Ky.),  42  S.  W.  "Smith     v.     Jordan,     13     Minn. 

99;  Smith  v.  Jordan,  13  Minn.  264;  264;   97  Am.  Dec.  232. 
97  Am.  Dee.  232;   Pitcher  v.  Hen- 


REFORMATION.  1923 

The  contracts  hitherto  discussed  have  been  chiefly  contracts 
for  conveying  some  interest  in  realty.  Reformation,  vphile 
more  often  needed  in  such  contracts,  is  not  confined  to  them. 
A  contract  of  insurance  may  be  reformed  where  there  is  a 
mistake  in  the  expression/®  as  where  there  is  a  mistake  in  the 
description  of  the  property  insured,^^  or  in  the  name  of  the 
beneficiary. ^°  A  contract  executed  by  a  surety  may  be  re- 
formed for  mistake  in  expression,  like  any  other  contraet.^^  So 
the  use  of  "  heretofore  "  instead  of  "  hereafter,"  referring  to 
certain  lots  to  be  released  from  lien  and  mortgage  upon  pay- 
ment,^^  the  insertion  of  the  name  of  the  holder  of  the  legal  title 
instead  of  that  of  the  equitable  owner  in  a  clause  imposing 
penalties  for  nonperformance,^^  a  misstatement  as  to  the  kind  of 
money  in  which  the  instrument  is  payable,"*  a  covenant  for  "  a 
semi-annual  rent  of  three  hundred  dollars  "  instead  of  for  an 
annual  rent  of  three  hundred  dollars  payable  in  semi-annual  in- 
stallments,^^ are  all  mistakes  for  which  reformation  can  be  had. 
Reformation  may  be  given  where  by  mistake  an  indorsement 
intended  to  be  made  without  recourse  is  not  so  made."°  An 
executor's  bond  which  by  mistake  misstates  the  name  of  the 
decedent  whose  estate  is  being  administered  may  be  reformed 
to  correct  such  mistake.^^ 


18  Equitable    Safety    Ins.    Co.    v.  21  Henkleman  v.  Peterson,  154  III 
Hearne,    20     Wall.     (U.    S.)     494;       419;  40  N.  E.  359;  s.  c,  50  111.  App, 
Western  Assurance  Co.  v.  Ward,  75      601;    State   v.    Frank,    51    Mo.    98 
Fed.   338.                                                        Neininger   v.   State.   50   0.   S.    394 

19  German  Fire  Ins.  Co.  v.  Gueck,  40  Am.  St.  Rep.  674 ;  34  N.  E.  633 
130  111.  345;  6  L.  R.  A.  835;  23  22  Johnson  v.  Wilson,  111  Mich 
N.  E.   112;  Home  Ins.  Co.  v.  Myer,       114;  69  N.  W.  149. 

93  111.  271;   Maher  v.  Ins.  Co.,  67  23  Smith   v.    Watson,    88    la.    73; 

N.  Y.  283.  55  N.  W.  68. 

2oSnell  V.  Ins.  Co.,  98  U.  S.  85 
Woodbury,  <etc.,  Association  v.  Ins 
Co.,  31  Conn.  517;  German  Ins.  Co 
V.  Gueck,  130  111.  345;  6  L.  R.  A 
835;  23  N.  E.  112;  Keith  v.  Ins 
Co.,  52  111.   518;   4  Am.  Rep.   624 


24Burdett  v.  Sims,  3  J.  J.  Mar. 
(Ky.)  190;  Talley  v.  Courtney,  1 
Heisk.  (Tenn.)  715. 

25  Snyder  v.  May,  19  Pa.  St.  235. 

26  Stafford  v.  Fetters,  55  la.  484; 
8  N.  W.  322. 

Cook  V.  Ins.  Co.,  60  Neb.   127;    82  27  Foley  v.  Hamilton,  89  la.  686; 

N.  W.  315;  Scott  v.  Association,  63      57  N.  W.  439. 
N.  H.  556;  4  Atl.  792. 


1924  PAGE    ON    CONTRACTS. 

§1249.    What  instruments  may  be  reformed. 

Reformation  will  not  be  given  when  the  instrument  as  re- 
formed would  not  be  operative.^  So  a  bond  given  to  settle  a 
balance  due  on  mutual  accounts,  which  had  been  kept  so  loosely 
that  it  was  impracticable  to  ascertain  the  true  balance  will  not 
be  reformed  to  show  such  true  balance."  Hence  an  instrument 
which  does  not  purport  to  be  a  contract  and  was  not  meant  as  a 
contract  cannot  be  reformed  so  as  to  be  a  contract.  Thus  a 
resolution  by  a  council,  directing  the  mayor  to  make  a  purchase 
from  A,  cannot  be  reformed  at  A's  instance  so  as  to  stand  as  a 
contract  between  the  city  and  A.^  So  where  a  married  woman 
can  be  bound  only  in  compliance  with  statute,  reformation  will 
not  be  given  for  deeds  of  married  women.*  This  rule  is  in  force 
only  where  a  married  woman  has  no  power  whatever  to  bind 
herself  other  than  in  the  manner  provided  for  by  statute.  If  a 
married  woman  has  a  wider  power  of  making  contracts,  her 
contracts  and  conveyances  may  be  reformed  for  mutual  mistake 
like  those  of  persons  of  normal  status.^  If  the  contract  is  one 
which  is  required  by  statute  to  be  proved  by  writing,  the  at- 
tempt to  reform  such  a  contract  in  equity  by  the  use  of  oral 


1  Thompson  v.  Ins.  Co.,  25  Fed.  38  la.  185;  McReynolds  v.  Grubb, 
296;  East  St.  Louis  v.  Mfg.  Co.,  150  Mo.  352;  73  Am.  St.  Rep.  448; 
34  111.  App.  458;  Williamson  v.  51  S.  W.  822;  Cannon  v.  Beatty,  19 
Hitner,    79    Ind.    233;    Williams   v.  E.  I.  524;  34  Atl.  1111. 

Cudd,  26  S.  C.  213;  4  Am.  St.  Rep.  5  Tillis   v.    Smith,    108    Ala.   264; 

714;  2  S.  E.  14;  Persinger  v.  Chap-  19  So.  374;  Stevens  v.  Holman,  112 

man,  93  Va.  349;  25  S.  E.  5;    (cit-  Cal.  345;   53  Am.  St.  Rep.  216;   44 

ing  Chapman   v.   Persinger,   87   Va.  Pac.   670;    Savings   &  Loan   Society 

581;  13  S.  E.  549;  Foster  v.  Jiitson,  v.  Meeks,  66  Cal.  371;  5  Pac.  624; 

17  Gratt.    (Va.)    321).  Hayford  v.  Kocher,  65  Cal.  389;   4 

2  Persinger  v.  Chapman,  93  Va.  Pac.  350;  Christensen  v.  Hollings- 
349;  25  S.  E.  5.  worth,  6  Ida.  87;  53  Pac.  211;  Par- 

sCarskaddon  v.   South  Bend.   141  ish  v.  Camplin,  139  Ind.  1;  37  N.  E. 

Ind.    596;    39   N.    E.    667;    affirmed  607;    Collins  v.   Cornwell,    131    Ind. 

on   rehearing,   141   Ind.   601;   41   N.  20;    30  N.  E.   796;   Carper  v.  Mun- 

E.  1.  ger,    62   Ind.   481;    Hamar  v.   Med- 


4Bowden  v.  Bland,  53  Ark.  53 
22  Am.  St.  Rep.  179;  13  S.  W.  420 
Leonis  v.  Lazzarovich,  55  Cal.  52 
Stodolka  V.  Novatny.  144  111.  125 
33  N.  E.  534;  Heaton  v.  Fryberger, 


sker,  60  Ind.  413;  Tichenor  v. 
Yankey.  89  Ky.  508;  12  S.  W.  947; 
Murdoch  v.  Leonard,  15  Wash.  142; 
45  Pac.  751. 


REFORMATION.  1925 

evidence  presents  a  close  and  interesting-  question,  on  which, 
there  is  a  conflict  of  judicial  opinion.  On  the  one  hand  it  is 
felt  by  many  courts  that,  in  view  of  the  safeguards  thrown 
about  reformation  by  the  amount  of  evidence  required  to  obtain 
such  relief,  it  would  merely  offer  a  shelter  to  fraud  to  deny 
reformation  in  such  cases;  and  accordingly  reformation  is  al- 
lowed.^ Thus  where  by  mistake  an  option  of  purchase  is  omit- 
ted from  a  lease,  such  option  may  be  inserted  by  reformation.' 
A  deed  or  mortgage  may  accordingly  be  reformed  f  and  a  mort- 
gage may  be  reformed  and  foreclosed  in  one  action.®  In  other 
jurisdictions  it  is  felt  that  "  in  case  of  an  executory  agreement, 
first  to  reform,  then  to  decree  an  execution  of  it,  would  be  vir- 
tually to  repeal  the  statute  of  frauds."^"  Accordingly  reforma- 
tion is  denied.^^  Thus  under  a  contract  for  the  sale  of  realty, 
reformation  of  a  defective  description  has  been  denied.^^  If 
reformation  of  a  conveyance  of  realty  can  be  given,  as  is  often 
done,^^  no  good  reason  appears  why  reformation  should  be 
denied  in  case  of  executory  contracts.  If,  by  mistake,  a  seal  is 
omitted  from  a  contract  which  is  required  by  law  to  be  under 
seal,  equity  may  grant  relief  by  compelling  a  seal  to  be  affixed.^* 

6  Bradford  v.  Bank,  13  How.  (U.  Pac.  211;  Fifth  National  Bank  v. 
S.)  57;  Schwass  v.  Hershey,  125  Pierce,  117  Mich.  376;  75  N.  W. 
111.   653;    18   N.    E.   272;    Smith   v.       1058. 

Jordan,  13  Minn.  264;  97  Am.  Dec.  lo  Townshend    v.     Strangroom,     6 

232;    Mosby  v.   Wall,   23   Miss.   81;  Ves.  Jr.  328. 

55  Am.  Dec.  71;  Gillespie  v.  Moon,  n  Osborn  v.  Phelps,  19  Conn.  -63; 

2   Johns.  Ch.    (N.  Y.)    585;   7  Am.  48  Am.  Dec.  133;  Elder  v.  Elder,  10 

Dec.  559;   Davenport  v.  Sovil,  6  O.  Me.  80;  25  Am.  Dec.  205;  Glass  v. 

S.  459;   Caley  v.  R.  R.,  80  Pa.  St.  Hulbert,  102  Mass.  24;  3  Am.  Rep. 

363;    Redfield    v.    Gleason,    61    Vt.  418;    Davis  v.   Ely,    104   N.   C.    16; 

220;   15  Am.  St.  Rep.  889;   17  Atl.  17  Am.  St.  Rep.  667;  5  L.  R.  A.  810; 

1075;    Fishack  v.  Ball,   34   W.  Va.  10   S.   E.    138;    Whiteaker   v.   Van- 

644;   12  S.  E.  856.  schoiack.  5  Or.  113. 

7  Butler  V.  Threlkeld,  117  la.  116;  12  Davis  v.  Ely,  104  N.  C.  16;  17 
90  N.  W.  584.  Am.  St.  JRep.  667;   5  L.  R.  A.  810; 

sTillis   V.    Smith,    108    Ala.    264;  10  S.  E.  138. 

19  So.  374;   Fuller  v.  Hawkins,  60  i3  See  §  1244  et  seq. 

Ark.  304 ;  30  S.  W.  34 ;  Burmeister  i4  Bernard's     Township     v.     Steb- 

V.  Olson,  102  Wis.  677;    79  N.  W.  bins,  109  U.  S.  341;  Gaylord  v.  Pel- 

1127.  land,  169  Mass.  356;  47  N.  E.  1019; 

9  Christensen  v.   Hollingsworth.   6  Springfield  Five  Cents  Sav.  Bank  v. 

Tda.  87;   96  Am.  St.  Rep.   256;   53  South     Congregational     Soc,      127 


19:^.6  PAGE    ON    CONTRACTS. 

§1250.     Reformation  of  mistake  which  may  be  corrected  by  con 
struction. 

Whether  a  contract  may  be  reformed  for  mistake  in  expres- 
sion when  such  mistake  is  apparent  from  the  entire  contract 
and  may  be  corrected  by  construction/  is  a  question  upon  which 
the  authorities  are  not  unanimous. 

Some  courts  hold  that  any  mistake  in  expression  may  be  cor- 
rected in  equity,"  in  analogy  to  a  bill  quia  timet,  the  question 
of  the  absolute  necessity  of  reformation  being  allowed  to  affect 
only  costs.  So  a  contract  in  which  by  mistake  the  date  for  per- 
formance is  fixed  at  a  time  prior  to  the  execution  of  the  contract 
may  be  reformed  even  though  the  correct  date  might  be  inferred 
by  persons  familiar  with  that  business.^  Other  courts  hold  that 
equity  'will  not  interfere  unless  the  reformation  sought  will 
modify  the  legal  effect  of  the  contract,*  on  the  ground  that 
otherwise  plaintiff  has  an  adequate  remedy  at  law.  The  answer 
to  this  may  well  be  that  while  adequate  the  remedy  may  not 
always  be  clear. 

In  any  event,  if  the  reformation  sought  will  change  the  legal 
effect  of  the  contract,  even  slightly,  it  will  be  given  if  otherwise 
proper.^ 

§1251.    Who  may  have  reformation. 

Only  a  party  who  is  prejudiced  by  the  mistake  can  maintain 
a  suit  for  reformation.^  Thus  a  married  woman  who  joins  io 
her  husband's  deed  to  release  dower,  cannot  have  the  deed  re- 
formed to  correct  a  covenant  of  warranty  where  she  was  not 

Mass.    516;    Lebanon    Sav.    Bank  v.  5    L.    R.    A.    493;    43    N.    W.    155. 
Hollenbeck,  29  Minn.  322;  13  N,  W.  *  Harm   v,  Voss    (la.),  82  N.   W. 

145;    Conover   v.   Brown,   49   N.   J.  753 ;  Shoemake  v.  Smith,  80  la.  655 ; 

Eq.  156;  23  Atl.  507;  Chase  v.  Peek,  45  N.  W.  744;   Rue  v.  Meirs,  43  N. 

21  N.  Y.  581;  Bullock  v.  Whipp,  15  J.  Eq.  377;   12  Atl.  369. 
R.  I.  195;  2  Atl.  309.  s  Stevens    v.    Hertzler,    114    Ala. 

1  See  §§  1113,  1125.  563;   22   So.    121;    Ward  v.  Water- 

2  Rich  V.  Trustee  of  Schools.   158  man,  85  Cal.  488;  24  Pae.  930. 

111.   242;   41  N.  E.  924;   Jenkins  v.  i  Miller  v.  Morris,   123  Ala.   164; 

Davis,  141  Pa.  St.  266;  21  Atl.  592.      27   So.   401;    Mlnazek  v.  Libera,  78 

3  Cameron  v.  White,  74  Wis.  425;      Minn.  151 ;  80  N.  W.  866. 


REFORMATION. 


1927 


bound  by  such  warranty.^  So  one  who  sues  as  partner  for 
reformation  of  a  partnership  contract  must  show  that  he  has 
an  interest  in  such  partnership.^  On  analagous  principles  an 
instrument  not  supported  by  a  valuable  consideration  will  not 
be  reformed.*  Thus  no  reformation  will  be  given  of  a  mort- 
gage intended  to  prefer  creditors.® 

§1252.    Effect  of  rights  of  third  parties  on  reformation. 

If  intervening  rights  of  hona  fide  purchasers  for  value  will 
be  prejudiced  by  reformation  it  will  not  be  allowed.^  Rights 
of  third  persons  acquired  with  actuaP  or  constructive^  notice  of 
the  mistake,  or  rights  of  third  persons  not  purchasers  for  value,* 
especially  if  not  prejudiced  by  the  mistake,®  will  not  prevent 
reformation. 


2  Miller  v.  Morris,  123  Ala.  164; 
27  So.  401. 

3  MInazek  v.  Libera,  78  Minn. 
151;  80  N.  W.  866. 

4  Strayer  v.  Dickerson,  205  111. 
257;  68  N.  E.  767;  Shears  v.  West- 
over,  110  Mich.  505;  68  N.  W.  266; 
Redding  v.  Rozell,  59  Mich.  476 ;  26 
N,  W.  677;  Gw'yer  v.  Spaulding,  33 
Neb.  573;  50  N.  W.  681;  Miller  v. 
Savage,  62  N.  J.  Eq.  746;  48  Atl. 
1004;  Powell  v.  Morisey,  98  N.  C. 
426;  2  Am.  St.  Rep.  343;  4  S.  E. 
185;  Willey  v.  Hodge,  104  Wis.  81; 
76  Am.  St.  Rep.  852 ;  80  N.  W.  75. 

5  Miller  v.  Savage,  62  N.  J.  Eq. 
746;  48  Atl.  1004.  A  deed  in  part 
for  love  and  affection  and  in  part  on 
valuable  consideration  may  be  re- 
formed. Smith  V.  Barksdale,  110 
Ga.  278;  34  S.  E.  582. 

1  Macon  v.  Dasher,  90  Ga.  195;  16 
S.  E.  75;  Harms  v.  Coryell,  177  111. 
496:  53  N.  E.  87;  J^oszell  v.  Roszell, 
109  Ind.  354;  10  X.  E.  114;  Sentell 
V.  Randolph,  52  La.  Ann.  52 ;  26  So. 
797;  Dunham  v.  Provision  Co.,  100 
Mich.  75 ;  58  N.  W.  627 ;  Cottrell  v. 
Bank,  53  Minn.  201 ;  54  N.  W\  1111 ; 
Seward   v.   Spurgeon,   9   Wash.   74; 


37  Pae,  303.  A  lien  holder  has 
been  treated  as  a  purchaser  for 
value.  Lough  v.  Michael,  37  W. 
Va.  679;  17  S.  E.  181,  470. 

2  Way  v.  Roth,  159  111.  162;  42  N. 
E,  321;  Smith  v.  Schweigerer,  129 
Ind.  363;  28  N.  E.  696;  Carpenter 
Paper  Co.  v,  Wilcox,  50  Neb.  659; 
70  N.  W.  228. 

3  Elwood  V.  Stewart,  5  Wash.  736; 
32  Pae.  735,  1000.  As  where  such 
third  person  acquired  non-negotia- 
ble mortgage  notes  after  maturity 
from  a  party  to  the  original  trans- 
action. San  Jose  Ranch  Co.  v. 
Water  Co.,  132  Cal.  582;  64  Pae. 
1097. 

*  Such  as  creditors.  Michigan 
Buggy  Co.  V.  Woodson,  59  Mo.  App. 
550.  Even  if  judgment  creditors. 
Citizens'  National  Bank  v.  Judy, 
146  Ind.  322;  43  N.  E.  259.  A 
grantee  without  consideration. 
Kraushaar  v.  Hauk,  27  Or.  92;  39 
Pae.  539.  A  wife  subsequently  mar- 
ried by  grantee,  now  claiming  her 
dower.  Hawkins  v.  Pearson,  96 
Ala.  369;  11  So.  304. 

5  Wright  V.  Bank  (Tenn.  Ch. 
App.),  60  S.  W.  623. 


lipiS  PAGE    ON    CONTRACTS. 

§1253.    Reformation  not  granted  for  mistake  in  the  inducement. 

Where  the  parties  have  through  mistake  as  to  some  collateral 
fact,  entered  into  a  valid  contract,  the  terms  of  which  are 
reduced  correctly  to  writing,  equity  cannot  reform  such  contract 
so  as  to  express  what  the  court  thinks  the  parties  would  have 
agreed  upon  but  for  such  mistake.^  Thus  where  two  adjoin- 
ing land  owners,  through  mistake  as  to  the  true  location  of  the 
boundary  line,  fix  a  line  erroneously,  and  put  this  contract  into 
writing,  equity  cannot  reform  the  contract  to  fix  the  boundary 
at  the  true  line,^  nor  can  the  lessee  of  certain  mineral  rights 
have  reformation  because  he  took  the  lease  in  ignorance  of  an 
ancient  reservation  in  a  deed,  giving  him  the  right  to  such  min- 
erals.^ So  where  an  assignee  in  insolvency  represented  to  A 
that  a  certain  sum  was  due  on  a  certain  claim,  and  unknown 
to  such  assignee,  a  payment  had  been  made  thereon,  leaving 
the  amount  due  less  than  that  represented,  no  reformation  re- 
ducing the  amount  to  be  paid  for  such  claim  could  be  made 
since  the  contract  of  assignment  was  exactly  what  the  parties 
had  agreed  upon  and  no  fraud  intervened.^  Where  A  agreed 
to  buy  the  interest  of  his  partner  B  and  an  invoice  was  made, 
in  which  a  mistake  of  five  hundred  dollars  was  made,  and  a 
price  was  agreed  upon,  on  the  basis  of  such  invoice,  no  reforma- 
tion can  be  had.^  So  where  A  expressly  released  all  partners 
except  B  from  liability  and  subsequently  learned  that  X  was  a 
dormant  partner,  X  being  financially  responsible,  A  cannot 
have  the  release  reformed  to  exclude  X.^  The  reason  under- 
lying the  rule  last  given  is  that  equity  will  not  make  a  new 

iDuke    of   Sutherland    v.    Heath-  lott,  151  Ind,  371;  51  N.  E.  471;  re- 
cote    (1892),    1   Ch.   475;    affirming  versing,  46  N.  E.  23. 
(1891),    3    Ch.    504;    Phillip    Zorn  3  Duke    of    Sutherland    v.    Heath- 
Brewing    Co.    V.    Malott,    151    Ind.  cote    (1892),    1   Ch.  475;    affirming 
371;  51  N.  E.  471;  reversing,  46  N.  (1891),  3  Ch.  504, 
E.  23;  Dever  v.  Dever  (Ky.),  44  S.          *  Curtis  v.  Albee,  167  N.  Y.  360 
W.  986;   Wise  v.  Brooks,  69  Miss.  60  N.  E.  660. 

891;    13   So.   836;   Curtis  v.  Albee,  e  De  Voin  v.  De  Voin,  76  Wis.  66 

167  N.  Y.  360;   60  N.  E.  660;   De  44  N.  W.  839. 

Voin  V.  De  Voin,   76  Wis.   66;    44  e  Harbeck  v.  Pupin,  145  N.  Y.  70 

N.  W.  839.  39  N.  E.  722. 

2  Phillip  Zorn  Brewing  Co.  v.  Ma- 


BEFOEMATION. 


1929 


contract  for  the  parties  imposing  on  one  of  them  terms  which 
he  did  not  assume  and  did  not  intend  to  assume  when  he  made 
the  contract/  It  seems,  however,  that  by  some  statutes  equity 
may  have  power  to  reform  a  contract  because  of  mistake  in  the 
inducement.^ 

§1254.     Evidence  necessary  for  reformation. 

The  so-called  parol  evidence  rule  has  no  application  in  actions 
to  reform  a  written  contract,^  and  extrinsic  evidence  is  always 
admissible.  The  amount  of  evidence  necessary  to  entitle  the 
party  seeking  reformation  to  the  relief  sought  is  variously 
stated.  It  is  always  more  than  a  mere  preponderance.  The 
evidence  must  be  much  clearer  than  a  mere  preponderance 
necessarily  is  to  permit  reformation.^     The  usual  form  of  state- 


7  New  York  Life  Ins.  Co.  v.  Mc- 
Master,  87  Fed.  63;  30  C.  C.  A, 
532;  \Vhittemore  v.  Farrington,  76 
N.  Y.  452 ;  Moran  v.  McLarty,  75  N, 
Y.  25 ;  Jackson  v.  Andrews,  59  N.  Y. 
244 ;  Welles  v.  Yates,  44  N.  Y.  525 ; 
Nevins  v.  Dunlap,  33  N.  Y.  676; 
Rider  v.  Powell,  28  N.  Y.  310. 
"  The  court  could  not  make  a  new 
contract  for  the  parties,  but  could 
only  cause  their  actual  agreement  to 
be  expressed  according  to  its  terms; 
nor  could  it  reform  the  instrument 
according  to  the  terms  in  which 
(A)  understood  it,  unless  it  should 
be  shown  that  (B)  also  had  the 
same  understanding  of  its  terms." 
Ward  V.  Yorba,  123  Cal.  447,  449; 
56  Pae.  58. 

8Du  Bois  V.  Waterworks  Co.,  176 
Pa.  St.  430;  53  Am.  St.  Rep.  678; 
34  L.  R.  A.  92;  35  Atl.  248.  The 
statute  authorized  the  court  on  bill 
filed  by  any  citizen  who  used  the 
water,  alleging  impurity  or  de- 
ficiency to  compel  the  water  com- 
pany to  correct  the  evil  complained 
of  and  to  make  "  such  order  in  the 
premises    as    may    seem    just    and 


equitable."  Under  this  statute,  the 
supreme  court  said  the  lower  court 
might  proceed  "  even  to  the  reforma- 
tion of  the  contract  upon  a  basis 
just  and  equitable  to  both  parties, 
where,  as  here,  it  was  made  in  mu- 
tual mistake  as  to  an  essential  fact, 
and  a  remedy  for  the  difficulty  may 
be  found  without  violation  of  the 
main  intent  of  both  parties  in  the 
original  instrument." 

These  remarks  are  obiter,  as  the 
question  was  as  to  the  right  of  the 
borough  to  rescind  the  contract  be- 
cause the  water  supply  was  de- 
fective owing  to  a  mistake  in  the 
capacity  of  the  stipulated  source  of 
supply.     Rescission  was  denied. 

See  also  United  States  Water 
Works  Co.  V.  Du  Bois,  176  Pa.  St. 
439;  35  Atl.  251,  to  the  effect  that 
the  borough  cannot  rescind  by  ordi- 
nance annulling  such  contract. 

1  See  §  1237. 

2Bartlett  v.  Brown,  121  Mo.  353; 
25  S.  W.  1108;  Sauer  v.  Nehls,  121 
la.  184;  96  N.  W.  759;  Allison 
Brothers'  Co.  v.  Allison,  144  N.  Y. 
21;  38  N.  E.  956. 


1930 


PAGE    01^^    CONTRACTS. 


ment  is  that  the  evidence  must  be  clear  and  convincing,^  though 
it  is  said  also  that  it  must  be  clear  and  satisfactory,*  "  satisfac- 
tory,"^ "  full,  clear  and  decisive,"^  "  clear  and  precise,"^ 
"  clear,  precise  and  undubitable,"^  "  clear,  cogent,"  "  strong  and 
convincing,"®  "  clear,  positive  and  convincing,"^"  clear,  con- 
vincing and  satisfactory,^^  most  clear  and  convincing,^^  "  clear 
and  most  satisfactory,"^^  the  "  clearest  and  most  satisfactory  " 
evidence,^*  the  clearest,  strongest  and  most  irrefragable  evi- 
dence,^^  evidence  as  strong  as  if  the  mistake  were  admitted,^" 
or  evidence  which  leaves  "  no  rational  doubt."^' 


3  Bowers  v.  Ins.  Co.,  68  Fed.  785 ; 
Benson  v,  Markoe,  37  Minn.  30;  5 
Am.  St.  Rep.  816;  33  N.  W.  38; 
Hunter  v.  Patterson,  142  Mo.  310; 
44  S.  W.  250;  Westchester  Fire  Ins. 
Co.  V.  Wagner  (Tex.  Civ.  App.),  38 
S.  W.  214. 

4  Baldwin  v.  Fence  Co.,  67  Fed. 
853;  Hochstein  v.  Berghauser,  123 
Cal.  681;  56  Pac.  547;  Seeman  v. 
Biemann,  108  Wis.  365;  84  N.  W. 
490.  "  Clear  proof  "  is  the  requisite 
in  Seeley  v.  Baldwin,  185  111.  211; 
56  N.  E.  1075.  It  is  said  .that  the 
facts  must  be  "  clearly  proved  "  in 
New  York  Life  Ins.  Co.  v.  McMas- 
ter,  87  Fed.  63;  30  C.  C.  A.  532. 

5  Ward  V.  Yorba,  123  Cal.  447 ;  56 
Pac.  58. 

6  Cross  V.  Bean,  81  Me.  525;  17 
Atl.  710. 

'Liggett  V.  Shira,  159  Pa.  St. 
350;  28  Atl.  218. 

8  Sanders  v.  Sharp,  153  Pa.  St. 
555;  25  Atl.  524. 


9  Foster  v.  Schmeer,  15  Or.  363  j 
15  Pac.  626. 

10  Turner  v.  Shaw,  96  Mo.  22;  9 
Am.  St.  Rep.  319;  8  S.  W.  897. 

11  Home  Fire  Ins.  Co.  v.  Wood,  50 
Neb.  381;  69  N.  W.  941. 

12  Clark  V.  Hy.,  127  Mo.  255;  30 
S.  W.  121. 

i3Habbe  v.  Viele,  148  Ind.  116; 
45  N.  E.  783;  rehearing  denied,  47 
N.  E.  1. 

14  Milligan  v.  Pleasants,  74  Md. 
8;  21  Atl.  695;  Hollenback's  Appeal, 
121  Pa.  St.  322;  15  Atl.  61G;  Don- 
aldson V.  Levine,  93  Va.  472;  25  S. 
E.  541. 

15  Ferring  v.  Fleischmann  ( Tenn. 
Ch.  App.),  39  S.  W.  19. 

16  Ford  V.  Joyce,  78  N.  Y.  618. 

17  Rowley  v.  Flannelly,  30  N.  J. 
Eq.  613,  614;  quoted  in  Green  v. 
Stone,  54  N.  J.  Eq.  387,  399;  55 
Am.  St.  Rep.  577;  34  Atl.  1099;  re- 
versing, 32  Atl.  706;  Hupseh  v. 
Reseh,  37  N.  J.  Eq.  657,  663. 


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